3 Proven Best Practices for ASC Managed Care Contracts

May 1, 2024

By Stacy LaLonde

Does your health system hope to develop a profitable ambulatory surgery center network?

Read on to learn how Compass Surgical Partners optimized the value proposition of one health system’s case migration event to lock in favorable ASC reimbursement rates. With Compass’s guidance, the health system did not need to sacrifice its IP or HOPD rates to achieve favorable ASC rates.

And, during negotiations with payers, we achieved managed care ready-rate language that paves the way for the surgery center network we will develop for the health system over the next few years.

Case Study: A Surgery Center Development Strategy to Grow Market Share

The $1.8B multi-site health system, located in a booming metropolitan area, had an inpatient (IP) market share far greater than its ASC market share. To create balance in its well-developed, rapidly growing ASC market, the health system wanted to increase its ASC market share.

The health system risked losing ground on ambulatory surgery opportunities if it failed to move quickly to launch and grow its ASC footprint.

The health system partnered with Compass to accelerate and optimize ASC development. Partners decided to launch the surgery network by converting two hospital outpatient departments (HOPDs) into ASCs.

Challenge: HOPD revenue is vital to the health system even as it develops its ASC footprint. For this reason, partners would need to effectively navigate HOPD-to-ASC case migration while minimizing HOPD revenue disruptions.  

Approach: Leverage the ‘Golden Moment’ that Case Migration Creates  

The health system had strong relationships with payers, but these relationships were limited to HOPD and inpatient (IP) service lines.

For this reason, the health system relied on our expertise and experience with ASC-focused payer strategies. The Compass team completed the 12 months of preparatory work necessary to negotiate effectively with payers.

The one-time, large scale case migration for the first two HOPD-to-ASC conversions would yield considerable cost savings for payers. Compass demonstrated how the move would create value across all eligible case types and payer lines of business. Highlighting the value to payers helped us agree on above-budget rates, leading to a win-win.

For each procedure affected by initial case migration, Compass applied a discount against the health system’s HOPD rate performance to establish rates for those same procedures in the ASC. The proposed, ‘win-win’ ASC rates would create cost savings for payers and drive healthy margins for the health system.

Winning Formula: Longstanding Payer Relationships + ASC-Focused Expertise

Health system leaders initiated and conducted negotiations with payers, leveraging the strong relationships forged during their HOPD and IP work together.

The health system leaned heavily on Compass’s preparation and background support during negotiations. Alignment between Compass and the health system from the front lines up to the C-level ensured the communication and collaboration required to prevail in payer negotiations.

Results: 22% above-Budget Reimbursement Rates

With Compass as a guide, the health system negotiated favorable rates for the first two HOPD-to-ASC conversions in only twelve months.

Partners also negotiated ‘ready rate’ language to undergird future HOPD-to-ASC conversions, de novo ASCs, and acquisitions. By building a firm foundation for a successful surgery center network, partners have gained a competitive advantage in the health system’s regional market.

Thanks to Compass’s work, the health system did not have to ‘trade away’ large amounts of revenue to achieve favorable ASC contracts with payers. The value proposition that Compass calculated clearly demonstrated to payers that they could offer solid reimbursement for procedures performed in the ASC and still save money they typically spend when those same procedures are performed in the HOPD.

Together, Compass and the health system have forged a surgery center network strategy that dramatically reduces outpatient surgical costs for both payers and patients in the region.

Proven Best Practices for ASC-Focused Managed Care Contracts

  • Engage payers early. Do the work necessary to create an ASC-focused payer strategy in the earliest stages of ASC development.
  • Calculate the cost savings that HOPD-to-ASC case migration creates. Clearly demonstrating this value proposition puts the health system in the best possible position to negotiate favorable contracts with insurers.
  • Prepare payer-specific, specialty-specific proposals to drive negotiations with each payer.  

Want to learn more? Check out how proactive payer credentialing preps your new ASC for financial success. Or contact us to talk about your own ASC-focused payer strategy.

Interested in exploring a partnership with Compass Surgical Partners? Contact Us