At the 20th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 25, Eveia Health Consulting & Management COO and Principal Matt Kilton and Senior Associate Rob Quinton outlined key steps providers should take when negotiating managed care contracts.
Here are some of the practices they recommended for successfully negotiating with payers.
1. Assess payer value. The first step ASCs must take is assessing the payer's value, Mr. Kilton said. Providers should consider factors such as whether aligning with the payer will enhance access to patients and how much revenue the contract will represent.
"Make sure that when the contract's in place, it's valuable enough to make it worthwhile," he said.
2. Consider payer mix. It's important for providers to track their payer mix, taking into account that many payers have more than one product in most markets, Mr. Kilton said. When negotiating a contract, surgery centers should make sure they know whether they're contracting for all of the insurer's products or only some of them, as well as whether a payor offers different rates by product
Additionally, providers should analyze how new volume from a payer contract will affect costs and revenue, since new cases may readjust the average cost per case.
3. Assess the ASC's potential market value. From a payer's perspective, ASCs add value to provider networks by expanding options and lowering the cost of accessing services, Mr. Kilton said. He advises surgery centers focus on demonstrating how they enable payers the opportunity to cut costs through less expensive access to services.
ASCs should also identify what differentiates them compared to other surgery centers and hospitals in the market, according to Mr. Kilton. This includes surgeons and specialties unique to the market and special equipment or capabilities.
4. Evaluate the center's case mix. ASCs should know their case mix by specialty and subspecialty. Mr. Kilton also said they should break down their case mix by age and by Medicare versus commercial payers.
"It helps to identify both what you need to be reimbursed and what your costs are," he said. "Make sure you're counting cases, not procedures. Those can be extremely different numbers."
5. Address payment methodologies. Awareness and familiarity with various payment methodologies allows ASCs to structure a proposal for the services provided and can serve to reduce the negotiation timeline, according to Mr. Kilton.
Factors to consider include how the payer reimburses for multiple procedures, multilevel procedures and implants, he said. Surgery centers should also inquire to determine a payers ability and willingness to work out a customized payment methodology.
6. Don't forget the details when adding new services. Providers can get so excited about bringing new services to their ASC they forget about crucial details that must be sorted out first, Mr. Quinton said.
Before adding new services, he said it's important to consider whether current payer contracts support those services.
"Most often, it's not going to be set up," he said. "It takes time to negotiate or renegotiate that contract."
Additionally, he said ASCs should factor in the timeline for adding new services, payer due diligence, whether their fee schedule will support the new service and how much the service line will cost them and the payer.
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Here are some of the practices they recommended for successfully negotiating with payers.
1. Assess payer value. The first step ASCs must take is assessing the payer's value, Mr. Kilton said. Providers should consider factors such as whether aligning with the payer will enhance access to patients and how much revenue the contract will represent.
"Make sure that when the contract's in place, it's valuable enough to make it worthwhile," he said.
2. Consider payer mix. It's important for providers to track their payer mix, taking into account that many payers have more than one product in most markets, Mr. Kilton said. When negotiating a contract, surgery centers should make sure they know whether they're contracting for all of the insurer's products or only some of them, as well as whether a payor offers different rates by product
Additionally, providers should analyze how new volume from a payer contract will affect costs and revenue, since new cases may readjust the average cost per case.
3. Assess the ASC's potential market value. From a payer's perspective, ASCs add value to provider networks by expanding options and lowering the cost of accessing services, Mr. Kilton said. He advises surgery centers focus on demonstrating how they enable payers the opportunity to cut costs through less expensive access to services.
ASCs should also identify what differentiates them compared to other surgery centers and hospitals in the market, according to Mr. Kilton. This includes surgeons and specialties unique to the market and special equipment or capabilities.
4. Evaluate the center's case mix. ASCs should know their case mix by specialty and subspecialty. Mr. Kilton also said they should break down their case mix by age and by Medicare versus commercial payers.
"It helps to identify both what you need to be reimbursed and what your costs are," he said. "Make sure you're counting cases, not procedures. Those can be extremely different numbers."
5. Address payment methodologies. Awareness and familiarity with various payment methodologies allows ASCs to structure a proposal for the services provided and can serve to reduce the negotiation timeline, according to Mr. Kilton.
Factors to consider include how the payer reimburses for multiple procedures, multilevel procedures and implants, he said. Surgery centers should also inquire to determine a payers ability and willingness to work out a customized payment methodology.
6. Don't forget the details when adding new services. Providers can get so excited about bringing new services to their ASC they forget about crucial details that must be sorted out first, Mr. Quinton said.
Before adding new services, he said it's important to consider whether current payer contracts support those services.
"Most often, it's not going to be set up," he said. "It takes time to negotiate or renegotiate that contract."
Additionally, he said ASCs should factor in the timeline for adding new services, payer due diligence, whether their fee schedule will support the new service and how much the service line will cost them and the payer.
More Articles on Payer Contracts:
Ready to Accept Bundled Payments? Considerations for Smart Contracting
10 Key Legal Issues for Ambulatory Surgery Centers Today
10 Critical Factors to Consider When Moving from Out-of-Network to In Network With Payers