ASC Managed Care Negotiation Best Practices: Tip #2

In our first tip, we discussed the preparation needed for successful contract negotiation. Now we need to address contract language. Contracts are written in legal terminology, which is sometimes difficult to understand. Due to the number of terms included in a managed care contract, we felt it best to divide this subject matter into two parts, with part one covering what services are covered and how the ASC is reimbursed and part two focusing on the remaining terms that you will need to evaluate.

Tip #2: Defining Terms and Terminology (Part I) — Covered Services and Reimbursement

All terms should have detailed, explicit definitions that are understood and agreed upon by both parties. 

Covered services

The contract should specify in detail: 

  • what patients are covered;
  • what services are covered;
  • what services are not covered; and
  • what requirements must be met by policyholder to be eligible for benefits (ie.eg., pre-existing condition, date of initial coverage, dependents). 

Reimbursement

The contract should provide sufficient information to allow an accurate determination of reimbursement. It should include:

  • a comprehensive fee schedule with detailed information on rates and payment methodology;
  • specific information on repricing, if applicable;
  • guidelines regarding procedural and supply codes;
  • procedure reimbursement groups — make sure CPTs have not been reclassified into lower groupers;
  • implant reimbursement;
  • carve-out possibilities for high-ticket procedures;
  • how CPT codes without an assigned group are paid;
  • explanation of how multiple procedures per case are covered (e.g., unlimited amount, multiple procedure discounts);
  • what is included in reimbursement — make sure does not include professional (surgeon’s) fee or anesthesia fee;
  • reimbursement guidelines (i.e., length of time for reimbursement upon submission of a “clean claim” as defined in the contract);
  • prompt payment clauses that meet state regulations and are enforceable;
  • no reduction of payment if other providers working in the center are not in-network with the payer (e.g., anesthesia, pathology, radiology); and 
  • an outline of what penalties and interest will accrue in the event the prompt payment guidelines are not met. 

When evaluating a managed care contract proposal, remember that most contracts are written to protect the interests of the payer. Therefore, it is important to take the time to review each proposed contract carefully, scrutinizing specific areas to determine if they meet your requirements. Highlight areas you do not understand and request explanations.

Access Tip #1 on Preparation. Stay tuned for our Tip #3: Defining Terms and Terminology (Part II).

Catch up on previous tips, including the four-part series on fee schedule best practices, here.

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