Some Key Contract Language Items to Watch

It is a long list.  A long, long list.  When you are negotiating a managed care contract, there is an extensive list of items to review while getting it “done.”  I use a checklist of items in the ASC contracts I review to remind myself of the little details that help make an agreement work well for a center.  Here are a few to remember:

Unilateral Amendment – check the amendment language to make sure any amendments actually require your agreement, not just your continuation in the contract.  Some payers will provide language in their template agreements that say, effectively:

“We will occasionally change the contract and notify you of the amendment.  If you are ok with the amendment, no further action is necessary.  If you do not like the amendment, you can terminate the agreement and no longer participate in our network.”

Rather than signing something that sounds like a Medicare condition of participation, suggest that the payer incorporate language requiring amendments to be mutually agreed upon in writing ONLY.  Here comes the exception to this rule that is actually ok:  any amendments necessary to comply with applicable federal and state laws.

What happens at the end of the term? – it is great to get a new contract or update one.  Make sure that you are not being blind at the beginning of a contract to what happens when it ends: 

Are there automatic extensions? Can you only renegotiate when giving 90 days notice prior to the end of the term?  Be sure to look at what happens on the anniversary dates of a contract – does it increase? Does it end? Or do the rates just stay the same forever?

By paying attention to these things now, you can make sure the next contract with that payer is even better.

New / Unlisted Procedures – That new procedure one of your favorite docs wants to do - just how will it get paid on this contract?  Some payers will want to relegate those procedures to the minor procedure rate; others will just say they will let you know after you bill them.  Really?  When negotiating rates, new or unlisted procedures should either at a % of charges (best case) or at a high grouper / fee schedule rate, with any implants or high cost supplies covered at cost.

David Parrott, CASC, is a Principal in Batavia Solutions, an ASC consulting firm that specializes in managed care contracting and business and operational efficiencies.  To find out more about Batavia Solutions and how they might help your Center, send David an e-mail at BataviaSolutions@comcast.net

Put it on One Page to see how you’re really doing!

The revenue end of this business should be easy, right?  All you have to do is negotiate advantageous contracts with your payers, code and bill accurately, collect the dollars and then go home.  Since it is so simple, I think I’ll just end this entry right here and now….

For those of you who haven’t clicked away yet, maybe you know it is not always that simple.  I have found that sometimes I needed to look at an ASC a macro view – look at the forest instead of the trees, to gain a better perspective on how the Center is really doing – compared to last year, compared to budget, and with each major payer compared to each other.

One way you can do is to print a bunch of different reports and bring them to your next Ownership meeting – then tell your partners to sift through each report and expect them to keep them all straight in their heads.  Or, you could look more organized and professional, as well as be more effective, by getting it all on one page that shows you where you are now and where you need to focus your attention in terms of increasing your net revenue through your contracting process.

The contents of this report are simple and easily placed in a spreadsheet:

-          Payer

-          YTD Cases

-          YTD Gross Charges Total

-     YTD Net Revenue Total

-          YTD Charges / Case

-          YTD Net Rev / Case

-          YTD % Charges Collected

(If you would like a sample grid to get you started, drop me an e-mail at BataviaSolutions@Comcast.net and I will gladly send it to you.)

This grid is a handy way to summarize how a Center is doing on a “per payer” basis with all its major payers.  It allows an ASC's leadership to look at each payer, side by side, in terms of reimbursement, volume and contribution to the Center’s overall performance.  For Centers that I work with in terms of modeling revenue and identifying opportunities to improve contracts, this is a tool we complete up front to provide a road map for our work together.

Be prepared:   using this tool to examine your Center may (will?) create additional work for you!  Fortunately, it’s the right kind of work – it gives you a roadmap to increasing your Net Revenue per Case on the volume you already have.  Remember, every dollar you can add to that NR/Case number goes straight to the bottom line.

David Parrott, CASC,  is a Principal in Batavia Solutions, an ASC Consulting firm that specializes in managed care contracting and business and operational efficiencies.  To find out more about Batavia Solutions and how they might help your Center, send David an e-mail at BataviaSolutions@comcast.net

Newsflash: Empty ORs don’t make money!

Between patient satisfaction, physician satisfaction and employee satisfaction, a Center’s leadership team has a lot on their plates.  And not only do they have to keep everyone “satisfied”, they have to do so profitably! (When is your next board meeting?  How is the month / quarter looking?)

One of the ways, of course, to aid your profit margins is to do more cases.  The old saying, “Volume cures all ills”, appears to apply.  So, how do you get the volume?  There are two ways:  (1) get more cases out of the physicians already working at your center, or (2) get more physicians to use your center.  This blog entry focuses on Door #1 – getting more out of the docs you already have coming to your center.  There are a couple of ways to get additional cases, especially from those docs who split their cases among more than one surgical location. 

(1)   How can we fill that hole on Wednesday afternoon? – If a physician’s office knows you have time available, they will keep it in mind when deciding where to schedule a patient and are more likely to book with you rather than a competing facility.  So it is imperative that you keep your open times easily accessible to physician offices.  Luckily, improvements in technology have provided opportunities for physicians’ offices to use online scheduling for getting their patients on the books.  This can be more efficient than the traditional phone call to the ASC’s scheduler, freeing up the scheduler to “ride herd” on the schedule and deal with outlier issues, rather than doing the data entry for Dr A’s three tonsillectomies on Tuesday morning.  Whether you let them actually place the cases on the schedule or “request” them, it makes sense to explore these options with your IT vendor.  You can also go “old school” by e-mailing or faxing open times on a weekly basis to your schedulers, either way, it is up to you to tilt the decision to your Center rather than somewhere else.

(2)   Have a Great Trip, Dr B! – When are your heavy hitters (the docs with the big, weekly block times) going on vacation?  Do you know, does your scheduler know?  If you don’t, you should.  There are few things worse than seeing a big hole in your schedule two weeks from now, all because you did not know that Dr B was going on vacation and you now have an OR sitting empty for 8 hours.  By having advance knowledge (i.e. a couple of months) of vacation schedules, you have a terrific opportunity to market that time to other physicians.

(3)   Make sure that scheduling with your ASC is an easy process – In line with (1) above, you need to look critically at your scheduling process to ensure that it is efficient, accurate and user-friendly.  If it currently consists of multiple phone calls (and “phone tag”), you and your scheduler need to find a way to reduce the number of steps for all involved.  Not only will it make the physicians’ schedulers happier, it will reduce the effort involved for your staff, as well.

David Parrott, CASC,  is a Principal in Batavia Solutions, an ASC Consulting firm that specializes in managed care contracting and business and operational efficiencies.  To find out more about Batavia Solutions and how they might help your Center, send David an e-mail at BataviaSolutions@comcast.net