Ambulatory surgery center (ASC) administrators face a variety of challenges when it comes to successfully managing their payor contract negotiations. But with careful preparation, ASC administrators can keep more money to reward and fuel center growth by negotiating payor contracts that will adequately cover the full cost of services and ultimately streamline healthcare costs for all.
One common problem, according to Andrea Woodell, Vice President of Managed Care at Regent Surgical Health, is that often hard-working and well-intentioned administrators and office managers are too busy balancing numerous job responsibilities to dedicate the needed persistence and focus required to successfully negotiate expiring payor contracts.
Woodell oversees annual negotiations of payor contracts for Regent’s ASC facilities, and works collaboratively with Regent’s hospital partners to support and facilitate successful managed-care contracting efforts. She has negotiated on behalf of health care providers and professionals for more than 20 years, working in tandem with business offices. She offers the following top strategies to help ensure seamless payor negotiations:
- Incorporate Centers for Medicare & Medicaid Services (CMS) changes into your contracting
Because Medicare has been making a series of significant adjustments causing sizable reimbursement changes, it’s important to negotiate upfront for ample room in the budget for contractual changes to occur, says Woodell. “You should not rely on the payor to be responsive or to have the bandwidth to renegotiate your contract. There’s just not enough staffing to do that,” she advises.
- Plan for the future with case mix changes
Woodell says more focus needs to be placed on negotiating contracts and planning for future case mix changes and updated procedures.
“Most payors are unwilling to open up negotiations during a normal existing contract term,” she explains. “Therefore, it’s critical to plan for the future. Even if a change is 9-12 months away, put it in your contract now.”
- Build in annual increases and multi-year contract increases
“If you’ve not started your negotiations at least four months prior to the anniversary of your contract, it is unlikely you will get an increase completed by the deadline,” Woodell says. “For a payor, the spend on an ASC is negligible in comparison to larger hospital contracts. Even though we are a solution, we’re not their priority – which is an important point to acknowledge and incorporate into your negotiating strategy. Always check the term of the contract and, if a payor is requesting a three-year contract, be certain to get cost of living adjustments incorporated in years two and three.”
Woodell’s experience suggests payors are not looking to increase rates, but rather to standardize across the entire ASC market. “But anytime a contract remains flat, it’s a decrease,” she explains. “We all see increases in the cost of doing business and if rates don’t increase, the margin decreases.” She believes effective payor negotiations are critical to ASCs’ ability to reward and compensate surgeons who are moving their cases out of the hospital and therefore reducing healthcare costs.
- Buyer beware with national TPA & PPO contracts
When it comes to preferred provider organizations (PPO) and third-party administrators (TPA), Woodell suggests careful attention to terms, and overall caution.
She notes that while big industry players like MultiPlan and Three Rivers Provider Network have historically paid a percent of bill charge, they are now moving their contracts nationally to a percent of Medicare. Although TPA offers of 300% to 400% percent of Medicare sound great, unfortunately the standard is for the TPA/PPO to apply members’ out of network (OON) benefits — often leaving the entire amount due as the patient’s responsibility, she warns.
“There is a wave of amendments being mailed out making unilateral changes and if you don’t respond, the change will occur,” Woodell says. “Most contracts allow 30 days to respond prior to the material change becoming effective.”
For more information on optimizing payor contract negotiations, contact Regent’s Andrea Woodell directly at (312) 882-7228. She’s happy to leverage her expertise to help ASCs better understand and manage payor contracting challenges and opportunities.