Negotiating contracts with commercial payers is one of the most challenging and fatiguing aspects of an ASC administrator's role. But there are core strategies administrators should consider when sitting at the table with insurers, including arming oneself with cost and outcomes data, understanding the market and fostering good relationships with negotiators.
Here are seven key considerations for ASC administrators negotiating with insurers, according to Alfonso del Granado, CEO and administrator of Covenant High Plains Surgery Center in Lubbock, Texas.
1. First and foremost, show value. This can take the form of demonstrating substantially lower than average complication, reoperation and hospital visit rates — meaning a lower overall cost per episode of care. It can also be an incentive if you are considering starting a procedure or service line to bring actual volume numbers for procedures you will be shifting from a local HOPD to your ASC, and if one or more of the affected surgeons can furnish you with their patients' explanation of benefits, you will have a sense of the scope of the potential savings the payer can accrue.
2. Another consideration has to be that the person you are negotiating with may only be interested in controlling costs for their ASC unit and will not be moved by the possibility of lowering HOPD and global costs — they may even be counterincentive depending on their bonus structure. If you are getting a surprising lack of interest, make every effort to move up the ladder until you find the person who is motivated to lower costs for the whole region.
3. A corollary to this approach may be to bring up how much it will cost you to implement this new procedure or service line. Be sure to include all costs associated with this project, including obviously direct case costs such as equipment, instrumentation, supplies and labor, but be sure to add indirect costs such as OR minutes (which should encompass general overhead) as well as opportunity costs (what you could be earning if you spend the resources on starting another procedure or service line). Then add a margin for risk, an incentive to make it worth your while. Aim high, but reasonable; otherwise your credibility may suffer.
4. For existing procedures, you may find those lower-reimbursing cases are weighing you down enough that you are considering closing them down, which will mean they have to be shifted elsewhere, quite possibly back to the local HOPD. Attestation from affected surgeons should accompany volumes and cost data so the message is made clear to the payer.
5. Again, not all payers are the same. Some may appear surprisingly unsophisticated, whether through lack of knowledge on the part of the negotiator, or simply a lack of resources to do the homework that you are now doing in support of your proposal. The best payers will actually appreciate the effort — though you should not necessarily expect them to show it. Others are actually highly sophisticated but so bureaucratic that they cannot flex enough to accommodate a reasonable request. We recently had such an encounter where our dataset needed four more cases out of almost 100 presented, but the dates for the reporting period were immovable and the payer will continue having these cases performed at a local HOPD until the next negotiation period, resulting in losses of over $2 million to their system. In these situations, you should appeal as far up the ladder as possible, and perhaps skip over a few rungs if you can get contact information for senior leadership, but it may not avail you in the end.
6. Be aware that, although the companies themselves are often enormous and professional, they are still run by human beings, so establishing a good relationship with their negotiator is important if there is a chance that they have some flexibility to use their own judgment. Be courteous and assertive, but refrain from expressing exasperation, disbelief, or worse, contempt. If you have to go over their heads, say so plainly and politely and explain your reasoning. They may not like it, but they will not work against you either. Over the years I have worked with surgeon owners whose demeanor at these meetings was not their best, and I cannot recall any instance where that approach yielded better results. Thankfully those days are in my distant past, and for quite some time now it has been my privilege to work with top-quality professionals on both sides of the table.
7. Finally, even if you present an excellent, well-documented proposal in an impeccable manner, you may still not get what you want — or anything at all. There are often internal and external factors that have nothing to do with your situation and over which the negotiator has no control. You may exercise every appeal and still come up empty-handed. All I can suggest at that point is to either consult with an outside professional or shelve the initiative for the year, trying to make the best of a suboptimal situation until the next opportunity. This is certainly not the answer you want, but it may be the one you get more often than not; however, if you do not try, you will never succeed, and these days we need every win we can get to continue to thrive in this increasingly challenging environment.