3 Reasons to Update Managed Care Contracts

By Stacy LaLonde

The managed care landscape is constantly changing. Because of that, neglecting to renegotiate contracts can result in missed revenues and lost value long-term for your ASC. Knowing that payers will never approach you to give you higher rates, it’s up to the ASC to re-engage in negotiation to drive additional value to the ASC. This post gives 3 reasons to update your ASC contracts.

If the contract has not been evaluated in more than three years:

ASCs must review payer reimbursement rates frequently, otherwise they risk missing revenue opportunities. One change requiring review is payer guidelines that reduce payments, which may increase the accounts-received (A/R) balances. Working with payers to ensure receipt of the contracted revenue can require ongoing dialogue. Ensure contracts that may have previously ignored cost-of-living (COLA) increases are re-opened to not only improve on old rates, but also amended to add increases so that the contract performance remains current and adequate each year.

If the payer’s performance is deficient:

Periodic evaluations of payers (e.g., benchmarking) help ASCs discern which payers perform at higher levels. Using routine analytics, a payer’s performance by specialty and by primary CPT can be reviewed to identify performance issues. Key factors include reimbursement vs Medicare (the benchmark) and case costing or margin reviews. Gathering detailed information to support adequate rate can greatly improve your ability to achieve optimized reimbursement across all case types.

When new specialties or procedures are added:

ASCs will periodically add new specialties and/or procedures through physician recruitment, technology changes, and OR time optimization due to changes in physician staffing. Examples include using robotics, new implant types, and adding more complex procedures (joints, spine, CV). Contract rates for new procedures may not be adequate with the current contract structure. Opening the contract and/or adding an amendment to address these issues may be necessary. 

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