1. Meet payor representatives in person. If possible, meet payor representatives in person for the negotiations. “We get so much better results when we meet together,” says Mr. Odom. “We can read their body language and see where they are coming from. If they are saying ‘no’ to something, you can read their body language to see if there might still be an opportunity there.” Additionally, take the time to let them know who you are and what your facility does. You can invite the representative to your facility so they can see where you operate every day. This forms a deeper relationship and can help the representative connect the finances to the actual healthcare provided.
2. Follow strict deadlines for negotiations. Create a calendar with dates of expected outcomes or milestones and inform the payor of these dates in advance. Delays in scheduling a meeting or receiving a response to your counter proposal can be hazardous for the center. Always let the payor know the date you expect to conclude negotiations, says Mr. Odom. This date should be at least one month before the expiration of your current contract.
3. Bring an expert into the negotiations. When sitting down with the payor, bring your internal “expert” to listen. “Have someone who knows the payor’s terminology and issues to interpret for you,” says Mr. Faith. “Know what the payor is saying and prevent specific terms from getting overlooked when you are active in what may be an intense discussion.” Additionally, make sure you stay focused on your goal and pay attention to the payor’s crunched numbers to gain the best results from the negotiation.
4. Negotiate with the future in mind. Set yourself up for the next contract during current negotiations, says Mr. Odom. Stay abreast of the ever-changing healthcare industry and know which types of procedures are profitable and how that may change. “If you position product lines you know are going to decline over the course of the current contract, establish a foundation now, so the pain is less when the contract kicks in down the road,” says Mr. Faith. Additionally, ask payors about their timeline for switching to the APC reimbursement model. “We’ve been listening to what they say and how they answer to position ourselves better for the future,” says Mr. Odom. “We ask the payor what they are talking about internally for one or two years down the road, such as which procedures are bring pushed into ASCs and which have pressure to be performed at hospitals.”
5. Share goals with the payor. Set financial goals for the surgery center and be prepared to discuss them with the payor. Share how you plan on meeting those goals, such as through rate adjustments across the board or through multiple rate adjustments distributed across certain groups. You can also discuss the efforts you have undertaken to control costs, says Mr. Odom, such as switching a group purchasing organization or standardizing supplies. Sharing these goals lets the payor know you are partners in keeping the cost of healthcare down. However, don’t get caught in a philosophical discussion about the state of the healthcare industry, inflation or how much the last rate hike was. These discussions waste time and don’t push forward with the ultimate goal.
6. Discuss all costs with the payor. While the payor may initially be interested in the cost of hardware or other material costs associated with a procedure, you can also share additional surgery center expenses to paint a broader picture of the financial situation. “Bring in the cost of compliance,” says Mr. Odom. This tactic is especially important considering compliance can cost a center upwards of $20,000 per year. Supply costs and labor costs are also increasing, which places a burden on the company. “If the payor is the provider for the health insurance plan for your employees, remind them of their rate hikes,” says Mr. Faith.
7. Don’t be afraid to take a zero. When it’s beneficial, you can take a zero for certain groups, says Mr. Odom. We will occasionally take a zero on a particular group when we are struggling with the payor for coverage on a specific specialty, such as ophthalmology. This can be beneficial if you have had strong negotiations in the past on that group and the payor is in a good position in the market. When you take a zero for one group over a year, you can negotiate for a higher percentage in the other groups. “You have to play the mathematical game to make sure you aren’t losing money,” says Mr. Odom.
Consider your options very carefully before taking a zero. Success depends on how the payor is approaching the APC model. “If different payors are moving toward that goal, and reimbursement rates in Medicare are less, your contracts might be significantly above Medicare. You might want to take a lower rate on GI or pain procedures to boost orthopedic or ophthalmology patients,” he says.
8. Seek carve-outs. If a procedure is unprofitable due to an extensive supply cost and reimbursement can’t be set at a proper level, request that the implants be a separate line item in the contract. Share the cost information for the implants with the payor during negotiations, says Mr. Odom. “Most payors will provide a margin if you prove cost,” he says.
9. Strategically close the negotiations. A closing strategy should be set beforehand, know what rates are acceptable or unacceptable. If the payor proposals are unacceptable, be prepared to opt out. However, before you do, know which surgeons will be the most affected and warn them of the change, says Mr. Odom.
Learn more about The C/N Group.
Read other expertise from The C/N Group:
– 8 Ways to Enhance Patient Satisfaction in Surgery Centers
– 6 Ways to Prepare for Successful Payor Contract Negotiations
– 4 Ways to Enhance Referral Relationships and Boost Surgical Volume
