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Navigating successful payer contracts for ASCs

Negotiating contracts with payers remains a challenge for ASCs and practices.

Administrator viewpoint
Evalyn Cole doesn't hesitate to say contracting issues are her greatest obstacle as administrator of Spine Surgery Center of Eugene, Ore. Ms. Cole deals with insurers who don't understand the full costs of spinal surgery.

"We just have to fight and struggle with them and get them to understand," says Ms. Cole.

Many payers include implant costs in the procedure fee, which doesn't bode well with ASC budgets. With spine implant costs ranging from $5,000 to $15,000 and spine stimulator costs ranging from $20,000 to $25,000, there isn't much money left for other procedural costs.

"Insurance companies base their policies on Medicare policies and they just don't want to deviate from those policies — so even though these companies allow and pay for cases in an ASC that Medicare does not allow they use Medicare policies, even when they don’t fit for surgeries outside the Medicare rules," explains Ms. Cole.

Her surgery center will charge $57,100 for a two-level lumbar fusion. The ASC cost for these implants is $15,000. The hospital will receive $97,000 for the same procedure, since hospitals bill by line items for each item, while the ASC bills a flat fee for the entire surgery.

Surgeon perspective
Understanding Ms. Cole's frustrations, Anthony Yeung, MD, orthopedic spine surgeon of Phoenix-based Desert Institute for Spine Care and founder of the first spine-focused ASC, notes unfavorable reimbursements as a major challenge in his practice as well.

The implementation of new surgical codes with no established reimbursement rates fosters a difficult financial situation for surgeons operating in independent practices.

"The new codes are at the mercy of the payers who, while provided a special "T" code, is certainly going to give payers freedom to simply not pay or pay with rates that are not sustainable for the ASC to provide the care, even when it is clear that the procedure is more cost effective and less surgically morbid," says Dr. Yeung. "Medicare must find a way to offer reasonable reimbursements for implant costs separate from the facility fee to make the most expensive procedures more cost effective."

The new reimbursement environment emphasizes cost control over quality control. This short-sighted and financially-straining environment not only pushes many young surgeons to hospital employment, but also requires the use of hospital facilities.

"New surgeons just starting practice are forced to work for a salary offered by hospitals or large provider groups," says Dr. Yeung. "Employed physicians recruited from private practice due to declining reimbursements are provided a first year salary that may be close to their take-home pay in private practice, but soon find their salaries reduced the second and third year."

Some payers that see savings by allowing in-network cases in ASCs by out-of-network surgeons are approving enrollees to go to ASCs with a good track record on a case-by-case basis.

"Having a good track record in your local area will get the attention of some private and self-insured payers," says Dr. Yeung. "The ASCs must become proactive in negotiations with local payers and be able to back up their claims of quality and cost effective care."

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'Show Me the Money' — Maximizing your ASC's billing services relationship

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