Ep. 99: Rita Reyes-Williamson – Payor Contracts: Leveraging Data for Negotiations
Here’s what to expect on this week’s episode. 🎙️
Effectively negotiating your payor contracts is key to maximizing your surgery center’s revenue potential and long-term financial success.
Rita Reyes-Williamson, Senior Director of Managed Care at Surgery Partners, joins us on this week’s podcast episode for part 2 of our payor contract series to talk about Leveraging Data for Negotiations. Here’s what Rita recommends.
❇️ Know Your Market: Understand the average reimbursement rates in your area (e.g., % of Medicare). Research competitors and hospitals to benchmark effectively.
❇️ Leverage Data: Use analytics to assess contract performance and make sure your rates align with costs, especially for high-cost cases.
❇️ Pitch Value to Payors: Highlight cost savings from moving cases to outpatient settings (e.g., total joints, cardiology) and quantify the benefits for payors.
❇️ Plan for Escalation: Include auto-escalation clauses or step-ups in multi-year agreements to keep pace with reimbursement trends.
❇️ Stay Ahead: Begin renegotiation at least six months before the term ends to account for delays and secure better terms.
Listen to the full episode for more strategies and real-world examples to make your contracts work for you.
Episode Transcript
[00:00:00] Welcome to this week in Surgery Centers. If you are in the ASC industry, then you are in the right place every week. We’ll start the episode off by sharing an interesting conversation we had with our featured guest, and then we’ll close the episode by recapping the latest news impacting surgery centers.
We’re excited to share with you what we have, so let’s get started and see what the industry’s been up to.
Erica: Hi everyone. Here’s what you can expect on today’s episode. Rita Reyes Williamson is the Senior Director of Managed Care at Surgery Partners, and she joins us today for part two of our payer contract series to talk about leveraging data for negotiations. Rita has really great tips and ideas for what data you should bring to your payer negotiations, such as physician case volume data, case migration from inpatient to outpatient, how you’ll improve access to care for their members, and so many more creative ideas for how you can gain leverage and get the [00:01:00] best rates possible.
Erica: After my conversation with Rita, we will switch to our data and insight segment. HST released our annual state of the industry report in September, which analyzed client data from 590 surgery centers. So today I’ll share with you case volume trends per specialty from 2023 to 2024, and then tips for how you can increase your case volume if you are looking to do so.
Erica: But before we dive into today’s discussion, I wanted to remind you again about our podcast survey. We are giving a 50 gift card to listeners who take just a few minutes to share their feedback with us. We want to know what you love about the podcast, what we could do better, and any segments or topics you’d like to hear.
Erica: The gift cards are limited to the first 30 responses though, so don’t wait, head to the link in the episode notes and let us know your thoughts. And a huge thank you to everyone who has already participated, we truly appreciate your input. Hope everyone enjoys the episode and here’s what’s going on this week in surgery [00:02:00] centers.
Erica: Hi, Rita. Welcome to the podcast.
Rita: Thanks, Erica. Great to be here.
Erica: Can you please share a little bit about yourself and your ASC experience?
Rita: Sure. I’ve been in this space for a long time for about 26 years. Started out actually in operations.
Rita: So I’ve worked pretty much every non clinical. Roll in a surgery center that there can be. And then from there, I moved on to being an administrator for surgery centers and being a regional oversight person and then also getting into the business of building surgery centers, taking over failing surgery centers.
Rita: And at that one point in my career, I switched over to focusing on managed care. So managed care is really my passion. It’s how do we get paid well for the services that we provide and we provide an amazing service. So it’s always been something that’s been near and dear to my heart. So I’ve been doing that pretty much exclusively for about the last I would say about nine years.
Erica: Very cool. Thank you. And all of that experience and your passion is exactly why we wanted to have you on today. [00:03:00] This is this episode will be part two of our payer contract series. And last week we really covered just some general tips for effective contract management. And then today with you, we’re going to dive into something a little bit more specific, which is how to leverage data for negotiations.
Erica: So let’s actually start with negotiating that first contract. So whether someone is opening up a new facility or just looking to add a new payer, what data can you bring to that meeting?
Rita: Yeah, I think number one, the most important thing is that whoever’s negotiating contracts for you, that they understand what the market average is, right?
Rita: whatever type of product we’re talking about. So each contract could be commercial lives, it could be senior lives, it could be Medicaid. So depending on what it is that they’re negotiating, they should have a sense for this area of the state, this is what the average going rate is for a commercial product.
Rita: product, for example, versus an MA or Medicaid. So without that, you’re really flying blind, right? You [00:04:00] don’t want to just take whatever it is that the insurance plan offers you. You should have a sense for what your worth is in that area. You get that in different ways. Certainly when you work in one area, one market for a long time, it, becomes pretty clear over a span of many contracts that this is what the health plan industry is willing to pay for services in this particular area.
Rita: And it can really vary depending on where you are. If you’re in a metropolitan area, there’s more likely going to be more surgery centers, more competition versus say, like in a rural area, where you’re the only gig in town, in which case that rural area might actually be able to get better rates than.
Rita: The city ASC. So for, if we’re just starting out in a new area of the state, that’s the first thing that we do is that we research, what is the going rate? What do the hospitals fetch in those areas? What’s your competition look like in the area? Are there other surgery centers next door or not for 20 miles?
Rita: And that’s really going to [00:05:00] impact what you should be able to get on those contracts.
Erica: Perfect. And how can you acquire those data points that you’re you referred to?
Rita: I think, different ways. If you, if it’s the first time that you’re in an area in the market, you’re going to be negotiating several contracts, I imagine at the same time.
Rita: And you’ll get a sense for, okay, it seems like everyone is settling on 125 percent of Medicare or something to that effect. And let me just take a step back. When we assess contract performance, one of the easiest ways to do that is to look at it as a percentage of Medicare, right? Everybody has an idea of what Medicare is for them and it’s a very consistent benchmark and we’d like to look at it as a percentage of Medicare.
Rita: So if I go into a new area of the country and I have no idea what the going rate is, I’m going to shoot high and I’m going to be doing this probably for, Three to five different contracts at the same time because you’re usually, the big book as we call them, Blue Cross, Blue Shield, UnitedHealthcare, [00:06:00] Cigna, Aetna.
Rita: They’re prevalent in most areas of the country. So we get a sense for, okay, everyone seems to be settling in at this value of Medicare. So it’s most likely the going rate. Then you have to start talking about your own value propositions. Okay, that might be the going rate, but we really don’t want.
Rita: that amount, we would like something better. And how are you going to pitch it to the health plan that you’re worth that additional premium?
Erica: And what are some of those ways you can, outside of kind of the going rates, what else can you leverage during those negotiations?
Rita: Really depends on what the services are that you offer.
Rita: So for example Most surgery centers, in the 90s did gastroenterology or ophthalmology and things like that. Those are very common things to be done in ASEs over the last 10 15 years, though. We’re doing things like total joint replacement, spine surgery, urology, and now even we’re seeing women’s health procedures coming out, vascular, [00:07:00] cardiology.
Rita: So what makes us valuable as an industry is what we can do for the health plans and that is to be able to move cases that historically are done at the hospital. Where the cost is much greater and move them into the surgery center where we can save them quite a bit of money. So there’s a balance though, right?
Rita: They’re not going to pay us the same as a hospital because it makes no sense. So we have to be able to price ourselves a little bit lower than the hospital, but not so low that it doesn’t make sense for us either. Because there are a lot of costs that go into launching those more advanced service lines.
Erica: Sure. And I’m going to oversimplify this, but let’s say you’re, when you’re talking to the payer, you’re saying to them, okay, per procedure, I can save you a thousand dollars by bringing it to an outpatient setting. And we’re projecting 150 cases per month. So that’s X amount that I’m able, that we’re going to be able to save you if you contract with us at this negotiated rate.
Rita: Is that Yeah, that’s exactly right. And we try You do the math for them. So we would do exactly [00:08:00] that. The hospital data is out there. It’s public. You can get a sense for what hospitals are getting paid for certain types of procedures. And so you can go to them and just say exactly that this is what I think you should pay us which is significantly lower than the hospital.
Rita: If we were able to convert even 50 percent of those cases that happened at the hospital last year, To our surgery center. This could be whatever millions of dollars of savings. So we try to make it easy because the person on the other side of that email or whatever, they need to be able to pitch it for you to their superiors.
Rita: So the more information that you can give to them to make their life easier, the better. The other thing you could talk about too, is like, Hey, we’re recruiting, these new procedures and what have you. So the more unique procedure. The better. And certainly you can even ask the health plans.
Rita: Hey, what would be helpful for you if we were able to take these out of the hospital? What would be helpful for you? And you can have those kind of collaborations where, I could go [00:09:00] back and just say, Hey, guys, the health plan is saying that, the total joint replacement work that they do at the hospitals is just really outrageous and they’d really like us to convert some of those and we can work together to try to identify which doctors might be interested and try to go after those folks and get them on staff.
Rita: Interesting.
Erica: Yeah, that’s a great angle. So when you’re negotiating, we mentioned some of these data points you can bring to the table and you had mentioned, to aim high, assuming that while you’re negotiating, it might be lowered or likely be lowered. What else when you’re negotiating?
Erica: Any other tips that you’ve seen really work or tactics that you’ve used?
Rita: Yeah, I will say, so there’s different ways that you can negotiate any contract with any health plan and so they’re just because they’ve done it one way in the past doesn’t mean that you necessarily have to stick with that.
Rita: So let me give you an example, like with Aetna Healthcare, they traditionally have used groupers with carve outs for certain procedures and they would pay you for implants at whatever cost or [00:10:00] cost plus. They are now. Across the country, starting to move to a more inclusive percentage of Medicare.
Rita: You can negotiate it with or without the ability to get paid for implants separately, or sometimes you can use a third party procurement company. So If you understand your numbers that can work to your advantage, right? So what the health plans don’t know is what it costs you to do the care. But as a surgery center, you should know, and it should is a quotation.
Rita: You should know what your costs are to do a case. And if you can control those costs. by flipping to a situation where the surgery center basically takes on the risk of negotiating rates without implants, where meaning you have to control that cost, you can actually do very well. I would suggest, definitely, Look at the different ways that your surgery centers are willing to contract.
Rita: I will say I’ve seen that trend with Aetna, I’ve seen that trend with Cigna, and to a lesser degree some of the Blues. But all the health plans are [00:11:00] tired of paying for, implants separately because they can’t control that. They just assume gosh, that’s what the doctor needed, and I guess I have to pay for it.
Rita: And it’s hard for them to budget, right? So what’s appealing to going to a percentage of Medicare methodology is that they can budget. They know, okay, I am in for this percentage of Medicare on this case and I don’t have to pay anything extra. Before they would say I know what I have to pay for the procedure, but the implants are, an unknown.
Rita: We’re not exactly sure it could be a thousand dollars. It could be 10, 000. We have no idea. So it’s hard for them to know whether it’s going to be a reasonable. Case for them or not. So that would be a suggestion is, look at different ways. Each of the plans are willing to contract with you, not just the traditional way.
Erica: Sure. All right. Let’s switch to someone who may be renegotiating an existing contract. It sounds like a lot of these tips you already gave might be useful as well. But what should a surgery center be analyzing in [00:12:00] advance and in preparing for that meeting?
Rita: And I alluded to this in my last answer too, is that, surgery centers really need to get a grasp on what it costs them to do a case.
Rita: And by that, I mean the implants or any extraordinary supplies or equipment that they have to pay for a case, right? So when we model a contract, we always look at, okay, what is our baseline performance? We did 500 cases for, At now or whatever. And we look at one product.
Rita: We’ll look at the commercial product, for example, and we’ll say, okay, how did that fair benchmarked against Medicare? And so even a small independent surgery center should be able to do this. Medicare rates are public. You should be able to see what it is in your wage index. And so you should be able to reprice in a model.
Rita: And this can be Excel based. And they can reprice every case that they did for Aetna against what would Medicare have paid down to, the fact that they don’t pay implants, but and then from there, you come up with a percentage. So say [00:13:00] you, you benchmark all your Aetna commercial cases, and it looks like you’re performing at say 130 percent of Medicare.
Rita: From there, you can start playing around with the model okay gosh, you What do we want to get for a renewal? Part of that depends on like, how long ago did you renew this contract? If you’re very good and you stay on top of it right away that’s going to happen every three years, but say you have a small surgery center, they haven’t renewed it for 10 years.
Rita: It’s a, you’re probably going to ask for a little bit bigger lift. At the same time, you have to understand that the health plans have their budgetary constraints as well. I would say most health plans will tell you that they’re relegated to a 3 percent year over year increase. And so sometimes they have to give more to somebody, which means that sometimes I’ll have to give less to somebody be able to average out to about a 3 percent lift.
Rita: So the analytics I think is very important. So without that, you really have no sense for what you’re going to put forth as a proposal, how it will [00:14:00] do for you, right? So by doing the analytics that way, you’ll also be able to see Hey, what kinds of cases really move the needle for us? And which ones are really hurting?
Rita: If you’ve got something where you’re in a traditional, grouper situation and you have this one case that you do all the time and it’s just terrible and you’re always underwater, those might be the kinds of things that you identify when in this time to renew. Just be honest with the health plan and just say, we would love a general lift, but at the same time, I need an extraordinary lift on this.
Rita: And this is why I need to give them the information. Like we’re paid well below Medicare on this particular case. And this costs me 1, 200 to do. And I’m not going to be able to afford to do that for you guys in the future if I can’t get some sort of consideration. So those kinds of things where you have, additional carb outs.
Rita: Certainly, how do you deal with implants? If you’re a small center and you don’t have a lot of leverage in terms of buying power maybe you want to stay with a cost plus [00:15:00] methodology versus if you’re, a bigger, more sophisticated center and you have control over your implant costs, maybe you’re willing to take more risk, in which case you move to a scenario where you get paid more.
Rita: But you don’t get paid separately for the implant. So there’s all kinds of things that the data will show you. The other thing is important to know is, will your case mix look the same over the next three years as they have historically, right? Because if we do the analytics, it’s always based off of historical data, right?
Rita: We’re never going to do exactly the same cases in the next term, but that, the People that run those surgery centers will say I’m losing that doctor. He’s retiring. So all of these cases that made us a ton of money are now going away. So we may need to shift and look and see, okay we need to start putting more money towards a different specialty that we know is solid and will be there in the next term.
Rita: So those are the kinds of things. And again, the health plans don’t know that, but the surgery centers should know [00:16:00] that. So that would impact how we’re going to approach the renewal.
Erica: Yeah, that’s all great advice. And would you recommend Cause, I’m trying to think would you recommend the renegotiating every year so that you can look at your data and renegotiate every year, or would you recommend a multi year agreement with that blanket increase of 3 percent and then maybe room to negotiate The five CPT codes what would you recommend in terms of the length of the contracts?
Rita: Yeah, I think it depends. Most contracts are for a minimum year of two to three years, typically.
Erica: Okay.
Rita: I’ve seen longer and I’ve seen shorter. Certainly, whenever the end of the term is, you want to make sure that you’re renegotiating, and you really can start like six months in advance of that to try to get a lift for the next term because the health plans are experts at delaying and they won’t get to you right away.
Rita: And so you have to give yourself a little [00:17:00] room wiggle room. So https: otter. ai
Rita: What I would probably recommend is that you negotiate whatever your renewal is for year one, and then do auto escalations for year two. So that means like Okay, we’re going to agree to this for the next renewal year one and then the next year we’re going to do whatever a three To four percent auto lift and that way they don’t have to deal with you in years two and three the other thing that you can do and this is very common if you Negotiate it as a percentage of medicare is that you can have say you start year one at 135 percent of Medicare, you can say in year two, I’m going to go to 140, and year three, I’m going to go to 145.
Rita: That way it creeps up automatically. Again, the contractors on the health plan side are extremely busy, so it helps them because they don’t have to hear from you for three years. At the same time, everyone’s happy because we have this step up approach and we’re [00:18:00] still staying with the times in years two and three.
Erica: All right. Rita, we do this every week with our guests. What is one thing our listeners can do this week to improve their surgery centers?
Rita: I would say double check to make sure that you understand what your costs are per case. And so that involves the cost of implants.
Rita: Because that’s something that we can get paid back on. Just making sure that your surgery center staff are capturing implant costs properly is going to be really critical to negotiating proper contracts going forward.
Erica: Love it. Thank you so much for coming on today. We appreciate it.
Rita: Thanks. It was my pleasure. Take care.
Erica: HST Pathways released an updated version of our state of the industry report in September, highlighting best practices, key process steps, and KPIs for every step of the patient journey and for nearly every recurring administrative duty. Most importantly, using our own unique data set from our clients, we were able to extract data points so that anyone in the industry [00:19:00] could compare themselves to their peers.
Erica: We only pull data from clients who gave us permission and we omitted any extreme outliers. So today we’re going to take a look at case volume trends broken down by specialty from 2023 to 2024. And then we’ll cover how you can increase case volume if you’re looking to do so.
Erica: All right, let’s look at the year over year trends. So from 2023 to 2024, we looked at 12 specialties to see how their monthly case volume changed. Four specialties increased with urology seeing the largest Jump with 13. 8%. The other three specialties that increased were GI, ophthalmology, and dental. Four specialties saw no significant change and those were cardio, general, ortho and pain. And then four specialties decreased, with podiatry seeing the largest decrease with 20%. The other three specialties that also decreased were ENT, gynecology, and plastic.
Erica: Across the board, though, if [00:20:00] we average all 12 specialties, ASCs did see a 1. 1 percent decrease in monthly case volume. So, those are the trends that we saw. Now, let’s talk about how you can increase your case volume. You may know you want to, or maybe you need to increase your case volume, but it can be really hard to know where to start.
Erica: So, my advice to you is to focus on the following three metrics. The first is OR utilization percentage. This is going to tell you how efficiently you are using your most valuable resource, which is the operating room. By finding the percent of unutilized OR time, you know how much room you even have to grow.
Erica: The second metric is revenue per OR minute. This metric is exactly how it sounds and strives to tell you how much revenue you generate for each minute the OR is in use. Now, if you are multi specialty, I would recommend, breaking this metric down by specialty, or if you’re single specialty, you could break it down [00:21:00] even further by CPT code.
Erica: this number is important so you can understand if you did increase your OR utilization, exactly what would the financial output be? The third and final metric is average net revenue per case. Knowing this will help you focus your efforts on the most profitable areas. So if you have your OR utilization, you can back into how many minutes that you have available to grow.
Erica: And then using that revenue per OR minute, you can tell exactly what your financial output would be if you did backfill. And then the average net revenue per case is really going to tell you. You know, which, specialties and which CPT codes you should be focusing on because those are your highest revenue generating, procedures.
Erica: So let’s walk through a quick example. Let’s say you’re an orthopedic facility. You first determine your OR utilization and realize you have, 40 percent of your block time is going unused. You can then look at all your procedures from the last year and [00:22:00] average net revenue per CPT code. So let’s say you determine that CPT code 29889 for a knee arthroscopy is your highest revenue generating procedure and you average 5, 000 per case. Since you know, you’re unused our time, you know, that you have the white space to add three knee arthroscopies per day.
Erica: And that would bring in 15, 000 per day if you did so. So now you know what you need to do. And now you’re saying, that’s great, Erica, but it’s not that easy to just whip up three new cases per day. And you’re totally right. So here are three tips to help you backfill with the procedures, you know, that you need to.
Erica: The first is to prioritize your top procedures during the scheduling process. So once you know which procedures generate the most revenue, you can prioritize scheduling them or consider expanding capacity for these high revenue cases by adjusting your block scheduling. The second is to seek partnerships or referrals.
Erica: So you can build [00:23:00] partnerships with physicians or practices that specialize in your most profitable procedures. You should also tap into your existing physicians to collaborate and brainstorm and help point you in the right direction. They might have colleagues at the hospital. They might have people in their network that they know, whatever it might be.
Erica: Tap into your physicians. They could absolutely help. And then lastly, engage in targeted marketing efforts. So this could include digital marketing campaigns, community outreach or partnerships. I’ve seen some really powerful case studies for surgery centers who have run targeted local marketing ads for total joints programs specifically, and they were able to increase case volume by 10 percent after only six months.
Erica: So it’s definitely effective and worth looking into. It’s also not an endeavor you need to take on by yourself. There are plenty of marketing agencies out there who specialize in things like this that could help you. So to recap, ASEs on average saw a 1. 1 percent decrease in monthly case volume from 2023 to [00:24:00] 2024.
Erica: And if you’re looking to increase case volume, you do have levers you can pull in order to do so. And if you’re interested in more data points and use cases, subscribe to our podcast so that you don’t miss any upcoming segments or head to our website to check out the full state of the industry report to get your hands on even more data.
Erica: And that officially wraps up this week’s podcast. Thank you, as always, for spending a few minutes of your week with us. Make sure to subscribe or leave a review on whichever platform you’re listening from. I hope you have a great day and we will see you again next week.
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