Michael McClain – Opening an ASC: Navigating Payer Contracts
Here’s what to expect on this week’s episode. 🎙️
Last week, we sat down with Wil Schlaff to talk about how to conduct a feasibility assessment for your new surgery center.
As a continuation of that conversation, we’re sitting down with Michael McClain to discuss navigating payer contracts for your new surgery center. Michael is the founder and managing member at LeftCoast Healthcare Advisors, and we are talking through how to initiate payer conversations, positioning yourself to get the best rates, effectively managing contracts, and the complexities to consider along the way.
A few highlights:
⏰ Timely Start for Payer Contracting: Payer contracting discussions should begin six to nine months before an ASC’s opening.
📊 Market Analysis: Research your local market to identify key payers, volume, and potential patients. Patient EOBs can be a valuable resource for determining actual reimbursement amounts.
☎️ Engaging Payers: Reach out to physician representatives and payer market representatives early on. Initiate contact with payer-specific negotiators to discuss rates, terms, and credentialing.
🗣️ Understanding Rate Negotiation: Negotiating rates involves understanding your costs and the value you bring to the payer. Obtain the entire fee schedule from payers to negotiate effectively.
🚫 Termination Provisions: Pay attention to contract terms and termination provisions. Negotiate terms that align with your ASC’s growth plans and allow flexibility.
Find the full episode on Apple Podcasts, Spotify, or YouTube to hear all the details.
Episode Transcript
0:00
welcome to this week in surgery centers if you’re in the ASC industry then
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you’re in the right place every week we’ll start the episode off by sharing an interesting conversation we had with
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our featured guests and then we’ll close the episode by recapping the latest news impacting surgery centers we’re excited
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to share with you what we have so let’s get started and see what the industry’s been up to [Music]
0:27
hi everyone here’s what you can expect on today’s episode so last week we sat down with Will
0:33
schlaff to talk about how to conduct a feasibility assessment for your new Surgery Center
0:39
as a continuation of that conversation today we’re sitting down with Michael McLean to talk about navigating payer
0:47
contracts for your new Surgery Center Michael is the founder and managing member at Left Coast Healthcare advisors
0:54
and we are going to talk through how to initiate these payer conversations positioning yourself to get the best
1:00
rates effectively managing contracts and so much more in the payer contract World
1:06
in our news recap we’ll cover the government’s plan to grow the nursing Workforce how to implement more safety
1:13
and security measures at your ASC the use of machine learning to predict the
1:19
suitability for having a surgical procedure performed at an ASE versus a hopd and of course end the new segment
1:27
with the positive story about how many steps a day you actually need to remain healthy
1:33
hope everyone enjoys the episode and here’s what’s going on this week in surgery centers
1:41
Michael welcome to the show thank you for having me excited to have you on today and we’ve been doing a series of
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podcasts and conversations recently on the de novo process and opening new surgery centers and so wanted to
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continue that conversation on here today Michael and bend it towards the payor
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contract side of opening new facilities and so as you think about the process open new
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ASCS and you think about payer Contracting when do those negotiations
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come up in the overall timeline of opening a Surgery Center yeah the question of how you start that
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process and and where it starts really depends on the value proposition that your ASC brings to the payer in concept
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an ASC should be a lower cost higher quality location of service than one
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where patients are coming from but the level of that value to the payer varies is this an ASC that’s bringing an
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exceptionally large amount of business from say a hospital or other locations
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where the rates are much higher payers are much more interested in engaging in that conversation that shortens your
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timeline so I always Advocate thinking at least six to nine months out before
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your opening to begin addressing your payer contracts six to nine months great and for owners
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and for folks working on building out new facilities how do you get the lay of the land in
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your market in terms of who the payers might be what the most important payers might be by type and by volume is there
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a way that you can research and get up to speed on these things before you start reaching out yeah great question there are a number
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of ways to do it although ironically the most effective is still secret shopping picking up the phone calling competitors
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from different phones and asking them what they charge or what the expense would be there are more software
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platforms that are now coming out on the market and with all the changes and the no surprises act and with changes around
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hospital and pricing transparency there are more resources available honestly
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the single best location of information though is patient eobs whether that’s
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families friends your Physicians who are going to be in your new ASC their
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patients are getting eobs from wherever they’re doing cases today and will have exactly what the insurance providers are
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paying that gives you a great armchair metric to establish what your savings
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can look like and the value that you offer to a payer guys you’re almost suggesting starting
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to put together kind of the point of view on hey who are these payers that are going to benefit based on your
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potential patients and who those are going to be who are the payers that are common and stand to gain the most from
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your services coming to Market absolutely I always talk about payers when you think about a payer contract
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it’s the most important piece of your ambulatory strategy when you’re building an ASC because it’s all the dollars at
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the top fall to the bottom line and so while many payers will provide a
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contract getting premium rates where you’re paying for your costs plus a margin take time and data and so you
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want to be really strategic about that and understanding where is The Leverage that you can apply to that conversation
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so that you get the most appropriate rate for the cost savings because it’s
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not going to get offered in the first proposal that you get on your desk sure yeah to that point it seems like really
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this is one of the most fundamental important concepts of opening and
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maintaining a profitable SC for the long term which is the payer contracts which determines your
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Revenue right and again if we put ourselves in the shoes of new ASC owners they’re researching their
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patient demographic getting a feel for the market formulating their value prop
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and their pitch when they’re ready to start reaching out to payers what do you
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recommend that folks do and what should they keep in mind as they you know start to initiate those conversations and
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start to initiate those negotiations yeah I think the key message is you’re
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only going to get to sign your first contract once and so every subsequent
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contract will be renegotiating and trying to get more so that first contract is incredibly important so as
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you’re thinking about gosh we’re six to nine months from opening starting the conversations with the physician
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Representatives that each practice has a representative from the payer that’s a
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market representative and saying hey we’re going to be moving our volume over to a new ASC help us start to get in
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contact with the ASC specific negotiators for each payer understanding that there are two processes you have to
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negotiate rate and terms but you also have to complete credentialing and so
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the credentialing application itself can sometimes take two to three months and often requires that you have both your
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license and your Medicare Certification Number before they’ll let you complete credentialing so even if you’re
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negotiating rates you may not be able to complete that credentialing piece and both have to happen and then allow for
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contract loading so you have time to get paid so it’s critical I think to think
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ahead about who are your most important payers at the time of opening begin those conversations early you can have
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conversations with smaller payers your large National payers that will
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have larger volume start those conversations first and know that the rates that you sign with them will cast
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skate downward to the smaller pairs got it and you mentioned the payer
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conversations and credentialings as two key Milestones it sounds like it’s okay to run those two processes in parallel
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are they more sequential so it depends on the payer and it depends on the market and we always say Healthcare is
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local it’s really true when it comes to reimbursement and payer process many payers will tell you they will not
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negotiate until they have a credentialing packet complete and if you don’t have a Medicare certification you
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can’t complete your application that being said most payers will allow
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if you push a bit for you to at least put documentation in queue so that you can at least provide the bulk of the
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credentialing information early even if you’re still working on rates but they’re actually two completely separate
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divisions in every payer every payer has a credentialing department and a negotiations or payer department and so
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it’s actually two different groups of people that you work with so if you approach it sequentially you’re just
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adding time so I always Advocate push as hard as possible to get them going
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simultaneously okay that’s good to know from an order of operations perspective and you mentioned on the negotiation
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side that there’s the rate side of that negotiation in the term side and if we kind of break those up let’s talk about
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the rate side first what is the best way Healthcare is local are rates local too
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what’s the best way for owners to get an understanding of what rates are Benchmark what rates are fair what
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rates are normal in their market so you’re absolutely right rates vary by
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market they can even vary by micro Market meaning one side of the state will have a completely different rate
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than the other you can get a little bit of feel for that by looking at what your Medicare rate is in each market because
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Medicare publishes all their standard rates and there’s very mutations based on uh population cost of living Etc so
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you know that you’re going to have some variation when it comes to individual rates though I would say that the
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individual rate that you have the ability to negotiate payers like to think of rate in terms of
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what they’re paying everyone else you as an owner of an AFC should be thinking of what am I saving the payer
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by providing this service and causing a migration of cases from point A to point B
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that work that we talked about earlier understanding the eobs what are your area hospitals or ASCS being paid
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whether you’re querying through existing software and other pricing transparency tools to get a feel
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for their rate where do you fit into that is how you start to determine your
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rate but in the end the rate that’s most important is the one that covers your costs so you really need to understand
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if my procedure costs five thousand dollars to perform I shouldn’t ever
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accept a rate that’s less than five thousand dollars right and so I think
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that’s the key is understanding what your expenses are so you can effectively negotiate a payment plus a margin
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because you’re going to need to continually to reinvest in those ases and what is a reasonable margin that
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also varies by market there are plenty of markets where rates are at or below
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Medicare from a commercial construct and you’ll understand that by talking to your ASE colleagues in the market oh
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yeah I’ll never I can’t get more than x um other markets you look at some areas
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in the midwest some areas in Texas some more rural areas they may still have
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rates that are two three four times Medicare and so getting that understanding of what the larger market
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is and then honing in on what do I need as a business to grow
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I got it and then these actual conversations on the right side as you mentioned these are important
11:42
conversations in the negotiations arguably nothing is more important as you get going
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is there a framework or set of best practices or a playbook in terms of how
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people drive these conversations should folks expect hey this is going to be a series of a 10-step negotiation do
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people settle this in a call or two if they’re prepared what’s like the range of processes that you’ve seen for this
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yeah what I would say is the higher above what is considered a market rate
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and once you’ve done your homework and figured out okay the market rate for this is somewhere between two and three
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thousand dollars but the higher above that market rate that you want to get and the size of the
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payer will dictate how many rounds or how long it’s going to take to do that negotiation if you want double the
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market rate that type of negotiation could take a year and could take a
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thousand man hours and lots of negotiations you might not ever get there if you’re looking to accept a
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market rate from a small paper who’s just trying to get in the door that could happen as quickly as in a phone
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call and you get a relatively decent proposal for a relatively small amount of business
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so I think the most important part though from this it’s not a 12-step program which is great although
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sometimes you feel like it is is that the very first thing you should do is make sure that when you’re negotiating
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you get an entire fee schedule so that the payer provides you every single payment for every single CPT
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because without that information you’re guessing and so that should be
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the first step of every discussion is to get the actual fee schedule that they
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will pay you or that they’re basing their rates on the second thing that I think is really important is to really
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Target what additional services are they going to bring are they going to reimburse implants do they provide carve
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outs what are the special elements that might be there and then the devil’s in
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the detail when it comes to things like multiple procedure logic some payers
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will pay a hundred percent of the first procedure you do and then 50 of all the
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subsequent others only pay a hundred on the first 50 in the second 25 and the
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third and then nothing else and so understanding the differences every payment system is different that’s
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why it’s so important to get all of that information up front so then you can effectively negotiate with them
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at multiple procedure logic in particular that’s where it gets complicated isn’t it
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absolutely if you’re an ENT practice for example and you typically have six or
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seven or eight procedures that you do at once that’s a very different reimbursement model than say
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Ophthalmology that is mostly Medicare and generally has only one procedure code so multiple procedures matter a lot
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more to an ENT or Orthopedic practice than they might with a more typical Urology or general surgery practice
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yep those are good tips around the fee schedule additional services and the multiple procedure logic but
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it’s a lot to get your head around if you’re doing this for the first time if you’re not an expert in this process and
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it’s daunting to go through the first time I’m sure what have you seen out there is great resources great firms
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great people that folks owners opening de novos can talk to for help as they
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get through this sure and I think that sort of comes in what I would say three flavors I think
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the first one is your own professional organizations whether it’s a state professional ASC or a state professional
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physician practice organization they’re going to have access to the local talent
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that’s going to be able to help whether it’s a consultant or even just a network of people to compare and contrast ideas
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and comments I think that’s the first great step the second is really engaging more of a formal consulting or advisory
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firm I know my firm Left Coast Healthcare advisors we offer that services and tend to focus more on the
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west coast but we’ve got experience across the country and there are other great firms that are small like us that
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offer some similar size Services I think of there’s probably a few others and
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then there’s a third layer and I think this is particularly important if you’re starting a really large or Capital
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intense ASC if you’re looking at hospital joint venture related so if
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you’re looking at a large specialty practices sometimes you can benefit from an even more Deep dive in companies like
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ECG and sg2 there are big consulting firms what I would say is that the
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output generally is equal to the cost that you’re going to pay but I also
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think that if you’re looking for a hundred thousand dollar increase every year on a contract
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the cost to pay 40 or 50 000 seems horribly daunting but that’s a hundred
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thousand dollars a year to the bottom line every year in perpetuity that they helped you get
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so it’s really starting at that local level is there someone locally that can help you if not is there a larger
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organization that might benefit and of course there’s no shortage of organizations around rev cycle companies
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Nimble surgical notes others that can help with negotiating contracts as part
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of their rep Cycle Service and we touched on the rate set one thing
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one thing I forgot to touch on more was the key term side outside of rates is folks are setting up these bear
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contracts what should they be thinking about or watching out for on the term side yeah we touched on rate and multiple
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procedure logic term and termination Provisions are really important how long is the contract and what are the rights
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that you have in terms of terminating it surprisingly termination language can be
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long some payers as say as long as that you have to tell them you’re going to terminate
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180 days before the contract’s over most of us I certainly don’t think six months
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in advance when I’m running an ASE that I have to negotiate essentially nine months in advance because if I can’t get
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somewhere and I want to terminate in the future I need to give them six months of notice so term and termination matters a
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whole lot I think the other two that are particularly important now are really around Amendment language
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an assignment language if you’re looking at a potential sale in the future and
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those contracts go with you or not is a really important question to understand because in an acquisition or a
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partnership if someone’s coming into your facility they want to know can we bring those contracts along for the ride
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or do we need to start over and I gotta imagine on that point of assignment and Acquisitions sometimes
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it’s probably helpful for the centers to have agreements that are assignable to the next group and maybe sometimes you
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have groups that come in that would rather negotiate their own because they have a big infrastructure and in place
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contracts you’re absolutely correct it’s part of that larger question of what will a future partnership look like from
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a m a standpoint maybe you want to maintain your existing contracts maybe you don’t you want to start over
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depending on what the new partner brings to you the other piece that I think gets
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lost a lot of time is the difference between charge and payment and understanding is there a lesser of
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provision that sits in there that lesser of provision in the market that we chat about is really
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are they going to pay you the lesser of a contracted rate or a build charge amount and quite often there are ways
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that if you aren’t charging high enough on your contract they won’t automatically pay you your contract rate
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maybe they pay you 50 percent of billed charges or the lesser of that or your
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contracted rate so your charges have to be high enough to capture that contracted rate
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sure and how should folks think about in-network versus out of network and how
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that comes into play from a high level yeah oh gosh so I’ve been saying for
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almost 15 years that out of network Services is going the way and yet every
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day we still have out-of-network services and so what I would say is understanding what your local and state
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laws are around out of network Services now that we’ve got the no surprises act
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I’m actually doing a talk on that coming up around what do you have to disclose
20:29
now to the patients if they are choosing to go out of network or have non-insurance coverage so I think the
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biggest thing to do is really do your homework locally understand your state and local regulations around what
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information is going to be there or has to be provided to the patient I think that’s so important because I think it’s
20:48
difficult to manage out of network practices and now it’s even more okay final question for you here Michael we
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do this every week with our guest that’s one thing our listeners can do this week to improve their surgery
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centers I saw that question and I thought quite a bit about it and I go back to my days
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as an operator the best thing I ever did in my ASC and I’ve had all my people do
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this is to have someone in your ASC wheel you around either in a wheelchair
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or in a Stretcher and your perspective changes entirely you get to see the
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ceiling you get to see what it’s like to go through doors you get an entirely different view of your own facility and
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it’s amazing if you’re laying in the back on your back in your own pacu what you see above you remember that’s what
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patients see every day and you can really dramatically change the look and
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feel of your facility by changing a few ceiling tiles or catching a few cobwebs
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that’s the best thing that I’ve ever and I was taught that by an older ASC expert
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and I’ve done it every time I think it’s great wow that’s a different answer than we’ve ever gotten before in answering
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this question I love it from a patient experience standpoints thanks for sharing that you bet
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Michael thanks for joining us today absolutely thanks for having me
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[Music] as always it has been a busy week in healthcare so let’s Jump Right In
22:17
the health resources and services Administration announced Awards of more
22:22
than a hundred million dollars to train more nurses and grow the nursing Workforce so the 100 million dollars
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will be spread out between three different areas of focus the first is
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helping licensed practical nurses become registered nurses so 8.7 million dollars
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of the 100 million will be given now this is the longest name ever but will
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be given to the nurse education practice quality and retention Pathway to
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registered nurse program which trains practical and Vocational nurses to become registered nurses
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the second Focus will be on training nurses who will deliver Primary Care
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Mental Health Care and maternal health care now this is by far where the biggest portion of the money will be
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going and there are two programs that will benefit here 34.8 million will be given to the
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advanced nursing education Workforce program and then 30 million dollars will
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be given to the advanced nursing education nurse practitioner residency
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and fellowship program and then lastly the third and final
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Focus will be on addressing the bottlenecks in nurse training by supporting more nurse faculty so the
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remaining 26.5 million will be given to the nurse faculty Loan program to
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provide low interest loans and Loan cancellation to incentivize careers as
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Nursing School faculty so Carol Johnson is the hrsa’s administrator and she said
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today’s Investments demonstrate our ongoing commitment to supporting the nursing Workforce training and growing
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the next generation of nurses creating career ladders for nurses and recognizing the critical role nurses
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play in primary mental and maternal Health Care now 100 million dollars is great we’ll
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take it you know compared to the government’s budget it’s not much but
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better than nothing and if you want to learn more about these programs check out
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hhs.gov or head to these episode notes and you’ll find a link directly to the
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article and you can learn more about the programs and see how you might be able to benefit
24:44
our second story comes from the August edition of ASC focus and it’s all about
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implementing security and safety measures at your surgery center so the most recent Federal data from the
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Bureau of Labor Statistics states that health care and Social Service Industries experience the highest rate
25:04
of injuries caused by workplace violence and are five times as likely to suffer a
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workplace violence injury than workers overall and then a national nurse’s United
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survey of more than 2500 nurses that was conducted in early 2022 found that
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nearly half reported an increase in workplace violence so I share all of this because this is why it feels so
25:30
timely as you have probably have experience in your own day-to-day workplace environments that especially
25:37
after covid and during the pandemic there’s just been an increase of unruly
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patience and issues that are taking place so where can you start by conducting a security vulnerability
25:50
assessment to identify potential security gaps and the actions that can be taken to address them
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this assessment should be as comprehensive as possible and include interviews with leadership and Frontline
26:03
Associates as they can likely identify vulnerabilities and make the best suggestions for improvement
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so the article shared a ton of different ideas from a few different administrators who have recently been
26:15
focused on added safety measures and here’s a quick recap of what they did share
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so you’ll want to double check and possibly upgrade the Locking mechanisms on all doors and windows
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hire part-time off-duty police officers to help keep patients and visitors under control
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install keypads so that visitors are unable to move past the waiting room
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unattended add security cameras outside your facility
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install a silent alarm system so you can alert local police and then lastly make
26:51
sure your employees are properly trained for any situation or emergency and that everyone is well equipped and in the
26:58
know about your emergency preparedness plans and hopefully you will never need to act
27:05
on any of these safety measures and it will always seem like Overkill but it’s just not one area you want to be caught
27:12
off guard and if you haven’t done an evaluation like this it’s a great place to start and then they recommend doing
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it annually moving forward our third story comes from or manager
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and it’s about a study from the University of Michigan that examined the use of machine learning to predict the
27:32
suitability for having a surgical procedure performed at an ASC versus a
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hospital outpatient Department so when the process is done manually it’s pretty labor intensive and requires
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physician assistance to review each patient’s suitability one by one
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the machine learning model has two components the first is predicting the
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outcome of a clinician review for where a patient is best suited for having their procedure at and then the second
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is for predicting whether the surgical procedure will be done at an ASC or hop d
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and the models were trained using roughly 30 000 clinician reviews in surgical location types and after the
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study was complete the researchers estimated that using the model based reviews at their institution would save
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about 80 hours per week which is obviously equivalent to two full-time clinical employees
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now I will give the same disclaimer I do every time we share a story about Ai and
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Healthcare this technology is intended to be used in tandem with medical professionals not in lieu of but this
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seems like this might be one area where you can use simple learnings and you
28:47
know if then type logic to build a reliable and helpful model that will save lots of time and help Pas spend
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more of their time providing care on more complex scenarios and to end our new segment on a positive
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note no pressure to walk 10 000 steps a day anymore a new analysis revealed that
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health benefits kick in at as few as 2300 steps per day while 4 000 steps is
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enough to cut the risk of premature death so researchers in Poland analyze stepcow
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involving almost 227 000 people they found that those who
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took 2 337 steps a day experience benefits to
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the heart and blood vessels while walking at least 3967 steps reduce the risk of dying from
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any cause and lastly every Thousand Steps over that 4 000 Mark cut the
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chance of early death by 15 percent it’s also important to note that this applied
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to both men and women of all ages and outdoor living environments so while walking an added movement
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should always still be the goal if you don’t hit that 10 000 number every day seems like it’s okay
30:05
and that news story officially wraps up this week’s podcast thank you as always for spending a few minutes of your week
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with us make sure to subscribe or leave a review on whichever platform you’re listening from I hope you have a great
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day and we’ll see you again next week
30:25
why are you keeping me
welcome to this week in surgery centers if you’re in the ASC industry then
0:06
you’re in the right place every week we’ll start the episode off by sharing an interesting conversation we had with
0:11
our featured guests and then we’ll close the episode by recapping the latest news impacting surgery centers we’re excited
0:18
to share with you what we have so let’s get started and see what the industry’s been up to [Music]
0:27
hi everyone here’s what you can expect on today’s episode so last week we sat down with Will
0:33
schlaff to talk about how to conduct a feasibility assessment for your new Surgery Center
0:39
as a continuation of that conversation today we’re sitting down with Michael McLean to talk about navigating payer
0:47
contracts for your new Surgery Center Michael is the founder and managing member at Left Coast Healthcare advisors
0:54
and we are going to talk through how to initiate these payer conversations positioning yourself to get the best
1:00
rates effectively managing contracts and so much more in the payer contract World
1:06
in our news recap we’ll cover the government’s plan to grow the nursing Workforce how to implement more safety
1:13
and security measures at your ASC the use of machine learning to predict the
1:19
suitability for having a surgical procedure performed at an ASE versus a hopd and of course end the new segment
1:27
with the positive story about how many steps a day you actually need to remain healthy
1:33
hope everyone enjoys the episode and here’s what’s going on this week in surgery centers
1:41
Michael welcome to the show thank you for having me excited to have you on today and we’ve been doing a series of
1:48
podcasts and conversations recently on the de novo process and opening new surgery centers and so wanted to
1:56
continue that conversation on here today Michael and bend it towards the payor
2:01
contract side of opening new facilities and so as you think about the process open new
2:08
ASCS and you think about payer Contracting when do those negotiations
2:15
come up in the overall timeline of opening a Surgery Center yeah the question of how you start that
2:22
process and and where it starts really depends on the value proposition that your ASC brings to the payer in concept
2:31
an ASC should be a lower cost higher quality location of service than one
2:38
where patients are coming from but the level of that value to the payer varies is this an ASC that’s bringing an
2:45
exceptionally large amount of business from say a hospital or other locations
2:51
where the rates are much higher payers are much more interested in engaging in that conversation that shortens your
2:57
timeline so I always Advocate thinking at least six to nine months out before
3:02
your opening to begin addressing your payer contracts six to nine months great and for owners
3:11
and for folks working on building out new facilities how do you get the lay of the land in
3:17
your market in terms of who the payers might be what the most important payers might be by type and by volume is there
3:24
a way that you can research and get up to speed on these things before you start reaching out yeah great question there are a number
3:30
of ways to do it although ironically the most effective is still secret shopping picking up the phone calling competitors
3:38
from different phones and asking them what they charge or what the expense would be there are more software
3:45
platforms that are now coming out on the market and with all the changes and the no surprises act and with changes around
3:51
hospital and pricing transparency there are more resources available honestly
3:57
the single best location of information though is patient eobs whether that’s
4:03
families friends your Physicians who are going to be in your new ASC their
4:08
patients are getting eobs from wherever they’re doing cases today and will have exactly what the insurance providers are
4:15
paying that gives you a great armchair metric to establish what your savings
4:20
can look like and the value that you offer to a payer guys you’re almost suggesting starting
4:27
to put together kind of the point of view on hey who are these payers that are going to benefit based on your
4:33
potential patients and who those are going to be who are the payers that are common and stand to gain the most from
4:38
your services coming to Market absolutely I always talk about payers when you think about a payer contract
4:44
it’s the most important piece of your ambulatory strategy when you’re building an ASC because it’s all the dollars at
4:52
the top fall to the bottom line and so while many payers will provide a
4:58
contract getting premium rates where you’re paying for your costs plus a margin take time and data and so you
5:05
want to be really strategic about that and understanding where is The Leverage that you can apply to that conversation
5:11
so that you get the most appropriate rate for the cost savings because it’s
5:17
not going to get offered in the first proposal that you get on your desk sure yeah to that point it seems like really
5:24
this is one of the most fundamental important concepts of opening and
5:30
maintaining a profitable SC for the long term which is the payer contracts which determines your
5:36
Revenue right and again if we put ourselves in the shoes of new ASC owners they’re researching their
5:43
patient demographic getting a feel for the market formulating their value prop
5:49
and their pitch when they’re ready to start reaching out to payers what do you
5:54
recommend that folks do and what should they keep in mind as they you know start to initiate those conversations and
6:02
start to initiate those negotiations yeah I think the key message is you’re
6:07
only going to get to sign your first contract once and so every subsequent
6:12
contract will be renegotiating and trying to get more so that first contract is incredibly important so as
6:19
you’re thinking about gosh we’re six to nine months from opening starting the conversations with the physician
6:26
Representatives that each practice has a representative from the payer that’s a
6:31
market representative and saying hey we’re going to be moving our volume over to a new ASC help us start to get in
6:38
contact with the ASC specific negotiators for each payer understanding that there are two processes you have to
6:45
negotiate rate and terms but you also have to complete credentialing and so
6:50
the credentialing application itself can sometimes take two to three months and often requires that you have both your
6:57
license and your Medicare Certification Number before they’ll let you complete credentialing so even if you’re
7:03
negotiating rates you may not be able to complete that credentialing piece and both have to happen and then allow for
7:11
contract loading so you have time to get paid so it’s critical I think to think
7:17
ahead about who are your most important payers at the time of opening begin those conversations early you can have
7:24
conversations with smaller payers your large National payers that will
7:30
have larger volume start those conversations first and know that the rates that you sign with them will cast
7:36
skate downward to the smaller pairs got it and you mentioned the payer
7:43
conversations and credentialings as two key Milestones it sounds like it’s okay to run those two processes in parallel
7:50
are they more sequential so it depends on the payer and it depends on the market and we always say Healthcare is
7:57
local it’s really true when it comes to reimbursement and payer process many payers will tell you they will not
8:03
negotiate until they have a credentialing packet complete and if you don’t have a Medicare certification you
8:10
can’t complete your application that being said most payers will allow
8:17
if you push a bit for you to at least put documentation in queue so that you can at least provide the bulk of the
8:24
credentialing information early even if you’re still working on rates but they’re actually two completely separate
8:30
divisions in every payer every payer has a credentialing department and a negotiations or payer department and so
8:38
it’s actually two different groups of people that you work with so if you approach it sequentially you’re just
8:44
adding time so I always Advocate push as hard as possible to get them going
8:50
simultaneously okay that’s good to know from an order of operations perspective and you mentioned on the negotiation
8:57
side that there’s the rate side of that negotiation in the term side and if we kind of break those up let’s talk about
9:03
the rate side first what is the best way Healthcare is local are rates local too
9:09
what’s the best way for owners to get an understanding of what rates are Benchmark what rates are fair what
9:15
rates are normal in their market so you’re absolutely right rates vary by
9:20
market they can even vary by micro Market meaning one side of the state will have a completely different rate
9:27
than the other you can get a little bit of feel for that by looking at what your Medicare rate is in each market because
9:34
Medicare publishes all their standard rates and there’s very mutations based on uh population cost of living Etc so
9:42
you know that you’re going to have some variation when it comes to individual rates though I would say that the
9:50
individual rate that you have the ability to negotiate payers like to think of rate in terms of
9:56
what they’re paying everyone else you as an owner of an AFC should be thinking of what am I saving the payer
10:04
by providing this service and causing a migration of cases from point A to point B
10:09
that work that we talked about earlier understanding the eobs what are your area hospitals or ASCS being paid
10:16
whether you’re querying through existing software and other pricing transparency tools to get a feel
10:23
for their rate where do you fit into that is how you start to determine your
10:28
rate but in the end the rate that’s most important is the one that covers your costs so you really need to understand
10:36
if my procedure costs five thousand dollars to perform I shouldn’t ever
10:41
accept a rate that’s less than five thousand dollars right and so I think
10:46
that’s the key is understanding what your expenses are so you can effectively negotiate a payment plus a margin
10:54
because you’re going to need to continually to reinvest in those ases and what is a reasonable margin that
11:00
also varies by market there are plenty of markets where rates are at or below
11:06
Medicare from a commercial construct and you’ll understand that by talking to your ASE colleagues in the market oh
11:13
yeah I’ll never I can’t get more than x um other markets you look at some areas
11:18
in the midwest some areas in Texas some more rural areas they may still have
11:23
rates that are two three four times Medicare and so getting that understanding of what the larger market
11:30
is and then honing in on what do I need as a business to grow
11:36
I got it and then these actual conversations on the right side as you mentioned these are important
11:42
conversations in the negotiations arguably nothing is more important as you get going
11:47
is there a framework or set of best practices or a playbook in terms of how
11:54
people drive these conversations should folks expect hey this is going to be a series of a 10-step negotiation do
12:02
people settle this in a call or two if they’re prepared what’s like the range of processes that you’ve seen for this
12:08
yeah what I would say is the higher above what is considered a market rate
12:14
and once you’ve done your homework and figured out okay the market rate for this is somewhere between two and three
12:20
thousand dollars but the higher above that market rate that you want to get and the size of the
12:28
payer will dictate how many rounds or how long it’s going to take to do that negotiation if you want double the
12:34
market rate that type of negotiation could take a year and could take a
12:39
thousand man hours and lots of negotiations you might not ever get there if you’re looking to accept a
12:45
market rate from a small paper who’s just trying to get in the door that could happen as quickly as in a phone
12:52
call and you get a relatively decent proposal for a relatively small amount of business
12:57
so I think the most important part though from this it’s not a 12-step program which is great although
13:03
sometimes you feel like it is is that the very first thing you should do is make sure that when you’re negotiating
13:10
you get an entire fee schedule so that the payer provides you every single payment for every single CPT
13:19
because without that information you’re guessing and so that should be
13:24
the first step of every discussion is to get the actual fee schedule that they
13:29
will pay you or that they’re basing their rates on the second thing that I think is really important is to really
13:36
Target what additional services are they going to bring are they going to reimburse implants do they provide carve
13:43
outs what are the special elements that might be there and then the devil’s in
13:49
the detail when it comes to things like multiple procedure logic some payers
13:54
will pay a hundred percent of the first procedure you do and then 50 of all the
14:00
subsequent others only pay a hundred on the first 50 in the second 25 and the
14:05
third and then nothing else and so understanding the differences every payment system is different that’s
14:12
why it’s so important to get all of that information up front so then you can effectively negotiate with them
14:19
at multiple procedure logic in particular that’s where it gets complicated isn’t it
14:25
absolutely if you’re an ENT practice for example and you typically have six or
14:31
seven or eight procedures that you do at once that’s a very different reimbursement model than say
14:37
Ophthalmology that is mostly Medicare and generally has only one procedure code so multiple procedures matter a lot
14:45
more to an ENT or Orthopedic practice than they might with a more typical Urology or general surgery practice
14:53
yep those are good tips around the fee schedule additional services and the multiple procedure logic but
15:00
it’s a lot to get your head around if you’re doing this for the first time if you’re not an expert in this process and
15:06
it’s daunting to go through the first time I’m sure what have you seen out there is great resources great firms
15:12
great people that folks owners opening de novos can talk to for help as they
15:17
get through this sure and I think that sort of comes in what I would say three flavors I think
15:23
the first one is your own professional organizations whether it’s a state professional ASC or a state professional
15:29
physician practice organization they’re going to have access to the local talent
15:35
that’s going to be able to help whether it’s a consultant or even just a network of people to compare and contrast ideas
15:41
and comments I think that’s the first great step the second is really engaging more of a formal consulting or advisory
15:49
firm I know my firm Left Coast Healthcare advisors we offer that services and tend to focus more on the
15:54
west coast but we’ve got experience across the country and there are other great firms that are small like us that
16:03
offer some similar size Services I think of there’s probably a few others and
16:08
then there’s a third layer and I think this is particularly important if you’re starting a really large or Capital
16:14
intense ASC if you’re looking at hospital joint venture related so if
16:19
you’re looking at a large specialty practices sometimes you can benefit from an even more Deep dive in companies like
16:27
ECG and sg2 there are big consulting firms what I would say is that the
16:33
output generally is equal to the cost that you’re going to pay but I also
16:40
think that if you’re looking for a hundred thousand dollar increase every year on a contract
16:47
the cost to pay 40 or 50 000 seems horribly daunting but that’s a hundred
16:54
thousand dollars a year to the bottom line every year in perpetuity that they helped you get
16:59
so it’s really starting at that local level is there someone locally that can help you if not is there a larger
17:05
organization that might benefit and of course there’s no shortage of organizations around rev cycle companies
17:13
Nimble surgical notes others that can help with negotiating contracts as part
17:18
of their rep Cycle Service and we touched on the rate set one thing
17:24
one thing I forgot to touch on more was the key term side outside of rates is folks are setting up these bear
17:31
contracts what should they be thinking about or watching out for on the term side yeah we touched on rate and multiple
17:37
procedure logic term and termination Provisions are really important how long is the contract and what are the rights
17:44
that you have in terms of terminating it surprisingly termination language can be
17:49
long some payers as say as long as that you have to tell them you’re going to terminate
17:54
180 days before the contract’s over most of us I certainly don’t think six months
18:01
in advance when I’m running an ASE that I have to negotiate essentially nine months in advance because if I can’t get
18:08
somewhere and I want to terminate in the future I need to give them six months of notice so term and termination matters a
18:14
whole lot I think the other two that are particularly important now are really around Amendment language
18:20
an assignment language if you’re looking at a potential sale in the future and
18:25
those contracts go with you or not is a really important question to understand because in an acquisition or a
18:33
partnership if someone’s coming into your facility they want to know can we bring those contracts along for the ride
18:39
or do we need to start over and I gotta imagine on that point of assignment and Acquisitions sometimes
18:46
it’s probably helpful for the centers to have agreements that are assignable to the next group and maybe sometimes you
18:52
have groups that come in that would rather negotiate their own because they have a big infrastructure and in place
18:58
contracts you’re absolutely correct it’s part of that larger question of what will a future partnership look like from
19:05
a m a standpoint maybe you want to maintain your existing contracts maybe you don’t you want to start over
19:10
depending on what the new partner brings to you the other piece that I think gets
19:16
lost a lot of time is the difference between charge and payment and understanding is there a lesser of
19:21
provision that sits in there that lesser of provision in the market that we chat about is really
19:27
are they going to pay you the lesser of a contracted rate or a build charge amount and quite often there are ways
19:34
that if you aren’t charging high enough on your contract they won’t automatically pay you your contract rate
19:40
maybe they pay you 50 percent of billed charges or the lesser of that or your
19:46
contracted rate so your charges have to be high enough to capture that contracted rate
19:51
sure and how should folks think about in-network versus out of network and how
19:58
that comes into play from a high level yeah oh gosh so I’ve been saying for
20:04
almost 15 years that out of network Services is going the way and yet every
20:09
day we still have out-of-network services and so what I would say is understanding what your local and state
20:18
laws are around out of network Services now that we’ve got the no surprises act
20:24
I’m actually doing a talk on that coming up around what do you have to disclose
20:29
now to the patients if they are choosing to go out of network or have non-insurance coverage so I think the
20:36
biggest thing to do is really do your homework locally understand your state and local regulations around what
20:42
information is going to be there or has to be provided to the patient I think that’s so important because I think it’s
20:48
difficult to manage out of network practices and now it’s even more okay final question for you here Michael we
20:54
do this every week with our guest that’s one thing our listeners can do this week to improve their surgery
20:59
centers I saw that question and I thought quite a bit about it and I go back to my days
21:05
as an operator the best thing I ever did in my ASC and I’ve had all my people do
21:10
this is to have someone in your ASC wheel you around either in a wheelchair
21:17
or in a Stretcher and your perspective changes entirely you get to see the
21:22
ceiling you get to see what it’s like to go through doors you get an entirely different view of your own facility and
21:29
it’s amazing if you’re laying in the back on your back in your own pacu what you see above you remember that’s what
21:36
patients see every day and you can really dramatically change the look and
21:41
feel of your facility by changing a few ceiling tiles or catching a few cobwebs
21:46
that’s the best thing that I’ve ever and I was taught that by an older ASC expert
21:52
and I’ve done it every time I think it’s great wow that’s a different answer than we’ve ever gotten before in answering
21:58
this question I love it from a patient experience standpoints thanks for sharing that you bet
22:04
Michael thanks for joining us today absolutely thanks for having me
22:09
[Music] as always it has been a busy week in healthcare so let’s Jump Right In
22:17
the health resources and services Administration announced Awards of more
22:22
than a hundred million dollars to train more nurses and grow the nursing Workforce so the 100 million dollars
22:30
will be spread out between three different areas of focus the first is
22:35
helping licensed practical nurses become registered nurses so 8.7 million dollars
22:43
of the 100 million will be given now this is the longest name ever but will
22:49
be given to the nurse education practice quality and retention Pathway to
22:54
registered nurse program which trains practical and Vocational nurses to become registered nurses
23:01
the second Focus will be on training nurses who will deliver Primary Care
23:06
Mental Health Care and maternal health care now this is by far where the biggest portion of the money will be
23:13
going and there are two programs that will benefit here 34.8 million will be given to the
23:20
advanced nursing education Workforce program and then 30 million dollars will
23:26
be given to the advanced nursing education nurse practitioner residency
23:31
and fellowship program and then lastly the third and final
23:36
Focus will be on addressing the bottlenecks in nurse training by supporting more nurse faculty so the
23:43
remaining 26.5 million will be given to the nurse faculty Loan program to
23:49
provide low interest loans and Loan cancellation to incentivize careers as
23:55
Nursing School faculty so Carol Johnson is the hrsa’s administrator and she said
24:01
today’s Investments demonstrate our ongoing commitment to supporting the nursing Workforce training and growing
24:08
the next generation of nurses creating career ladders for nurses and recognizing the critical role nurses
24:15
play in primary mental and maternal Health Care now 100 million dollars is great we’ll
24:22
take it you know compared to the government’s budget it’s not much but
24:28
better than nothing and if you want to learn more about these programs check out
24:33
hhs.gov or head to these episode notes and you’ll find a link directly to the
24:39
article and you can learn more about the programs and see how you might be able to benefit
24:44
our second story comes from the August edition of ASC focus and it’s all about
24:49
implementing security and safety measures at your surgery center so the most recent Federal data from the
24:57
Bureau of Labor Statistics states that health care and Social Service Industries experience the highest rate
25:04
of injuries caused by workplace violence and are five times as likely to suffer a
25:11
workplace violence injury than workers overall and then a national nurse’s United
25:17
survey of more than 2500 nurses that was conducted in early 2022 found that
25:23
nearly half reported an increase in workplace violence so I share all of this because this is why it feels so
25:30
timely as you have probably have experience in your own day-to-day workplace environments that especially
25:37
after covid and during the pandemic there’s just been an increase of unruly
25:42
patience and issues that are taking place so where can you start by conducting a security vulnerability
25:50
assessment to identify potential security gaps and the actions that can be taken to address them
25:56
this assessment should be as comprehensive as possible and include interviews with leadership and Frontline
26:03
Associates as they can likely identify vulnerabilities and make the best suggestions for improvement
26:09
so the article shared a ton of different ideas from a few different administrators who have recently been
26:15
focused on added safety measures and here’s a quick recap of what they did share
26:21
so you’ll want to double check and possibly upgrade the Locking mechanisms on all doors and windows
26:28
hire part-time off-duty police officers to help keep patients and visitors under control
26:34
install keypads so that visitors are unable to move past the waiting room
26:39
unattended add security cameras outside your facility
26:45
install a silent alarm system so you can alert local police and then lastly make
26:51
sure your employees are properly trained for any situation or emergency and that everyone is well equipped and in the
26:58
know about your emergency preparedness plans and hopefully you will never need to act
27:05
on any of these safety measures and it will always seem like Overkill but it’s just not one area you want to be caught
27:12
off guard and if you haven’t done an evaluation like this it’s a great place to start and then they recommend doing
27:19
it annually moving forward our third story comes from or manager
27:25
and it’s about a study from the University of Michigan that examined the use of machine learning to predict the
27:32
suitability for having a surgical procedure performed at an ASC versus a
27:37
hospital outpatient Department so when the process is done manually it’s pretty labor intensive and requires
27:44
physician assistance to review each patient’s suitability one by one
27:49
the machine learning model has two components the first is predicting the
27:55
outcome of a clinician review for where a patient is best suited for having their procedure at and then the second
28:01
is for predicting whether the surgical procedure will be done at an ASC or hop d
28:07
and the models were trained using roughly 30 000 clinician reviews in surgical location types and after the
28:14
study was complete the researchers estimated that using the model based reviews at their institution would save
28:21
about 80 hours per week which is obviously equivalent to two full-time clinical employees
28:28
now I will give the same disclaimer I do every time we share a story about Ai and
28:33
Healthcare this technology is intended to be used in tandem with medical professionals not in lieu of but this
28:41
seems like this might be one area where you can use simple learnings and you
28:47
know if then type logic to build a reliable and helpful model that will save lots of time and help Pas spend
28:54
more of their time providing care on more complex scenarios and to end our new segment on a positive
29:02
note no pressure to walk 10 000 steps a day anymore a new analysis revealed that
29:08
health benefits kick in at as few as 2300 steps per day while 4 000 steps is
29:15
enough to cut the risk of premature death so researchers in Poland analyze stepcow
29:21
involving almost 227 000 people they found that those who
29:28
took 2 337 steps a day experience benefits to
29:33
the heart and blood vessels while walking at least 3967 steps reduce the risk of dying from
29:41
any cause and lastly every Thousand Steps over that 4 000 Mark cut the
29:47
chance of early death by 15 percent it’s also important to note that this applied
29:52
to both men and women of all ages and outdoor living environments so while walking an added movement
29:59
should always still be the goal if you don’t hit that 10 000 number every day seems like it’s okay
30:05
and that news story officially wraps up this week’s podcast thank you as always for spending a few minutes of your week
30:12
with us make sure to subscribe or leave a review on whichever platform you’re listening from I hope you have a great
30:18
day and we’ll see you again next week
30:25
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