1. Understand the impact of each payor on your reimbursement mix. Knowing the dollar impact and percentage of patients covered by the payor before entering into contract negotiations can impact the decisions you make during the negotiation.Before going into the negotiations, understand how resources for the different procedures are consumed in supply cost, recovery time, drugs and implants, and use this information as a negotiating tool. However, keep in mind that it’s important to maintain a good relationship with each payor regardless of the contract’s impact on the practice. “We really try to treat all contracts the same,” says Jim Odom of The C/N Group. “In the past, we let a couple of payors get away from us and it was incredibly difficult to get them on par with other payors.” The payor might not have a big presence in your market now, but if the payor successfully expands in the future, you can build upon the positive relationship that already exists.
2. Address implant costs in payor contracts. 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,” he says. “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.
3. Work with physicians and vendors to reduce implant costs. Compare the cost of implants from different companies and use that information to negotiate down the price of your preferred product. “Make the vendors compete for implant business,” says Jay Rom, president of Blue Chip Surgical Center Partners. “Once you know you’ll start a new procedure or service that requires a new type of implant, work with the physicians to minimize variation of implant price and negotiate with vendors to find the one offering the most cost-effective pricing.”
Although encouraging physicians to use the same implants can save an ASC money, Dr. Gambardella warns it can also negatively impact physician satisfaction. “The challenge of providing only one brand of implant in order to negotiate a better price is that you are still dealing with multiple physicians who prefer different products,” he says. “You could potentially lose a physician’s business to another center if that center offers the implant he or she prefers.”
4. Stay educated on reimbursement trends. Orthopedic surgeons can borrow tactics from the automobile industry for maximizing profits on reimbursement, says says John Cherf, MD, president of OrthoIndex. The automobile industry works opposite of the current healthcare industry: thousands of suppliers and fewer buyers who manage those costs aggressively. It’s all about leveraging “buyer power.” Orthopedic ASCs can internally get up the learning curve by committing the staff and time to stay educated on reimbursement trends, optimal coding and managing the cost of specific orthopedic devices, but some facilities may not always be able to do this effectively.
Alternatively, orthopedic ASCs can aggregate buying power in using a third-party firm. Neutral, unbiased, orthopedic technology management specialists can educate ASCs that don’t have the experience or knowledge to capture appropriate pricing. These firms can help propagate buyer power, develop and manage supply chain contracts, leverage provider alignment, maintain compliance and much more.
5. Attract more cash patients. To ensure reimbursement for services rendered, orthopedic surgeons can focus on attracting patients who are willing to pay cash before the appointment. “Orthopedics as a specialty has quite a lot of patient turnover so practices need to aggressively find new patients,” says Scott Sangster, CEO of Health In Reach, a website designed to connect patients who are willing to prepay for services with surgeons in their area. “Compared to insurance patients with low reimbursement rates, patients who pay cash can be much more profitable since the provider can set their own prices and there’s less paperwork.” Traditionally, referrals from cash patients have come through general practitioners or insurance companies, and these patients were difficult to come by. However, the website offers a third option for surgeons to market to these types of patients.
“Because the appointment is prepaid, the physicians don’t have to worry about collections, delays in payment or no-show patients,” says Mr. Sangster. “These patients also tend to help maintain the provider’s schedule better because they have some skin in the game.” He says that there are several types of patients who are willing to prepay for the appointment in exchange for a discount in cost, and the physician’s office can benefit from working with the patients who deliver their payments upfront.
6. Fight for denied surgical approval for unique cases. If the surgeon has monitored the patient through non-surgical treatment and the surgeon and patient feel a procedure, such as spinal fusion is the best treatment option, surgeons can ask for pre-approval. In many states, if the insurance company denies approval, the surgeon can still advocate on behalf of the patient to perform the procedure. “The surgeon may need to undergo additional leg work in developing a response or having a verbal conversation with the insurer’s medical director to explain the unique circumstances in the patient,” says Greg Przybylski, MD, director of neurosurgery at the New Jersey Neuroscience Institute at JKF Medical Center in Edison, N.J., and president of the North American Spine Society. “Sometimes the conversation and written appeal are successful, sometimes they are not.” If the request is still denied, the patient can appeal to the insurer for reconsideration of the treatment. Patients can also pursue insurance coverage from outside their primary company for the procedure.
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