Interview with Alla Keinig on Increasing Reimbursement Rates

In last week’s article about an ASC increasing value for payors, The Ambulatory M&A Advisor discussed numerous ways that ASC’s can get their foot in the door with payors on the healthcare market.

However, what happens when a center is already stable and poised to either renew their contract with their current payor or is fishing for a better rate with a new company? Negotiations will have to be in order, and in these cases, an ASC or urgent care business should be poised to negotiate with a payor on why their business should receive a higher rate than the hospital down the street. The Ambualtory M&A Advisor examines what talking points and negotiation strategies ASCs and urgent cares can utilize in order to gain higher reimbursement rates and stay on top of their geographic market.

Ron Dreskin, principal in charge of healthcare practice at Eisner Amper LLP, says that when negotiating payor contracts, providing certain statistics can help improve a center’s chances of getting a desired rate for their next cycle.

According to Dreskin, if an urgent care center is able to prove that their services are similar to an emergency room and say that if patients were to go to their center instead of the ER then the payor would gain significant benefits.

Alla Keinig, supervisor of the billing department at WCH Service Bureau, agrees with Dreskin. She, however, brings the spotlight to ASCs. Keinig says that even though the model is about 20 years old, surgical centers are a newer trend in healthcare and the model is very popular because they are mostly physician owned and controlled. Keinig says that physician ownership is something that ASCs can use to help negotiate better rates with payors.

“ASCs can provide more quality care and get reimbursed less than an outpatient hospital. You want to do digits; for example, if you were to take a Medicare patient and do a cataract surgery at an outpatient hospital, the procedure would cost around $1,670. However, the same procedure at an ASC would cost around $500, 30% of what the outpatient hospital would cost payors,” Keinig says.

Keinig adds that ASCs can also use their staff as a negotiation point when gaining a new contract. Keinig says that aside from just saving money for the payors, ASCs also choose more particular providers that are experienced and that specialize in what the ASC considers their specialty.

“Since ASCs are controlled by federal agencies, their quality of care is more strict and high-quality than an outpatient hospital,” Keinig says.

“They should also emphasize that, in comparison to a lengthy hospital wait for a procedure, at their ASC, the patient comes in and there is little to no waiting time for them. Also, they should also emphasize that their current rates are three times less than Medicare but the service is more qualified. This allows the payor to better consider an increase in reimbursements rates because the same quality of care at an outpatient hospital would cost the payor a lot more.”

Dreskin says this type of approach would provide the prospective payor with the information desired to feel comfortable with negotiating rates that the center desires.

“The payors are going to react because they can shift monies from paying a hospital or an ER to paying a center and they can increase the center’s compensation while still paying a lot less than an ER,” Dreskin says.

Keinig says that another negotiation point on the ASC’s side is that the efficiency of their procedures will help payors save money since the ASC provides a strictly outpatient service in comparison to a hospital that may have a patient stay overnight for a similar procedure.

“When a patient stays overnight, the payor does not only pay for services provided during the procedure, but they pay for the bed, food, and unnecessary doctor’s visits. These are all things that bring up the cost for a hospital when compared to an ASC where the same procedure and entire visit could cost the payor three times less. If the payors will encourage their patients to go to an ASC, it will actually bring their expenses down even if they elevate the rates during negotiation,” Keinig says.

Steve Selbst, CEO of HealthCents Inc., agrees that all of these areas are important in a negotiation; however, in order for a center to receive an optimal reimbursement rate, drafting agreements prior to initial negotiations is an area of utmost importance and is something that a business owner should pay close attention to.

Selbst believes that many providers are under the misinformed understanding that they are just going to be presented with a standard fee schedule when entering into a new payor contract and will have to accept what is offered.

Selbst explains that almost all agreements are negotiable, and therefore, it becomes imperative to understand exactly what the center is being offered.

Dreskin says another area prior to initial negotiations that is important for both ASCs and urgent care centers is to maintain relationships with the payor’s representatives working with the center that is seeking higher reimbursement rates.

Dreskin says these relationships are important because a close relationship will help when it comes to presenting the request for a negotiation to the insurance board.

Dreskin says that, in these types of negotiations, urgent cares should stress forming a partnership with the payors.

“I’ve seen payors even promote urgent care centers to their enrollees, explaining that these centers provide similar services to an ER but for a lower co-pay,” Dreskin says.

Dreskin adds that urgent care centers partnering up with a hospital or other urgent care centers in order to increase their chances of getting a higher compensation rate during a negotiation is also a smart way to gain leverage in negotiations with payors.

“A single center is going to have a harder time negotiating a contract than a center that is aligned with a merger or multiple centers,” Dreskin says.

“If you’re got 50 or 60 centers, your negotiating power is going to be higher than if you only have one or two centers. Any large entity is going to have a better opportunity than a smaller entity. That’s just a fact.”

This article was originally published in The Ambulatory M&A Advisor.