1. Educate the payors about the procedures. Laser Spine Institute works most often with out-of-network payors, so the administrators often speak with payors about why they should cover a patient’s procedure. Jimmy St. Louis, Chief Corporate Operations Officer of Laser Spine Institute, makes sure to point out that patients undergoing minimally invasive surgery have less conservative care before choosing surgical treatment, that the surgery is done as an outpatient procedure and that the recovery rate is faster. All of these factors contribute to a lower cost for payors and a higher rate of patient efficacy, which is another important point to cover with the payors.
“When we educate payors and patients on the reimbursement level, we anticipate we’ll see improved reimbursement because it is less money than what they would pay for the traditional surgery,” says Mr. St. Louis.
From “5 Key Strategies for National Expansion of Orthopedic and Spine Practices.”
2. 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.”
From “6 Best Practices to Create a Thriving Orthopedic Practice.”
3. Renegotiate contracts to take advantage of a new economic landscape. Due to rapidly changing economic circumstances, now is an excellent time for your practice to renegotiate contracts with payors. As spine surgeons exit Arizona health plans to escape falling reimbursements, the plans have had second thoughts and some are now agreeing to higher rates to fill gaps in their networks, Donna Lahey, the administrator of Spine Institute of Arizona in Scottsdale reports. So far, she says, two out of the practice’s 15 payors have agreed to rate hikes, at 10 percent and 15 percent. The practice has also signed on a new payor at a 20 percent higher rate than Medicare. Shannon Doyle, an MGMA consultant based outside of Denver adds that bringing a physician into negotiations will raise the practice’s credibility and improve chances for a reimbursement hike.
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.
From “6 Reimbursement and Business Concepts for Spine ASCs.”
5. Do Research Before Negotiating With Payors. According to Amy Mowles, president and CEO of Mowles Medical Management, ASCs can improve their contracts with payors by simply doing adequate research about costs and regulations beforehand. Your ASC may be able to ask for higher fees if a deadlock — and the possible loss of the payor contract — would not hurt your facility.
“The more you ask in a negotiation, [with either a] new or renewed contract, the more likely it becomes that the negotiation will end with either a large favorable settlement or a deadlock,” Ms. Mowles says. Before you start negotiating, do your research on the value of the specific payor contract to your center. How much of a market presence does the payor have? Does your center treat a significant number of the payor’s enrollees? If losing the contract will not significantly damage your center, you can afford to ask for more fee increases.
Once you know you can afford to negotiate, Ms. Mowles recommends researching your costs and identifying several fees that are “significantly too low.” In order to do this research, Ms. Mowles recommends a few different resources, including the 2010 MGMA Cost Survey for Single-Specialty Practices and the 2010 Cost Survey for Multi-Specialty Practices.
From “Best Billing Practice: Do Your Research Before Negotiating With Payors.”
6. Address implant costs. Implant costs are a critical component of any contract negotiations, says Eric J. Woollen, vice president of managed care for Practice Partners in Healthcare. ASCs should carve out procedures with expensive implants to ensure they are adequately reimbursed for implant costs.
“Payors are generally receptive to carve-outs because of implant costs and the time required for certain procedures,” says Mr. Woollen. “ASCs can validate these high costs by showing payors their implant invoices and demonstrating the need for payors to negotiate fair reimbursements that build in some profitability.”
Ralph Gambardella, MD, an orthopedic surgeon and president of Kerlan-Jobe Orthopaedic Clinic in Los Angeles, which also operates an ASC, says that carve-outs are crucial to orthopedic profitability. “As more and more orthopedic surgeries are done in the outpatient setting, more and more surgeries will require implants. Because of the high cost of implants, these procedures have to be carved out or you’re dead, financially,” he says.
From “9 Reimbursement and Business Concepts for Orthopedics in ASCs.”
