Steve Arnold, MD, chief medical officer at Access MediQuip, discusses seven core concepts for leveraging surgery center data during payor negotiations.
1. Compare the old contract to actual rates received. One of the first things surgery center administrators should do is to examine their old contracts and make sure that they have been receiving full reimbursement. "If the contracts call for percentage increases over time for annually renewed evergreen contracts, they need to ensure those reimbursement increases are actually being paid," says Dr. Arnold.
When you are negotiating a new rate for an old contract, it's still important to know whether the payor has adhered to the old contract. "If the contract says the surgery center should get $5,000 for the procedure and sometimes the company only reimbursed $4,000, you need to ask why," says Dr. Arnold. "If the payor doesn't give you a reasonable answer, then you need to recoup the money that was not paid before you move into a new contract."
Those losses from the previous contract can be applied to the new contract through various arrangements.
2. Know the data better than the insurance companies. Surgery center administrators must have a firm grasp on national benchmarks as well as their individual center's data going into contract negotiations. "They really need to enter into negotiations armed with better data and analysis than the payor has," says Dr. Arnold. The data they must know includes:
• Surgery center utilization
• Total costs and unit costs
• Physician alignment with the facility
• Hospital readmissions — unexpected and due to revision surgeries — broken into 30 day readmissions, 90 day readmissions and 365 day readmissions
• Capacity management
• Implant and device use on- and off-label
• Quality and safety
"If surgery centers don't have these data analytics abilities, they need to partner with an organization such as ours to supply that analysis," says Dr. Arnold.
3. Align physicians with payors and the center. Physician alignment with the payor is important because when physicians aren't aligned with the payor, they aren't aligned with the center and their procedures won't be paid. Physicians who aren't aligned with the center often have up to a 20 percent denial rate. They tend to perform surgeries without achieving prior authorization or use materials not covered in their contract.
"Surgeons must understand their contracts and perform procedures based on coverage," says Dr. Arnold. "We want to show payors that our physicians are aligned with them and us on quality, utilization and administration."
4. Compare your data with others. Once you have your data sets available, compare your numbers with others from your local market and against national benchmarks. "The payor is going to compare your ASC to others and if yours performs twice as many knee surgeries , they are going to ask whether you actually run a better facility or if you are doing the procedure inappropriately," says Dr. Arnold.
Another data point to highlight is readmission rates for problems associated with surgeries, like infection rates and implant failure. You need to compare your numbers with others in your market. It can be difficult for surgery centers to track hospital admission rates after patients leave the ASC, but these numbers could be an invaluable tool when negotiating contract rates. Companies like Access MediQuip can help surgery centers track these data and compare them with your competitors.
"When surgery centers can give this data to the payor, the surgery center becomes more valuable," says Dr. Arnold. "These data add tremendous value because if your ASC can show that your surgeons provide patients with higher quality outcomes than at hospitals by more appropriately utilizing resources and lowering costs for the payor, you can leverage this information to achieve bundled payments or pay for performance reimbursements."
5. 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. "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."
6. Factor future capacity into negotiations. If you aren't currently performing cases at full capacity, but expect to increase volume in the future, negotiate those contracts accordingly. "If surgery centers have capacity for more surgeries, they need to find a way to negotiate for increased volume through either better pricing or bundled pricing," says Dr. Arnold.
7. Know your costs so contracts will cover them. One of the biggest risks going into contract negotiations is accepting a rate that won't allow you to cover the average costs for your surgery center. Have an understanding of your overhead and fixed costs, as well as case volume per specialty, before going into contract negotiations so you can ensure those costs will be covered by the final rate.
"Administrators need to be armed with their data so they know what is reasonable and what isn't," says Dr. Arnold. "Otherwise, they might accept a rate that is too low to sustain."
More Articles on Surgery Centers:
11 Statistics on Most Payor Coverage Denials
Implants: Purchasing, Contracting and Reimbursement Considerations
Physician Engagement and ICD-10: The Role of the Physician in a Succession Transition
1. Compare the old contract to actual rates received. One of the first things surgery center administrators should do is to examine their old contracts and make sure that they have been receiving full reimbursement. "If the contracts call for percentage increases over time for annually renewed evergreen contracts, they need to ensure those reimbursement increases are actually being paid," says Dr. Arnold.
When you are negotiating a new rate for an old contract, it's still important to know whether the payor has adhered to the old contract. "If the contract says the surgery center should get $5,000 for the procedure and sometimes the company only reimbursed $4,000, you need to ask why," says Dr. Arnold. "If the payor doesn't give you a reasonable answer, then you need to recoup the money that was not paid before you move into a new contract."
Those losses from the previous contract can be applied to the new contract through various arrangements.
2. Know the data better than the insurance companies. Surgery center administrators must have a firm grasp on national benchmarks as well as their individual center's data going into contract negotiations. "They really need to enter into negotiations armed with better data and analysis than the payor has," says Dr. Arnold. The data they must know includes:
• Surgery center utilization
• Total costs and unit costs
• Physician alignment with the facility
• Hospital readmissions — unexpected and due to revision surgeries — broken into 30 day readmissions, 90 day readmissions and 365 day readmissions
• Capacity management
• Implant and device use on- and off-label
• Quality and safety
"If surgery centers don't have these data analytics abilities, they need to partner with an organization such as ours to supply that analysis," says Dr. Arnold.
3. Align physicians with payors and the center. Physician alignment with the payor is important because when physicians aren't aligned with the payor, they aren't aligned with the center and their procedures won't be paid. Physicians who aren't aligned with the center often have up to a 20 percent denial rate. They tend to perform surgeries without achieving prior authorization or use materials not covered in their contract.
"Surgeons must understand their contracts and perform procedures based on coverage," says Dr. Arnold. "We want to show payors that our physicians are aligned with them and us on quality, utilization and administration."
4. Compare your data with others. Once you have your data sets available, compare your numbers with others from your local market and against national benchmarks. "The payor is going to compare your ASC to others and if yours performs twice as many knee surgeries , they are going to ask whether you actually run a better facility or if you are doing the procedure inappropriately," says Dr. Arnold.
Another data point to highlight is readmission rates for problems associated with surgeries, like infection rates and implant failure. You need to compare your numbers with others in your market. It can be difficult for surgery centers to track hospital admission rates after patients leave the ASC, but these numbers could be an invaluable tool when negotiating contract rates. Companies like Access MediQuip can help surgery centers track these data and compare them with your competitors.
"When surgery centers can give this data to the payor, the surgery center becomes more valuable," says Dr. Arnold. "These data add tremendous value because if your ASC can show that your surgeons provide patients with higher quality outcomes than at hospitals by more appropriately utilizing resources and lowering costs for the payor, you can leverage this information to achieve bundled payments or pay for performance reimbursements."
5. 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. "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."
6. Factor future capacity into negotiations. If you aren't currently performing cases at full capacity, but expect to increase volume in the future, negotiate those contracts accordingly. "If surgery centers have capacity for more surgeries, they need to find a way to negotiate for increased volume through either better pricing or bundled pricing," says Dr. Arnold.
7. Know your costs so contracts will cover them. One of the biggest risks going into contract negotiations is accepting a rate that won't allow you to cover the average costs for your surgery center. Have an understanding of your overhead and fixed costs, as well as case volume per specialty, before going into contract negotiations so you can ensure those costs will be covered by the final rate.
"Administrators need to be armed with their data so they know what is reasonable and what isn't," says Dr. Arnold. "Otherwise, they might accept a rate that is too low to sustain."
More Articles on Surgery Centers:
11 Statistics on Most Payor Coverage Denials
Implants: Purchasing, Contracting and Reimbursement Considerations
Physician Engagement and ICD-10: The Role of the Physician in a Succession Transition