STEP 1: Credentialing
Don’t expect to have contracts in place prior to your first day seeing patients at your new center. ASCs are carefully regulated by the state and most payors require the facility to pass their credentialing process prior to becoming a participating provider. First, identify the payor mix. In addition to the major payors in the area, there are usually a variety of small payors and TPAs. Second, make contact with each payor months before you expect to open, not only to introduce yourself, but to also get some vital information on the process and expectations of each payor. Again, most payors require a facility to pass their own credentialing process which includes the completion of an application and providing copies of various documents such as state license, Medicare Certification and Accreditation.
During the initial call, ask questions about the application process: What documents are required to submit the application? (e.g., State License, Medicare Certification and/or PIN number, AAAHC Accreditation) Some payors allow you to submit the application and forward your Medicare certification at a later date; others will not allow you to send your application without it. What are the professional and general liability requirements? How long does the process take? Once you’ve signed the contract and returned it to them, how far out is the effective date? (e.g., 30–45 days) What type of claim form is required?
Ask about the credentialing process: Is a contract representative reviewing your file, or is it sent to a central credentialing department? Are there regular meetings and deadlines for submission each month? For example, does your application have to be received by the 15th of the month to be considered at the monthly meeting? If you miss the deadline, you will probably have to wait until the following month for consideration. That will also push your effective date out another month which could mean no reimbursement from the payor and/or higher patient liabilities for an extended period of time.
Be proactive and ask for an application even if it is months prior to the opening of your center. Some applications require copies of policies or other operational documents that you can copy and affix to the application early. Consider making a list of all the required documents for each application. Then attach each document when it is received and check it off the list. When the list is complete, you are ready to send the application. Be sure you have the correct address and forward your application via overnight courier so that you have a record of its delivery, and always keep a copy of what was sent.
In addition to the credentialing process, inquire about the reimbursement methodology as there are several types. Medicare has recently overhauled its ASC reimbursement to mirror hospital outpatient reimbursement. Each CPT code is assigned a rate weighted for the intensity of the procedure and the county where the facility is located. Currently, only a handful of payors have adopted this methodology, although many are moving toward doing so. Many major payors have continued to follow the 2006 Medicare Groupers. This methodology assigns each CPT code to a group number which corresponds to a reimbursement rate weighted by group and location of the facility.
In an endoscopic facility, most procedures fall into Groups 1 and 2 with an occasional Group 3. Generally, commercial payors will express their reimbursement as a percentage of Medicare which can range from 92 percent to 260 percent depending on the payor and the market. It’s important to identify which Medicare methodology the payor is following.
Some payors also develop their own methodology or list of groups. By obtaining a crosswalk for the procedures performed at your facility, you will know how to negotiate more successfully. Still there are others who will negotiate a percentage discount off of billed charges. Generally, this language is seen in TPAs and PPO contracts and can range from a 10 to 40 percent discount. You will want to know the discount prior to setting your fee schedule to maximize reimbursement.
STEP 2: Negotiating the Contract
Once your facility has passed credentialing, negotiating the contract language is the next step (although some payors allow this to happen simultaneously). Ask about this during the initial call. Obtain a draft contract from the payor as soon as possible. Remember that everything is negotiable. Read through the contract and flag anything you want to discuss with the payor. Commercial contracts can generally be changed, while Medicare Advantage, Medicaid HMO and other government agreements typically are not negotiable. Look at sections pertaining to claim submission, overpayments and appeals, insurance liability requirements, and how amendments are handled. The initial term and limits on re-negotiations are also areas that can play into rate negotiations. Check for things that create extra work like notifications. Does the payor really need to receive a list of clinical employees every six months? If not, strike it from the contract. Notifications for changes to billing addresses, ownership, loss of accreditation, etc., are all reasonable expectations of the provider and can remain in the agreement.
“Amendments” is one section to pay careful attention to. Some language will require you to notify the payor in “X” number of days after receipt of an amendment. If you don’t agree to it, send your rejection of the amendment within the notification time, otherwise, the change becomes part of your contract. Most notifications are assumed to be received within three days if mailed by the U.S. Postal Service, which may not be an accurate assumption. It’s best to protect yourself against changes, primarily in your reimbursement, by negotiating how amendments are handled.
If you don’t like something offered by a payor, then ask for it to be changed; the worst that can happen is the payor will refuse. If that happens, you will need to assess the impact that section will have on your organization. You don’t want to negotiate a contract that will financially cripple your center. You will find that most payors are reasonable if you explain your concerns.
Finally, your facility is credentialed and contracted with all of the payors in your market! Unfortunately, your work is not done. Most major payors require re-credentialing every three years. This involves either updating an existing form or completing a new application and sending updated licenses, accreditations, liability and lists of clinicians.
One of the most ignored functions of contracting is re-negotiating reimbursement rates. This process begins with an evaluation of the current market, changes in local cost of living, increases in services and equipment from vendors, and increases in salaries and benefits for employees.
In addition to the financial analysis, look at the facility from a quality standpoint. Request patients to complete patient surveys after their procedures. Use this information to assess the quality of care received at the facility which can translate into additional dollars at the negotiating table. Medicare will soon be using quality indicators as a means of increasing reimbursement to ASCs; don’t be afraid to transfer that to commercial payors as well.
Although there are many areas in the operations and functions of your ASC that are of importance — especially when opening a new center — credentialing and payor contracting should be at the top of your list as your license and contracts are critical to the success of your center. Taking the time to understand the payors and learning skills to deal with them effectively will benefit your center for years to come. And don’t overlook re-negotiating your contracts every 18-24 months. Remember, if you don’t ask for more, you just won’t get it.
— Sharon Hohlfeld is payor contracting manager for Physicians Endoscopy. Together with teammate Raqhel Wallace, contract specialist, they are responsible for completing the initial credentialing process for all new centers as well as obtaining and negotiating the initial agreements. Contact Ms. Hohlfeld at shohlfeld@endocenters.com.
Note: This article originally appeared in EndoEconomics, a journal published by Physicians Endoscopy. Learn more about Physicians Endoscopy.
