1. Determine if payors will cover spine
Even before you can start trying to plan negotiating tactics for the spine procedures you want to perform in your ASC, you need to first confirm whether payors will even cover spine in a surgery center setting, says Mr. Cates. Since spine procedures are high-dollar cases, hospitals that compete with your ASC may try to use their leverage with payors to prevent the movement of these procedures out of their facility.
“They may take some sort of action with the payor and say ‘if you’re going to move that business then we need higher rates for some of our other services,” Mr. Cates says. “Payors, depending upon the market — may then have some reluctance to move those procedures. Also, by keeping those procedures at the hospital, payors may be able to use that as leverage to improve their overall hospital contract by a couple of percentage points.
“This is not going to happen everywhere but it’s certainly something to be aware of as you walk into the negotiations,” he says.
2. Identify what procedures a payor will cover
Just because a payor says it will cover spine doesn’t necessarily mean it will cover all of the procedures you want to perform. This is why it’s important for you to obtain a copy of the payor’s medical policies and identify what procedures a payor is actually willing to reimburse for in an outpatient surgery setting.
“There may be procedures — such as artificial disc replacement or perhaps certain multiple level fusions — that payors may still view as something they are more comfortable having on the inpatient side,” says Mr. Cates. “They may have a policy that states some procedures aren’t approved for the ASC setting. Even though you have a contract, it’s important to know exactly what procedures are allowed so you don’t bring in something you regret later.”
Once you determine what procedures are covered by your payors and which ones are not, make sure your schedulers know this information as well so they know which cases are appropriate to schedule at your ASC.
3. Understand payment methodology
Even with the changes that have occurred to the CMS reimbursement methodology and the movement for ASCs to the Outpatient Perspective Payment System (OPPS), some payors will still operate on some form of a grouper methodology. It’s important for you to learn what payment methodology your payors are following and what groupers they are using.
“Payors may have their own set of groupers and they will group procedures in a certain manner, so it’s important to understand where they’ve placed spine and orthopedic procedures,” says Mr. Cates. “CMS may have placed a procedure in ‘group five’ before, but a specific payor may place it in their ‘group eight.’ It’s critical to know, as you’re negotiating, which one of those groupers you need to focus on for your spine and orthopedic procedures.”
Also be careful of payors that are using grouper methodologies that do not follow or perhaps use some variation of the traditional grouper methodology with which you are familiar.
“They may have 12 or 15 groupers and internally classify procedures to fall into each one of those groupers,” Mr. Cates says. “As you’re negotiating a rate for the groupers, it’s important to know in what group they are placing shoulder arthroscopies or ACLs, for example, so you know exactly where you’re going to want to focus your discussions.”
4. Crunch your numbers
Before you go into contract negotiations, you should determine how much reimbursement you will need to receive for each procedure to justify performing the surgery at your ASC. You should have a plan for how you will counter offers that are too low or what you will do if the payor does not address or explain how it will reimburse your high-cost implants.
“You have to know how they’re going to deal with implants,” says Mr. Cates. “Are they including them in their reimbursement for the procedure? If so, will that payment cover all of your costs? Are they willing to carve them out and pay them separately at cost or cost plus some percentage?”
5. Understand your case mix
You will also want to have a clear understanding of your case mix and where you’re potentially willing to give up some reimbursement bumps in order to receive the rates for the procedures that can drive the profitability of your center.
“If you’re really focused on orthopedic or spine cases, understand your case mix and see if you can give up a little bit on pain, GI or general surgery, for example,” says Mr. Cates. “Leave yourself some room so that you have something to give in order to ultimately obtain what you’re really after.”
For example, let’s say you’re pushing for a 10 percent increase in your ENT procedures but you also want all of your arthroscopic procedures carved out. Be prepared to trade a few points on the ENT procedures if you can receive the carve outs.
“You’re still improving your overall position but you’re also giving yourself enough room that you can give something back to the plan,” says Mr. Cates.
6. Push for carve outs
Most of the grouper methodologies used by payors, as well as those based around the new OPPS policies, may not adequately reimburse for spine and orthopedic procedures. CMS is now rolling reimbursement for implants into the overall procedure reimbursement rather than offering a separate payment. In instances where a payor is trying to follow a similar methodology, it is essential that you fight to have these procedures and implants carved out.
“Most orthopedic and spine procedures are typically undervalued by a grouper-type of reimbursement. Try to carve reimbursement for these procedures out of the grouper payment whenever possible”, says Mr. Cates. If a payor simply refuses to provide any carve outs, know with certainty which groupers you need to fight for and whether the ultimate reimbursement you are able to achieve will cover your costs and allow you to perform the procedures.
“It’s very possible that the grouper payment is not going to be enough to cover the costs and allow the center to realize the return it needs on these expensive cases,” says Mr. Cates.
7. Ask for a percent of charges for implants
Consider trying to take the reimbursement you desire for implants and ask the payor to cover it at a percent of charges, says Mr. Cates. This will help to ensure your claims do not become hung up because somebody has to manually review an invoice to determine reimbursement. The approach allows the process of paying for implants to become automated on the payor side.
For example, let’s say you use a $100 implant and your center marks the cost up two times, so you’re going to bill $200. If your desire is to have your implants paid at cost plus ten percent ($100 + 10 percent = $110), then propose to the payor that it reimburse implants at 55 percent of charges ($200 x 55 percent = $110). This will automate the claims payment function and take the manual intervention out of it.
“Just know that as part of this process, you have to be open with the payor about what your markup is and, you have to be willing to give the payor the opportunity to audit your invoices, audit their reimbursement and audit your charges,” says Mr. Cates.
8. Educate payors
Use part of the time you spend with payors to educate them about the reasons why they should cover the orthopedic and spine procedures you want to perform in your facility and why they should be carved out in your contract.
“Many of the people that are in the trenches and actually doing the negotiations aren’t particularly knowledgeable about everything that goes into spine or orthopedic surgery,” says Mr. Cates. “It’s important to help them understand what’s really involved in these cases.”
Explain what actually goes into performing some of your orthopedic and spine procedures, and the costs associated with these cases — from implants, routine supplies, staffing, and preoperative and postoperative care. Be willing to share invoices with them to make your case for the high cost supply items that you may use.
“Many of these procedures are very OR intensive; there are a lot of implants, hardware and even routine supplies involved,” says Mr. Cates. “Some payors – at least the folks doing the negotiation – do not understand the complexity of some of the procedures now being done in an ASC.”
There are other factors that you will need to help payors understand as they are determining whether and how much to reimburse you for these procedures — and consider it your responsibility to educate them about these issues. For example, you will want to explain to payors that when they do a straight comparison of the reimbursement they pay to different ASCs in your area, this is not necessarily a fair comparison.
“A payor may say, for example, that other centers do not have carve outs for spine procedures. The reality is that the other centers may not be doing them. Also, even if we are doing similar procedures, the mix of those procedures at one center may be very different than the mix at another center,” says Mr. Cates.
You should also explain to the payors that surgeons typically perform cases in a single ASC or at the hospital, not at multiple ASCs and, remind payors about surgeon loyalty.
“Patients tend to be pretty loyal to their surgeons,” says Mr. Cates. “It’s not necessarily good for a payor to tell one of their members that they can no longer see a specific surgeon because he only works at a particular center and suggest the patient see another surgeon who practices at another center. Patients just don’t like to make that switch because they’ve built up a level of trust in their surgeon”.
“By helping educate payors about what goes into the procedures, why you’re asking for what you’re asking for and showing them what they’re going to save over the alternative (the hospital), it gives you an edge in your negotiations ,” he says.
9. Involve your physician partners
Try to involve your physicians in working with the payors and plans, particularly at the medical director level, says Mr. Cates.
“If you can have a surgeon talking with a medical director (for a payor) — particularly about some of the more intense procedures such as spine or high-end orthopedic procedures — about what you can bring from a quality perspective, why those kind of procedures ought to be approved and why the payor ought to be working with your center, it always helps, I think, to have a doctor talking to a doctor as opposed to an administrator talking to a doctor,” he says.
Although oftentimes those medical directors are not in a position to actually enter into a contract, they can certainly become an ally by expressing support for working with your ASC to those staff members who do determine contracts.
“They could at least have some level of influence,” says Mr. Cates.
10. Encourage data sharing amongst physicians and your ASC
The more relevant information you can gather before going into negotiations with a payor, the better off you will be in making your case for better reimbursement. Some of the best information you can present comes from your physicians.
“Try to get some data from their schedulers or from their office about what procedures they are currently taking to the hospital that they could take to the center,” says Mr. Cates. “Encourage this data sharing as a benefit for them and the center.”
While payors can access this information themselves, anything you can do or provide that will make their lives easier goes a long way in building the relationship with the payor while, at the same time, helping to support your case.
“Then you can say, ‘Here are a few procedures that we know a specific surgeon has had to take to the hospital,’” says Mr. Cates. “‘Just go look and see what you paid for them. We believe we’re offering you a savings over that, so why wouldn’t you do this contract with our ASC and realize those savings for the plan and your clients?’”
