Adding a Specialty? Make Sure Contracts Support Profitable Reimbursement

As ambulatory surgery centers (ASCs) change and grow, they add new specialties. Making sure contracts keep up with these changes is critical to ongoing success. Andrea Woodell, Regent’s vice president of managed care, has extensive experience negotiating payer contracts – and helping ASCs keep them current. In this final blog in a 3-part series, she shares tips for specialty-specific contracts.

“As surgery centers age, physician partners come and go, and new specialties are frequently introduced,” Woodell says. “Many ASCs are actively recruiting new partners to replace physicians who have relocated or retired. When evaluating the addition of new lines of business, centers should analyze their contracts to evaluate how the new specialty cases will be reimbursed. For example, if you’re locked into 2-3-year contracts with your top three payers and you’re adding a new specialty that is not reimbursed, adding that specialty is not a profitable option until the contracts can be renegotiated.”

When it is time to negotiate, Woodell advises ASCs build contracts for current specialties and consider how the contract would support added new business lines as well. Below are tips for two popular specialties, ENT and TJR:

Expanding into ENT

Adding an ear/eye, nose, and throat (ENT) specialty to your ASC can be a challenge, Woodell says, due to payer payment on multiples. She cites United Healthcare’s (UHC’s) preference to contract at 100/50/25, rolling implants into their groupers and carve outs.

“Sinus cases often bill out 6-8 CPTs (Current Procedural Terminologies) when repriced through UHC’s enhanced groupers and multiple methodology,” she says, “so these cases often end up south of Medicare payment, which is unacceptable. While the ENT CPTs are not on UHC’s standard carve out list, they will carve them out if you negotiate wisely. It is important to respect their position and take the time to build a thoughtful quantified response.”

Taking on TJR

Total Joint Reconstruction (TJR) is a specialty many ASCs would love to add, as acceptance grows for outpatients handling of these procedures. Woodell says the challenge typically faced is how to get paid fairly – rewarding the partners and facility for the additional risk they assume providing TJR in an ASC.

“What often happens is a GI (gastroenterology) center down the street will have language in a payer contract agreeing to TJR reimbursement at $12,000. They don’t think about it, because they don’t see joints. But then that payer tells the next provider that $12,000 is the market rate, proving it with the contracts they have in place.”

If it happens to you, Woodell suggests asking what TJR volume was successfully pulled from hospitals by those contracted centers who agreed to accept $12000-. Even better, know your competition and who is performing TJR. If there are no centers in your vicinity that objection can easily be overcome.

“If you have obtained EOBs (Explanation of Benefits) and know the surgeon’s current hospital site of service is paid $30,000 and the payer is only offering $15,000, ask the payer ‘Why is 20% savings not enough?’” she advises. “My argument is, ‘You are underrating the value of our service, disincentivizing surgeons from bringing cases here, and ensuring our center won’t invest in capital equipment to encourage the migration of TJR cases.’”

In addition, she suggests ASCs should not overlook tools payers themselves provide online for their members. For example, Blue Cross and Blue Shield recently published an article highlighting the variance in hospital payments within a city – this is very useful information for negotiating fair rates for outpatient joints.

“Those carriers posting rates at different venues will guide you to what the market bears, and often include the volume tied to a specific type of case. So, if you spot a lowball rate, it may be that the facility does not even provide the service,” she explains.

More Quick Contract Tips

Woodell offers additional specialty-specific contract considerations:

  • Podiatry is a specialty likely impacted by multiples – increases in hammertoe payment by Medicare within the last couple years have helped support the ASC’s position.
  • New technology in orthopedics continues to mitigate margins – rotator cuff implant costs have jumped $1000-1200 per case, taking a bite out of margins.

For more help and other tips on demystifying contract negotiations, contact Woodell here.