1. Provide detailed data of costs. Before going into contact negotiations, make sure you have reliable data on overall costs by CPT code, including prices of implants. Payors are not used to getting detailed information in advance. When given a chance to study the numbers, payors often come back with more reasonable offers. “Payors need to be realistic about what implants cost,” Dr. Miller says.
2. Be able to walk away from low offers. “The data we provide them show we are not making massive amounts of money on this,” Dr. Miller says. “If they offer an amount that we know is not within the price of any implant supplier, we tell them they will need to go to the hospital for those services and pay the hospital mark-up.”
3. Try to build in annual increases. In a recent negotiation, the payor initially offered a five-year contract with annual increases below the rate of inflation, but the payor was amenable to slightly higher increases in a three-year contract. “We would have preferred the five year contract because we’d didn’t want to negotiate all over again in three years,” Dr. Miller said, but the ASC accepted the three-year contract because of the higher annual increases.
4. Follow up with vendors. When a payor refuses to cover the implant price, go back to the vendor and explain the situation and offer a price that would fit the reimbursement. Tell them: “This is the best price we can pay you, given our reimbursement. If we can’t get any lower, we won’t be able to use this device.” In many cases, the vendor agrees to a price reduction.
5. Keep out implants that exceed the reimbursement. When new physicians come on board and want to use an implant that is pricier than the reimbursement, tell them it cannot be done at the ASC. “That’s a hard discussion to have, but it must has to be done,” Dr. Miller said.
Contact Dr. Miller at tkmiller@carilionclinic.org.
Thank you to ASD Management for arranging this interview.
Read more best practices for ASCs:
– 4 Steps to Steady ASC Profits and High Volume
