Common challenges faced by ambulatory surgery centers when negotiating with healthcare payers?

The Fee-For-Service (FFS) model dominates the industry today and not expected to be replaced anytime soon by alternative models.

The model, and the contracts that structure the reimbursement terms, represents the top revenue source for many healthcare providers. This requires Ambulatory Surgery Centers (ASCs)  to invest in their ability to effectively negotiate profitable contracts with payers, something cost-conscious payers aren’t always willing to do. 

Negotiating with healthcare payers poses several challenges for ASCs due to the complexity of payer contracts and the evolving healthcare landscape. Here are the top 5 challenges we often see ASCs trying to manage during negotiations with healthcare payers:

1. Reimbursement Rates: ASCs struggle to secure fair and competitive reimbursement rates from payers because they lack the resources and tools to develop a compelling, data-backed business case for increased reimbursement. Investing in a system to collect and visualize performance data for the ASC can yield insights on high-performing CPT codes, average reimbursement rates by payer, and at best - metrics on the quality of care provided by the ASC. Having these performance metrics gives ASCs an upper hand in negotiating better contract terms with payers.
2. Contract Terms: The small things are often the big things when overlooked. For many ASCs, they may not have the right team in place to analyze contract language offered by payers and may miss terms that could affect the profitability of their practice down the road.  Having attorneys who are skilled in healthcare contracts to review and assess language in the original contract terms and any amendment terms to the contract is critical to ensure contract terms work for both payers and providers.
3. Claim Denials: Dealing with claim denials is a significant challenge for all providers, especially ASCs. It will happen as a natural aspect of the model. One way to mitigate the impact of denials is to have higher reimbursement rates negotiated with the payers. When that is achieved, the financial impact of denied claims has a reduced effect on the practice and minimizes revenue loss. 
4. Data and Reporting: Payers today are often requiring more detailed data and reporting from ASCs to monitor performance metrics and outcomes. This can be a good thing overall; however, it requires additional investment in administrative costs for the providers to deliver against these requirements. Rather than hiring internal resources, ASCs have found it more beneficial to hire the expertise in outside firms who know how to gather the data, centralize it in an online platform, and analyze the data to provide the insights and metrics to inform payers. Look for partners who offer performance-based compensation so they have skin in the game with you. 
5. Negotiation Expertise: Let’s face it, payers are negotiating their provider contracts more than a provider is negotiating their contracts with payers. The expertise is often on the side of the payer. And for providers to be successful, they need the ability to craft a compelling business case for increased reimbursement rates. There simply aren’t enough resources (hours and people) to allow this to happen, however, it is critical to ensure the long-term viability and profitability of the practice. ASCs are encouraged to leverage outside firms that specialize in payer contract negotiations. They often employ former payer-side leaders who know how to navigate the complexity and designed chaos payers often put in place to slow the process of negotiating new contracts.

By proactively addressing these common challenges and investing in partners and systems that enable them to track contract performance, ASCs can enhance their negotiating position, optimize revenue streams, and strengthen their relationships with healthcare payers in an increasingly competitive market.