Channel Sponsor - Coding/Billing/Collections

Sponsored by National Medical Billing Services | | (636) 273-6711

What payer consolidation means for ASCs — And how to conduct business moving forward

Payer consolidation coupled with operational transition in many markets is slowing contract negotiations, making it more difficult to conduct business.

"Payer consolidation so far has been a mixed experience; in some markets moving to the more dominant larger payer who acquired previous plans has actually led to rate increases because contract rates were already more realistically level set against broader facility networking pricing and employer needs," says Jamison Pearlman, vice president of managed care at Meridian Surgical Partners.

New network management reporting structures related to consolidation have also made it hard for some payers to agree to terms and contracting variables they previously did in the past.

"The long term outlook on payer consolidation is still unclear," says Mr. Pearlman. "The conventional thinking would suggest less payers means more leverage over ASCs which should translate to lower facility rates."

Fewer payers in a given market will mean more responsibility to have adequate networks to service the large patient populations and a greater obligation to deliver savings for employers and patient stakeholders.

"ASCs represent the best opportunity to demonstrate savings," says Mr. Pearlman. "Depending on service needs and available cost-effective capacity, some ASCs might be in a better position to not only secure additional volume, but more favorable rates."

The converse is also true in some markets because without real payer competition there will be some payers that use market position to drive rates significantly downward without regard for facility profitability and economics. Narrow networks present a different challenge.

"The use of narrow provider networks by health insurance plans is a cost containment strategy that has gained popularity of late," says Mr. Pearlman. "Network design features differ among plans, but insurers generally seek to offer lower premiums by limiting the group of providers available to plan enrollees."

As narrow networks continue to be developed and implemented, it's important for ASC owners and operators to effectively design strategies and policies to balance stakeholder interests so patients have access to ASC care. Accountable care organizations have similar features to narrow networks; they limit the number of aligned providers and deliver more integrated and coordinated care.

"From an ASC perspective the ongoing development and popularity of these types of networks presents business feast or famine," says Mr. Pearlman. "If an ASC is properly aligned with a larger hospital sponsor that is the center of a narrow network created by the payer, then surgical volume will increase and rates will be protected to ensure operating sustainability."

ASCs that aren't strategically partnered or are positioned outside of the network with access to existing patient populations could be cut off from their patient revenue and experience financial challenges. Narrow networks could also restrict referrals to affiliated physicians and partners.

"ASCs should be mindful of these potential disruptions," says Mr. Pearlman. "As such, in order for ASCs to be considered part of broader network design initiatives, it’s important for them to be actively engaged in the market and with the payer community. ASCs must continue to position themselves as an alternative high-quality and cost-effective care setting that delivers savings.

More articles on surgery centers:
5 key thoughts on payer strategy for ASCs—Risk-sharing, narrow networks & payer consolidation
5 observations on ASC payer contracts in 2016
Certain off-campus HOPDs subject to site-neutral payments: 4 key points

Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Webinars

Featured Whitepapers

Featured Podcast