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Hospitals seek 15% pay bump from insurers — what should ASCs ask for?

Hospitals across the U.S. are seeing labor and supply costs rise with inflation and are clashing with insurers about raising contracted rates, according to The Wall Street Journal.

Surgery centers are in the same situation. Supply costs are going up with inflation and staff members are commanding higher salaries. Some ASC administrators are having a tough time staying competitive with nurse and staff salaries offered at local hospitals and now are competing with retailers such as Target and Walmart as well, which raised wages nationwide. The average nurses pay was up 9 percent in March from June 2021, according to a report from Premier, a healthcare consulting company, that was cited by the Journal.

The Journal reported some hospitals are opening contract negotiations early and asking insurers to raise reimbursement rates to 15 percent, more than the 4 percent to 6 percent hospitals typically ask for during new contract negotiations. The price increases, coupled with dissatisfaction with late payments, has led some health systems to end in-network status.

As surgery center contracts come due, what rates should owners and operators seek?

It depends on how competitive the market is and how much expenses have increased. Surgery center administrators equipped with granular data about increasing costs and the Medicare fee schedule for CPT codes in their ZIP code as a percent of reimbursement will be in a better position. Surgery center owners and operators can also compare their rates with local hospitals, which are required to post their charges online, and project costs given current trends.

ASCs can also leverage their position as high-quality, low-cost providers and ask for increases to keep cases out of the hospital, where insurers pay more. Insurers may also be willing to work with ASCs on value-based contracts. But will insurers agree to higher rates with ASCs?

The big companies are not meeting health system demands to raise rates, arguing hospitals can absorb the higher costs and increased rates would mean higher premiums for members. Despite inflation and the advantages of surgery centers as high-quality, low-cost sites of care, rate increases will not be easily won. Surgery centers armed with data and an understanding of their position in the local market likely will have the best chance of success.

 

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