Ambulatory surgery center owners and administrators depend on payer contract negotiations to stay in business, but navigating those negotiations isn't always smooth sailing.
"Our industry is facing multiple challenges presently," says Dan Connolly, vice president of payor relations and contracting at Pinnacle III. "Some challenges, like negotiating favorable reimbursement, remain difficult, while others — efficiently collecting reimbursement, for example — are increasing in complexity. These challenges are projected to intensify over the next year as payers and plan sponsors continue to seek ways to reduce and/or transfer healthcare risk."
The key challenges for ASCs include:
1. Negotiating attractive and sustainable reimbursement for new ASCs. Payers continue to offer lower reimbursement to new centers compared to existing centers. As newer centers accept lower rates, it becomes more difficult to negotiate and secure optimal reimbursement. Due to the combined effect of both these issues, it is taking longer to negotiate and execute new contracts, which is more costly for new ASCs.
2. Negotiating reasonable increases and adding carve-outs for new services at attractive and sustainable rates is challenging for existing ASCs. "It is as tough as ever these days to make a business case for increases, especially when newer ASCs are establishing artificial 'market rates'," Mr. Connolly notes. "Multiple payers are declining or stalling renegotiations — which may be due to pending merger activity. Whatever the reason, it's taking longer to secure optimal reimbursement. In addition, we are investing significant effort helping hospital partners execute 'evidence-based negotiations' to ensure the best interests of their joint venture ASCs are taken into account."
3. Collecting payment from payers and patients in a timely fashion is becoming more difficult. Payers are increasingly outsourcing claims processing to offshore entities, which lessens their control over the process. ASC business offices need more expertise and oversight to collect payments in a timely manner. "Having an experienced and tenacious revenue cycle management team is mission critical, and not an area an ASC should skimp on," emphasizes Mr. Connolly.
4. Payment on cases with implants is problematic. "Many payers remain dispassionate, remiss and/or ineffective in addressing claims difficulties without considerable coaxing from the ASC's business office and managed care liaison," says Mr. Connolly. "This problem will increase in significance as ASCs perform a higher number of high-acuity cases, especially for those procedures involving substantial financial outlay for implants."
5. There are more employers with self-insured plans; currently, plan sponsors carry the risk for around half of every dollar spent in healthcare. Self-insured employers cut out the middle-man, making it easier for ASCs to work directly with plan sponsors to negotiate case rates, bundled payments, discount for volume arrangements and rebate incentives — all while driving ASC volume to — or in some cases simply keeping it in — their centers. However, ERISA plans aren't governed by state mandates, so there could be increased variation in benefit and design coverage as well as less timely payment.
"There will be opportunities for more third-party entities to situate themselves between the ASC and the payer; more layers increase the potential for inaccurate and delayed payment," says Mr. Connolly.
6. Payers are making plans more affordable, which means higher co-pays, coinsurance and deductibles. The Kaiser Family Foundation reported more than one-third of covered workers have a deductible of $1,000 or more, and one-sixth have a $2,000+ deductible. "We don't see patient responsibility decreasing in the future; ASCs should expect this payer classification to grow," says Mr. Connolly.
7. ASC front offices must work harder to avoid non-collection and manage patient financial responsibilities related to each episode of care. "The increased demands on the resources of the ASC and business office not only must be strategically addressed through staffing, training and development, but all associated differential costs must be taken into consideration when negotiating future reimbursement," says Mr. Connolly.