Keep pace with healthcare's value-based future: 4 considerations for ASCs to obtain optimal payer contracts

Surgery centers can prevail in healthcare's changing reimbursement landscape if they employ strategies to obtain optimal payer contracts while also combating industry challenges.

"Today, changes in the healthcare and reimbursement landscape are creating new opportunities for ASCs to improve financial performance, while supporting safety and quality of patient care," said Marilyn Denegre-Rumbin, director of payer and reimbursement strategy for Cardinal Health, during a webinar sponsored by Cardinal Health.

The industry is shifting to consumerism and value-based payments, and surgery centers must keep pace with overall healthcare changes as well as trends specific to the outpatient landscape.

Some of these trends include:  

•    The uptick in merger and acquisition activity
•    Surgeons increasingly performing minimally invasive surgery
•    Cardiac surgery trending toward MIS surgery
•    Unfavorable reimbursement
•    More bad debt. In Medicaid expansion states, bad debt increased 22 percent and charity rates increased 130 percent between 2013 and 2016 .1
•    Movement of high-volume procedures, which include, orthopedics, neurosurgery, urology, ophthalmology and general surgery/ENT to the outpatient setting

Healthcare is undergoing many changes and these tides and turns may present both challenges and obstacles for surgery centers to obtain strong payer contracts in the value-based era. To thrive in the evolving payment landscape, Ms. Denegre-Rumbin detailed four considerations for surgery centers to maximize reimbursement.

1. Healthcare's transition to value poses obstacles for surgery centers to remain financially afloat. "The transition from the fee-for-service reimbursement system to one based on value is one of the greatest financial challenges ASCs currently face," Ms. Denegre-Rumbin said. "Providers are not only shifting to shared value; they're shifting to shared risk."

If surgery centers fail to achieve certain scores, they could experience financial penalties and lower reimbursement, which will make it exceedingly difficult for ASCs to compete in the healthcare market. In the wake of these challenges, Ms. Denegre-Rumbin noted providers are increasingly focused on improving their practice's clinical, financial and operational elements.

2. Surgery centers can participate in different value-based payment models depending on their aptitude for risk. Providers can opt to participate in many value payment models that differ based on risk. A lower-risk model would include fee-for-service, while the highest risk payment model would be a global capitation risk model in which a provider takes on full risk. Payment models taking shape in the industry include bundled pricing, pay-for-performance and shared savings.

"The emerging payment models truly do call old imperatives into question. The risk is weighted toward performance with the bundled pricing model and more toward utilization in the shared savings model," Ms. Denegre-Rumbin explained. "The pay-for-performance model is more equally weighted between performance and utilization risk."

3. Focus on your commercial payers. Ms. Denegre-Rumbin noted while understanding these trends and the popular specialties are important to stay viable in the competitive landscape, it is also pertinent for industry leaders to be aware of the payer mix landscape.  For 2016 to 2017, commercial payers constituted a large majority of ASCs' payer mix, including:

•    59 percent of payer mix as a percentage of gross charges2
•    65 percent of payer mix as a percentage of collections
•    51 percent of payer mix as a percentage of cases

4. Engage in meaningful conversations with payers about contracts. With their sights set on lowering cost and improving outcomes, many national payers are engaging in more shared-risk arrangements with surgery centers. Value-based contracts present opportunities for ASCs. In this model, payers will reimburse centers based on value indicators, including patient health outcomes, efficiency and quality.

While value-based contracts may prove beneficial for surgery centers, they must be ready to participate in these models. Surgery centers can conduct a Value-Based Readiness Assessment for ASCs, which has six major components:

1.    Care delivery transformation focused on patient engagement and strong coordination
2.    Robust technology
3.    Comprehensive provider network
4.    Provider compensation alignment
5.    Effective payment models
6.    Strong organizational foundation

After ensuring a surgery center is prepared for a value-based contract, ASCs have to show payers through data how they can save money without compromising patient outcomes, which Ms. Denegre-Rumbin said is the single most important factor to secure a solid contract.

Data is king in the value-based world as it can show payers a wealth of information from an individual surgeon's outcomes to a center's infection rates. Highlighting a center's superior scores relative to hospitals, especially in how they truncate costs, will allow ASCs to accrue optimal value-based contracts.

To view the webinar recording, click here.

To access the webinar slides, click here.


1 Technavio Research, Global Ambulatory Surgical Centers Market 2016-2020. Dec. 2016 report

2 VMG Health 2016 Intellimarker Multi-Specialty ASC Study.

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