1. Know practice data during payor negotiations. When going into payor negotiations, know the practice’s statistical data to prove that the practice is maximizing return on the payor’s premium dollars. This data includes, but is not limited to, the number of x-rays and MRIs the physicians order, the number of rehabilitation days and the number of days patients spend at hospitals for inpatient procedures. Practice administrators should also be able to explain how the physicians work with hospital staff to make sure patients are spending the least number of days in the hospital within the appropriate standards of care. “This forces the insurance companies to go back and look at their own data if they haven’t done that already and that puts the administrator in a strong position,” says Patrick Hinton, executive director of the Jacksonville (Fla.) Orthopaedic Institute.
The administrator should also know how his or her statistics match up against other area practices. If the practice costs are higher than they are at others, know how to explain these circumstances to the payor. “Say we have higher costs compared to other orthopedic providers, but we have a higher concentration of subspecialists, so we see a lot of orthopedic complications other physicians wouldn’t see, which drives the cost up,” says Mr. Hinton. “This helps make the case that the companies are getting value for what they pay for.”
2. Contracts with payors must address implant costs. 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.
3. Fight for the big ticket items. Craig Antell, DO, a physical medicine and rehabilitation physician at Madison Avenue Physical Rehabilitation and Wellness in New York, says it is critical for a sports medicine practice to know where to focus on fighting for the better reimbursement. This starts with analyzing where your practice makes the most money and working with insurance companies to get greater coverage in those areas because sports medicine practices won’t be able to win every battle at the negotiating table. “You can pick and choose your fights, but I’d rather fight for the bigger ticket items instead of the smaller ones like office visits,” Dr. Antell says. “For example, sports medicine practices could be negotiating epidural fees for $750 instead of $500 but fall into the trap of trying to increase reimbursement for office visits from $85 to $100.”
4. Allow 6-12 months for negations and don’t be afraid to walk away. Mr. Rom suggests existing centers allow six months to negotiate with payors, while new centers should allow up to a year. ASCs must also know their case costs and work from the cost up. “Understand your implant and facility costs and build in a sufficient level of profit,” he says.
“If an ASC already has a contract with a payor, it can move more quickly, but you may have to terminate the contract if the payor will not come around,” says Mr. Rom. “It depends on how important and how big of an opportunity it is to the ASC to bring the spine cases. Look at the termination provision and threaten to use it or use it.”
Kamshad Raiszadeh, MD, director of the Advanced Spine Institute of Alvarado Hospital in San Diego and a physician-owner of the recently-opened Physicians Surgery Center in San Diego, says his ASC had to be willing to exclude payors that didn’t offer good contracts as the ASC would only lose money on the cases. So far, Physicians Surgery Center has remained in-network with its payors, but Dr. Raiszadeh reports that other ASCs in the area peforming spine procedures have found some success by going out-of-network. “The reimbursements are higher [for out-of-network ASCs], but the volume is more variable,” he says.
Mr. Rom suggests ASCs be as active as possible in helping payors understand spine at ASCs and the cost-saving benefits of contracting with a center.
