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5 key observations on ASC payer contracts in 2016

Jamison Pearlman, vice president of managed care at Meridian Surgical Partners, highlights five key trends in payer contract for the next year.

1. Pricing and cost containment pressures. The continued emphasis on controlling healthcare costs will limit the ASC's ability to negotiate substantial rate increases with insurance companies beyond inflationary adjustments. "Hospital consolidation and strategic partnerships with a growing number of freestanding ASCs is fueling caution as payers are looking to hold off against material rate demands from new-found market leverage," says Mr. Pearlman.

2. ACA's impact on the employer-sponsored health plan market unknown. While healthcare reform's impact on this market is currently unknown, so far, it's helped to create an environment where payers are guarded and unwilling to budge from the established rate structures.

However, out-of-network opportunities in such plans are becoming more strained. "While remaining out-of-network is still a viable ASC approach in certain circumstances, an increasing number of employers are updating their benefit plan designs to limit OON maximum fee allowables and related spend which will ultimately reduce higher revenues previously enjoyed," says Mr.  Pearlman

3. Transition to value-based care presents some opportunity for rate increases. Payers are increasingly embracing the transition to value-based contracts and are reconfiguring provider and facility networks to capture larger savings for clients to increase provider accountability in regard to resource usage. 

"With so many competing undercurrents within the ASC operating environment, it would be safe to assert that rate increases will remain comparatively flat," says Mr. Pearlman. "There will be considerable opportunities to secure material rate increases within the framework of a broader contracting strategy with a larger regional facility partner. Another option would be for ASCs to develop mutually beneficial reimbursement arrangements that accelerate the migration of higher acuity and expensive procedures, such as spine and total joint replacement, from the inpatient environment to a more cost-effective surgery center setting."

4. Payers are open to working with ASCs on high-dollar procedures. Insurance companies including the larger MCO players — UHC, Aetna and Blue Cross Blue Shield are, to a large degree, receptive to working with ASCs transitioning high-dollar cases into the more cost-effective outpatient setting. Total joint replacement, neurosurgery, GYN and orthopedics in particular are making the move.

"ASCs within the context of these broader discussions should be mindful to leverage overall facility rates as part of the good-faith efforts to realize targeted savings for payers," says Mr. Pearlman. "Similarly, those ASC facilities willing to entertain new contract models, such as bundled payments, will also see increased payer engagement."

5. The future is moving toward pay-for-performance, even for ASCs. Hospitals are taking on risk with shared savings partnerships, and now payers are increasingly looking for similar deals from ASC contracts. There is a potential to garner more surgical volume and equitable rates working within performance-based contracts, although they are more complicated than traditional fee-for-service.

"ASCs should absolutely engage payers as part of their global contracting plan to ensure they are not left behind as the surgical service market evolves," says Mr. Pearlman. "Participation in hospital-based ACOs should also remain at the forefront of comprehensive payer contract strategy; while rates may be more competitive, access to critical patient populations and related service review may require formal agreements."

ASCs that can effectively present their value proposition and recognize upstream payer customer issues will be best positioned to align incentives with payers and develop favorable arrangements and rates.



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