The payer negotiation checklist: 9 key questions to consider

The standard advice when preparing for payer contract negotiations is: do your homework. But what exactly does this mean and what should ambulatory surgery center administrators examine leading up to insurance contract negotiations?

Here are nine questions to consider when prepping for payer negotiations:

1. When is your contract up for renewal? Avoid letting the date for contract renewal lapse as it could result in your ASC having to live with the same contract for years. This could negatively impact your ASC's reimbursement. Some insurers impose strict guidelines regarding when contracts can be re-negotiated.

"Contract negotiations allow ASCs to optimize their reimbursement and optimize their value," says Dan Connolly, vice president of payer relations and contracting for Pinnacle III. "Look at your contracts annually and figure out how much time will be required for negotiations. Typically, beginning negotiations six months before the renewal date works best."

2. Where does your ASC's revenue come from? Assessing your business and your reimbursement is the next important step. Understand your payer mix and related case profitability, says Jamison G. Pearlman, vice president of managed care at Meridian Surgical Partners, to prioritize which contracts need the most work and attention. Think about future reimbursement; if your center is planning to add services or physicians in the near future, negotiate contracts with that in mind.

3. What aspects of your current contracts are causing problems? Take a critical look at your current payer relationships and overall revenue cycle performance; note where contracts fall short on addressing ongoing issues and focus on these problem areas.

"If you negotiated a great contract with a payer and for whatever reason the payer isn't paying consistent with agreed terms or claims aren't properly adjudicated, then you know what to focus on during the re-negotiation," says Mr. Pearlman.

4. What is your value proposition? One of the strongest weapons in an administrator's arsenal is their ASC's value proposition. Frame the value of your ASC within the context of solving a problem. "Relay to the payer your value proposition by identifying the cost savings of cases performed at your ASC versus a hospital," says Mr. Connolly.

Emphasize what makes your ASC different from others, like what your ASC offers that others don't, and be mindful of how your facility helps meet payer stakeholder needs, adds Mr. Pearlman.

5. Are you the right person to conduct the negotiations? ASC administrators wear many hats and may not have time to prepare thoroughly for payer negotiations or possess the knack for negotiating.  

"Take a critical look at your personality and make an honest assessment of your strengths and weaknesses," says Mr. Pearlman. "Creating payer relationships and negotiating them requires a certain skill set and disposition."

If you are not the best person for the job, consider utilizing the services of a qualified third-party consultant or lawyer. These professionals have the time, energy and specific skills to successfully negotiate contracts, notes Mr. Connolly.

6. Do you understand the contract? Be honest about what you understand in the payer contract, says Mr. Pearlman. The contract is a long-term relationship between two parties agreeing to work together, so if there is an aspect of the document you don't understand, ask questions. "If you don't understand something, either the legalese, financial terms, ask questions, until you do. There are no stupid questions," he says.

7. Have you built a rapport with your payers? "Establish a good working relationship with your center's payers before going to the negotiating table. Reach out to payers routinely to see how things are going," says Mr. Connolly. Serve as a resource for payers regularly rather than waiting to interact with them once a year. From these conversations, new opportunities could arise outside of the current contract.

8. Have you managed physician leaders' expectations? Negotiations take time — impart this sentiment to physician leaders. Sometimes it takes numerous trips to the negotiation table before a contract can be closed and workable for both parties, notes Mr. Pearlman.

9. What could go wrong? Anticipate every eventuality. Think about contract performance and make sure your contract addresses mechanisms to remedy if the payer fails to adequately meet defined obligations, says Mr. Pearlman. For example, make sure you can be released from the contract if the payer does not adhere to it.

"If you fail to prepare you prepare to fail," says Mr. Pearlman. "Be thorough. Know your business and your cases, as well as your value proposition, and above all, understand you are the most important advocate for your facility's interests."

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