1. Know your costs. The first step in negotiating good payor contracts is knowing your costs, Ms. Morris says. If you understand how much a case costs to perform, you will know whether a certain contract covers those costs and contributes to your center’s profits. If you walk into a negotiation “blind,” you may end up accepting a contract that forces you to break even or lose money on your most common cases. Ms. Morris says her ASC benchmarks its finances every month to “take the temperature” of the center’s business.
2. Look past the payor’s first offer. Don’t make the mistake of accepting a payor’s first offer because you believe your surgery center lacks the leverage to negotiate a better rate, Ms. Morris says. Many payors will lowball a facility at first to gauge the level of reimbursement the negotiator will accept. If you jump at the first offer, you may end up stuck with a contract that provides minimal profit per case. Instead, come to the negotiation armed with data on your ASC’s costs, efficiencies and market share. If you can demonstrate that your ASC provides high-quality outcomes for less money than the hospital, you may be able to negotiate a great contract and set the bar high for future negotiations with the payor.
3. Walk away from bad payor contracts. If a payor simply won’t budge on a certain price, understand that you can walk away from the contract and go out-of-network. “I’ve seen EOBs of hospitals that are taking less than Medicare ASC rates on those contracts, and that makes it difficult for us to contract with those payors who are getting those low rates from the hospital,” Ms. Morris says. “There are some that want to reimburse at such a low rate that they don’t cover implants, and orthopedics is highly implant-specific.”
She says if a payor can contract with a local hospital for lower-than-Medicare ASC rates, they will be unlikely to offer 150 percent of the Medicare rate to your ASC because they can get better business elsewhere. Unlike the ASC, the hospital may be able to make up for this loss on outpatient cases by accruing generous revenue on inpatient cases.
4. Understand how implants are paid. In an orthopedic-driven ASC, implant costs are tantamount to negotiating a successful contract. “Once you understand how they pay for implants, you can go to the table and negotiate what you need,” Ms. Morris says.
Sometimes payors will cover any implant over $500 but fail to pay implants under $500 — a problem if your cases use a lot of implants that cost less than $500. She says the wording in the contract may be tricky, so make sure you read the fine print to understand whether all your necessary implants are covered by the payor. If you don’t understand, don’t be afraid to call or email the payor and ask for clarification; a few minutes on the phone could save you a significant amount of money down the line.
5. Work with payors to bring new cases to the ASC. Spine and more orthopedics cases are rapidly moving into ASCs as technological advancements make the procedures more appropriate for the outpatient setting. Despite these advances, your payors may be hesitant to add codes for certain cases. In order to introduces these new cases to your center, keep in contact with your payor and continue to send them information and correspondence about the safety and efficacy of performing these cases in an ASC.
“We have some correspondence between our spine surgeon and the payor’s medical director, and we work with them and let them understand that we can do these procedures safely,” Ms. Morris says. “Any time we see research on back procedures in the ASC, we send that information to the payor.” She says she called around to other states to find out if the payor reimbursed for spine and orthopedics in those ASCs; when she found out they did, she passed that information on to the payor. “You have to be very persistent,” she says.
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