You’ve heard it before, “work smarter, not harder”. In the revenue cycle space, the most obvious example of this concept is having the best possible contract in place with your in-network payers. After all, you can’t collect what you don’t bill out. In order to ensure you are being reimbursed as much as possible on each procedure, and each code, you’ll first need to ensure your contracts are highly competitive, and sufficiently profitable.
The process of renegotiating contracts, or initially negotiating contacts, is highly cumbersome, and often expensive. It’s important to be strategic about when to renegotiate your contracts. That said, there is certainly the potential for tremendous upside, especially when your position has become more favorable. Here are some guidelines we have prepared to help you decide if your facility would benefit from renegotiating your contracts:
- Your facility is performing procedures for which you do not have a contracted rate.
New procedures are continually being approved in the ASC space. If you have physicians performing these procedures, it’s important to ensure these codes are included in your contracts and are profitable.
- Your position in the market has changed.
Make sure they understand what you offer and how it is to their advantage to contract with you at sustainable rates for a long-term and mutually beneficial relationship. As an ASC, you cost less than the competing hospitals in your market. This is particularly advantageous if you are the only ASC in the area or if one of your competitors has ceased performing cases.
- A significant amount of time has passed since you’ve last reviewed your contracts.
Almost universally, consultants will tell you contracts need to begin 6 months prior to the end of your term and repeat annually. That said, this is not always feasible. This is particularly true for independently-owned ASCs who are not affiliated with a management company or hospital system (as these groups often perform this service on behalf of the ASC). We recommend renegotiating contracts at least every 3 years, with built-inautomatic increases.
- Policy changes on existing contracts have impacted your facility negatively.
Watch for policy changes and notices that require a timely objection. These changes can have a significant impact on your reimbursement rates and/or your facility’s operations. Such notices may include changes to your reimbursement rates, changes in how your rates are paid (for instance, applying multiple procedure discounts), added pre-authorization requirements or further documentation requirements. If these policy changes negatively impact your profitability, it would be prudent to attempt renegotiation.
While this is not a comprehensive list, we hope it is helpful to you in determining when to renegotiate your contracts. If you suspect you may be in need of a contract review, drop a comment below or give us a call at 855-208-5566.