Here are five steps for surgery centers to optimize payor contract negotiations.
1. Negotiate with the future in mind. Set yourself up for the next contract during current negotiations, says Jim Odom of The C/N Group. Stay abreast of the ever-changing healthcare industry and know which types of procedures are profitable and how that may change. "If you position product lines you know are going to decline over the course of the current contract, establish a foundation now, so the pain is less when the contract kicks in down the road," says Tom Faith of The C/N Group. Additionally, ask payors about their timeline for switching to the APC reimbursement model. "We've been listening to what they say and how they answer to position ourselves better for the future," says Mr. Odom. "We ask the payor what they are talking about internally for one or two years down the road, such as which procedures are bring pushed into ASCs and which have pressure to be performed at hospitals."
2. Propose participating in new payment programs. Participating in a pay-for-performance or bundled payments program rewards surgery centers for raising quality and lowering costs by adding volume and revenue to your center, says Steve Arnold, MD, chief medical officer at Access MediQuip. "Bundled payments can actually raise revenue when the center is able to utilize Access MediQuip’s ability to buy the implants at a lower cost," says Dr. Arnold.
There aren't many surgery centers participating in these types of programs today, and most aren't ready to participate at this point. "It's very new, but there are more surgery centers looking at it," says Dr. Arnold. "The surgery centers who should be looking at it are the ones who are most efficient or becoming more efficient. If an ASC is not aligned with their surgeons, then they should not be seeking bundled payments."
3. Stay realistic. ASCs should always approach payor relationships and reimbursement rates realistically. Know your market and understand reasonable prices for a service or device, says Brice Voithofer of AdvantEdge Healthcare Solutions.
Having knowledgeable, realistic expectations can foster a positive relationship with payors rather than a combative one.
"Trying to get the most bang for your center's buck is crucial, but you also need to stay within reason of what you ask for or demand," he says. "Some centers take the approach that the starting point is 'we'll go non-par if these fail' but that isn't a good opening strategy."
ASCs may suffer financially because their costs are out of line or they are paying too much for distribution. "If you are trying to correct a bad contract that occurred years ago, the best approach is to sit down with the payor to discuss what you need," he says. "The rate is not always the best thing to attack. There are other terms of the contract and carve-outs that are key to successful contract negotiations."
4. Clearly define the terms used in the fee schedule. Andrea Woodell of Regent Surgical Health says it's important to define terms used in the fee schedule so that you are paid the amount you expect. For example, when it comes to carve-outs, the payor may reference a 'case rate,' 'global rate,' or 'per CPT rate.' A CPT rate would mean that you receive a certain amount of money — say, $2,000 — for a certain CPT code. A case rate could mean that the surgery center will not receive anything except that rate for the particular carve-out, meaning you are not reimbursed for implants or multiples. "The purpose of a carve-out is to pay you higher than the enhanced groupers of the CMS methodology you're using," she says. "If you have a case rate, you may actually end up getting less." She says a 'global rate' implies that the rate is inclusive of some type of professional fee.
5. Address implant costs in the future. Just as with orthopedic cases, considering implant costs are critical to profitable spine cases. In fact, they may even be more important for spine cases because implant costs typically run higher with spine — as much as $2,000-$5,000 per case — than in traditional orthopedic cases, says Jay Rom, president of Blue Chip Surgical Center Partners. Spine cases must be carved out or the case rate must be built to assume implant costs. Since implant costs can vary from physician to physician — sometimes by as much as $3,000 — rates must also cover the most expensive physician, he says.
"While we do a lot of work trying to minimize cost differences, there are practice differences that are going to exist. Some physicians are trained with different materials that just cost more," says Mr. Rom. Consider purchasing implants wholesale if possible.
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1. Negotiate with the future in mind. Set yourself up for the next contract during current negotiations, says Jim Odom of The C/N Group. Stay abreast of the ever-changing healthcare industry and know which types of procedures are profitable and how that may change. "If you position product lines you know are going to decline over the course of the current contract, establish a foundation now, so the pain is less when the contract kicks in down the road," says Tom Faith of The C/N Group. Additionally, ask payors about their timeline for switching to the APC reimbursement model. "We've been listening to what they say and how they answer to position ourselves better for the future," says Mr. Odom. "We ask the payor what they are talking about internally for one or two years down the road, such as which procedures are bring pushed into ASCs and which have pressure to be performed at hospitals."
2. Propose participating in new payment programs. Participating in a pay-for-performance or bundled payments program rewards surgery centers for raising quality and lowering costs by adding volume and revenue to your center, says Steve Arnold, MD, chief medical officer at Access MediQuip. "Bundled payments can actually raise revenue when the center is able to utilize Access MediQuip’s ability to buy the implants at a lower cost," says Dr. Arnold.
There aren't many surgery centers participating in these types of programs today, and most aren't ready to participate at this point. "It's very new, but there are more surgery centers looking at it," says Dr. Arnold. "The surgery centers who should be looking at it are the ones who are most efficient or becoming more efficient. If an ASC is not aligned with their surgeons, then they should not be seeking bundled payments."
3. Stay realistic. ASCs should always approach payor relationships and reimbursement rates realistically. Know your market and understand reasonable prices for a service or device, says Brice Voithofer of AdvantEdge Healthcare Solutions.
Having knowledgeable, realistic expectations can foster a positive relationship with payors rather than a combative one.
"Trying to get the most bang for your center's buck is crucial, but you also need to stay within reason of what you ask for or demand," he says. "Some centers take the approach that the starting point is 'we'll go non-par if these fail' but that isn't a good opening strategy."
ASCs may suffer financially because their costs are out of line or they are paying too much for distribution. "If you are trying to correct a bad contract that occurred years ago, the best approach is to sit down with the payor to discuss what you need," he says. "The rate is not always the best thing to attack. There are other terms of the contract and carve-outs that are key to successful contract negotiations."
4. Clearly define the terms used in the fee schedule. Andrea Woodell of Regent Surgical Health says it's important to define terms used in the fee schedule so that you are paid the amount you expect. For example, when it comes to carve-outs, the payor may reference a 'case rate,' 'global rate,' or 'per CPT rate.' A CPT rate would mean that you receive a certain amount of money — say, $2,000 — for a certain CPT code. A case rate could mean that the surgery center will not receive anything except that rate for the particular carve-out, meaning you are not reimbursed for implants or multiples. "The purpose of a carve-out is to pay you higher than the enhanced groupers of the CMS methodology you're using," she says. "If you have a case rate, you may actually end up getting less." She says a 'global rate' implies that the rate is inclusive of some type of professional fee.
5. Address implant costs in the future. Just as with orthopedic cases, considering implant costs are critical to profitable spine cases. In fact, they may even be more important for spine cases because implant costs typically run higher with spine — as much as $2,000-$5,000 per case — than in traditional orthopedic cases, says Jay Rom, president of Blue Chip Surgical Center Partners. Spine cases must be carved out or the case rate must be built to assume implant costs. Since implant costs can vary from physician to physician — sometimes by as much as $3,000 — rates must also cover the most expensive physician, he says.
"While we do a lot of work trying to minimize cost differences, there are practice differences that are going to exist. Some physicians are trained with different materials that just cost more," says Mr. Rom. Consider purchasing implants wholesale if possible.
Related Articles on Coding, Billing & Collections:
Electronic Health Records May Lead to Medicare Overbilling
Emergency Room Billing Adds $1B to Taxpayer Medicare Burden
3 Tips for Designing an ICD-10 Financial Risk Assessment Proposal