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Payor Contracts: 6 Essentials for Effective Management
0 Playsin 11 hours
We’re starting 2025 with an exciting three-part series on Payor Contracts! In this episode, Kristin Pegram, Contracts and Compliance Manager at Mann Eye Institute shares six essential tips for effective contract management. Kristin brings invaluable firsthand experience to help you navigate contract challenges.
In our news recap, we’ll cover why ASCs closed in 2024, projected headwinds and tailwinds for 2025, SCA Health’s latest acquisition, and, of course, end the news segment with a positive story from Baxter, the manufacturing facility in North Carolina that was hit hard by Hurricane Helene.
Do you want $50? We’re offering a $50 gift card to the first 30 listeners who complete our Podcast Survey! It only takes a few minutes of your time, and you’ll be able to share your feedback and ideas. Start the survey here: https://www.cognitoforms.com/hstpathways1/podcastsurvey
Resources Mentioned:
- Why ASCs closed in 2024
- New Year, New Trends
- SCA Health Acquires OrthoAlliance, Expanding Orthopedic Footprint
- Baxter Expects Pre-Hurricane Levels of Production in Early 2025
Brought to you by HST Pathways.
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Transcript
Introduction and podcast focus
00:00:01
Speaker
Welcome to This Week in Surgery Centers. If you're in the ASC industry, then you're in the right place. Every week, we'll start the episode off by sharing an interesting conversation we had with our featured guests, 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.
New series on payer contracts for 2025
00:00:27
Speaker
Hi, everyone. Happy new year. I am so excited to be back with you all. Here's what you can expect on today's episode. To kick off 2025, we are starting with a brand new three part series on payer contracts. I have some great guests lined up over the next few weeks to cover all the nuances related to payer contracts. And today we have Kristen Pegram here to kick us off.
00:00:50
Speaker
Kristen is the contracts and compliance manager at Man Eye Institute in Laser Center in Houston, Texas. And Kristen has a ton of firsthand experience, so she's going to share with us six essential things to know for effective contract management.
Listener engagement and survey incentive
00:01:05
Speaker
In our news recap, we'll cover why ASCs closed in 2024, projected headwinds and tailwinds for 2025, SCA health's latest acquisition, and of course, and the new segment with a positive story from Baxter, the manufacturing facility in North Carolina that was hit hard by Hurricane Helene.
00:01:25
Speaker
Before we get to our guest discussion though, I wanted to let you all know that we are currently offering a $50 gift card to any listener who takes a few minutes out of their day to complete our podcast survey. We would love to hear from you on what you find most valuable, what we could improve on, the segments you like best or would like to see us add, and anything else that you'd like to share. We are capping it at the first 30 responses though.
00:01:49
Speaker
So if you want to get that $50 gift card, make sure you move fast and head to the link in the episode notes to get started. And thank you in advance to everyone who takes a few minutes to complete it. We really appreciate it. And with that, hope everyone enjoys the episode and here's what's going on this week in surgery centers.
Understanding your payer portfolio
00:02:09
Speaker
Hi, Kristin. Welcome to the podcast. Hi, Erica. How are you? Good. Thanks. Before we jump into the tips you have for us today, can you please share a little bit about yourself with our listeners? Happy to. So I am the contract and compliance manager for Man Eye Institute. I've been with the organization for five years and overall I am responsible for reviewing, analyzing, and managing all of our payer contracts to ensure that we maintain a robust payer portfolio as we move from year to year.
00:02:46
Speaker
Great. Thank you. And excited to have you on today so you can help kick off our three-part series that is all about payer contracts. And it sounds like over the years with all your experience, you've put together a list of things that you think every contract manager should know. So let's get into that first one, which is knowing your payer portfolio. What does that entail?
00:03:10
Speaker
So knowing your payer portfolio is something that every contract manager or every provider's office, big or small, should do. And basically that's going to entail of a couple of things. So you need to know your payer mix. You should know your contract performance and you should know age of your contract. So to sum up all those things, your payer mix is going to be basically understanding or knowing where your payer stand in relation to your charge volume. So you should be looking at your charges,
00:03:40
Speaker
And you're going to see, okay, how many charges am I putting out to payer A, payer B, payer C, across either the entire organization, or you might want to look at it maybe by financial category. um But this gives you a good idea of what payers are your top ones, right? Which ones maybe you want to focus more on and those that are not. It also gives you a good feel of which ones are more commercial or your private compared to your government-based ones, right? Cause you want to have a good mix of that.
00:04:10
Speaker
Then knowing your contract performance and that ties into the age of your contracts. So knowing how your contracts perform in comparison to current CMS, that is pretty important. We know that CMS has had its waves over the past couple of years. So it's always good to know, hey, payer or agreement A, is it paying 90% of current CMS? Maybe 95%. And what can you do to maybe push that reimbursement higher? Okay.
00:04:40
Speaker
Age of contracts. How old are they? Some of us have
Improving negotiations with payers
00:04:43
Speaker
contracts that are really old. They're aged maybe 10 plus years. And that has a big impact on your compensation. So knowing your your payer portfolio is just important across the board because it sets the foundation for how you'll move into your negotiations.
00:05:03
Speaker
Sure. And with all of that, do you use a ah contract management so ah software tool to help you with all of that? So that's a great question. I do not.
00:05:14
Speaker
I don't have a specific tool or software that I use that's specifically geared towards contract management. However, most providers in their EMR, there should be a fairly good analytics part to your EMR system that allows you to run your basic production summary reports. It should be able to give you a pay or fee schedule report.
00:05:36
Speaker
Some of them can be very detailed and even do as much as providing collection um information as far as your collection rates, denial rates. So I rely on our EMR system and the analytics piece of that. And I run various reports. It may consist of two or three reports, depending on what information I need. And then from there, there's a lot of manual work that's done on the other side of that to configure that information in such a way that I can present it to the payer.
00:06:06
Speaker
Gotcha. That makes sense. All right. What is tip number two? So tip number two is going to be now that you know your payer portfolio. So you know that payer A is up here, payer B, payer C, all the way down to maybe about 90, 95% of what your charge volume is billed to. Now you want to know.
00:06:28
Speaker
What is the service mix? So now we're getting down to the CPT level, right? So you want to know what codes or maybe what service category you are billing the most of. And the reason why that's important is because, again, as years go by, payers themselves, and obviously CMS, they make a lot of changes to the reimbursement for our CPT codes, right? And so you can see a negative or a positive change in your CPT codes, meaning that maybe some of the reimbursement goes up or maybe some of it goes down.
00:07:01
Speaker
And so if you know what mix of codes you're billing, meaning if you know that this particular service, maybe it's an E and&M service, is being charged higher, right it's your highest charged code, but you notice that the reimbursement on that has been cut by maybe 5%, then that should be the key right for a provider to say, hey, we need to kind of relook reevaluate how we're providing this service. It also gives, it encourages a provider to look at that the resources that you're allocating to providing that service, right? It's a lot of financial, the biggest thing is the financial impact, right? Of being able to continue to provide quality service, but you also want to make sure that you're paid properly for it, right? Which is a big struggle for providers. Now, again, most of the contracts, at least for our institution,
00:07:53
Speaker
And I'm going to safely say that it's a lot of others. The contracts are CMS based. They follow CMS methodology. So as CMS changes, you're going to see your rates change, right? And you're always going to see a difference between your professional side and the ASC. CMS has been a little kinder, I think, towards ASC reimbursement over the past couple of years. We all know 2025, they got a nice bump, right? But it's still important to know what services you're billing the most of because you want to be able to monitor those and train them throughout the year.
00:08:30
Speaker
Gotcha. Yeah,
Avoiding common payer errors
00:08:31
Speaker
that makes sense. Yeah, we actually just did an episode a few weeks ago with Karen Newberry who walked us through all of the ah CMS proposed or the final payment rule for this year. um And I feel like every year it's like, I don't know, last year I thought was good. I thought like everyone was pleasantly surprised. And then this year I felt like there was a little bit of a letdown, more so on the the ah covered procedures list. But I'm like, oh, we think we're on such a good roll.
00:09:00
Speaker
I know, I know it's you have to keep it's important for whoever deals with contracts to always just keep your ear, as I say to the street just go into your CMS website because like you said these changes for the ASC compensation They've been pretty good over the past couple of years. We've seen a bump, I think for at least the past two to three years, whereas the professional side, there's been more politics involved. And so some laws have now been removed. And so that has tanked some of the compensation, but it's important to pay attention to. And if there's ever information
2024 ASC closures and future strategies
00:09:34
Speaker
available, someone should run towards it because it makes a big difference. I agree. All right. So we know our payer portfolio. We know our service mix. What is number three?
00:09:46
Speaker
Number three is probably the biggest thing all of us want to know is what are we being paid? What do our collections look like? We do all of this work. We provide this great service. Now I want to know how am I being reimbursed for it? I want to know what factors are impacting my reimbursement. So when it comes to knowing your collections, I recommend that you always look at your collection rate. And again, if you don't have a software or any type of platform that maybe provide you that information. There is some manual work that you should do, but you should be tracking and trending your collection rate, which basically is how much of the allowed reimbursement right contractually are you actually receiving? That's really important information. Another thing that I think is very important when it comes to reviewing your collections is you want to know the denials, right?
00:10:38
Speaker
We really want to know what services are being denied. Which claims are we fighting the most to get paid? Maybe it's because of a medical policy that has changed that now all of a sudden medical records are required for service that weren't needed. It could be that there's a modifier or maybe there's a code that is no longer in use where it's been replaced by something else, but you really want to know.
00:11:05
Speaker
which services or which CPT codes are being denied. And that proves to be helpful in negotiations, actually, because as you start to talk about how you can create a more secure agreement for your organization, that should be part of the conversation. You should use that as an opportunity to say, hey, I just want to let you know that over the past year, we've noticed that this particular service that we bill 95% of the time to your payer group, we end up with at least 25% of denied claims. Let's talk about that.
00:11:35
Speaker
Another thing when it comes to knowing your collections is your forecasted receivables versus the actual. So in all of the analysis that I do, I like to know what a perfect world scenario would look like. So let's say we were free of all modifier reductions. We had no multiple procedure reductions or anything like that. I want to know perfect world scenario. What is the max that I can expect the actual, right? The max possible.
00:12:01
Speaker
And then I'm going to project what that's going to look based upon what we should be thinking about. Again, since we know what our payer portfolio looks like, right? but If we know what it looks like paying against current CMS and we want to go higher, maybe 105% that helps you set what your asking rate will be. So
Industry updates: Acquisitions and recovery
00:12:21
Speaker
I'm going to do a forecast to say, okay, this is what I'm actually being paid. Perfect world. Now I want to move into what the forecasted could be.
00:12:29
Speaker
if we come to an agreement of 105, 110% above whatever CMS might be. So just, this is, I think is the most important part that every provider should be looking at is what are you being paid and how difficult is it to be paid? Because payment for what it's worth should be a pretty cut and dry process. We all know that it's not, you would think but we can only hope, right?
00:12:55
Speaker
and Truth of the matter is, is that payers don't want to pay us, right? And that's just the hard truth of it. I do find that on the ASC side of things, that it's a little easier to manage, I think, because for the most part compensation schedules are one of two things. They're either going to be CMS-based or they'll be grouper-based. And each one of those come with ups and downs, but they're easier to analyze as far as you pulling your data, being able to know what your collections are, being able to see what's denied because it's usually involving a shorter list of codes.
00:13:29
Speaker
Sure. And you had mentioned this a few minutes ago, but you've mentioned the CPT codes and how you can go to negotiations with those, with the data that you have in terms of denial rates. Do you also find that knowing those CPT codes internally, you could say to yourself or or anybody on the team say, okay, the CPT code, we're seeing an above average denial rate. We have to pay extra close attention to the submission or do you use that internally as well as externally?
00:13:55
Speaker
Oh, absolutely. Hands down. So when it comes to maybe your claims department, your billing office, you can take that information and really when you get into negotiations or excuse me when you start to manage your contracts, I think one of the biggest things you should do with the information that you find or you learn about is you should use it to create better internal processes to make them stronger. right You should be able to identify maybe those small areas where you need to tighten up on some things. so For sure, if you see that there's a claim that's denying all the time, you should be having a conversation maybe with your billing department, your claims department. You should have a conversation probably with maybe the clinic and or the ASC.
00:14:42
Speaker
because it could be that maybe there's some small mistake being made just in the electronic record that you don't know about. But it's a really good way to open up the the table for conversation across multiple departments to just create a stronger unit in terms of the provider itself. You hit it right on the nails, perfect opportunity.
00:15:03
Speaker
Yeah, I think that's great advice. that We always joke too. I always give the scenario of just the financial side of having surgery done is so bizarre at for a patient who doesn't live in this world. And I always give the analogy of imagine getting on an airplane you don't know what the flight costs. But when you get off the plane, you're going to get you're going to get a bill from the flight attendant, you're going to get a bill from the baggage handler, the pilot, you don't know what they're going to be or when they're coming. And then at the payer side, too, it's just, it's a fascinating situation that we've gotten ourselves into with reimbursement. it
00:15:41
Speaker
it It is, and and I think you brought to light a very good point as well is that when you are very secure and you are very
Conclusion and listener appreciation
00:15:49
Speaker
knowledgeable about your contracts and what they pay and you know about your collection rate, small details that we'll talk about a little bit later when it comes to your payers, you're really able to pat use that information in a way where you provide a better patient experience. So some of the unknowns that patients are worried about where it comes to cost,
00:16:10
Speaker
right? You're able to utilize that so that you can provide them with that information because we know upfront, this is what we're going to get paid. We know what's going to be covered. We know what's going to deny. And I think that really helps, right? Because medicine has changed.
00:16:26
Speaker
over the years, and we should all be about providing the best patient experience as possible. And a lot of that comes from just communicating with patients, right? Instead of making it like a revolving door where the patient's here, 15 minutes in the chair, and then they're gone.
00:16:43
Speaker
Taking the time to explain to them in a very organized manner, hey, this is what it's going to cost. This is your responsibility. This is what we estimate will be the insurance's responsibility. And we can say that in confidence because we know our contracts. Yep. Love it. Okay. So we've talked about knowing your payer portfolio, but let's go to step four, tip four, which is just knowing your payers themselves. What does that entail? Yes.
00:17:11
Speaker
So knowing your payers, it can, ah and it was hard to drum this down to just a few points because there's so many things that I i could say about knowing your payers. The list is almost endless. But I think if I had to give just a couple of points that I think would carry a practice far, when it comes to knowing your payers is you should know, number one, what is their compensation schedule based on? Okay. um Again, for ASCs,
00:17:41
Speaker
I find that majority of the contracts are either going to be based on CMS, which means whatever the current year CMS compensation is, that's what they follow and they pay 100%, or if you're really blessed and fortunate, they pay above.
00:17:54
Speaker
or some choose to follow a grouper methodology. And a grouper methodology is where you have a set of codes that they classify in group one, two, three. Some of them can be as short as 10 groups. I've seen some contracts that have as long as 20 groups and they group all these codes together and they say all of these codes in this group are going to get paid this amount.
00:18:19
Speaker
And the problem with that is, is that some of those codes are misaligned, right? So for, we'll use, you know, ophthalmology as an example, they might have a cataract code that is classified in a group for maybe a diagnostic code that maybe has to be performed in the ASC setting. So what I expect to be paid for my surgery, I expect for that to be more than what I will receive for this diagnostic code, but they have them together. So you have to be mindful.
00:18:49
Speaker
How is the compensation set up? What is it based on? That's the question you should ask. Knowing your payers also consists of being familiar with when they make their updates. So we all know that CMS, anytime they make an update, it's usually January, right at the beginning of the year. But you should know when your payer or when your payers tend to make their updates. Some, they don't release their updates and do anything to their fee schedule until March or April.
00:19:18
Speaker
you should know that information because that's going to play a big role in, again, how you see your collections coming through the first couple of months of the year, right? So you're not surprised, oh my goodness, why is it that I'm seeing this code pay this way over here for CMS, but then I know this contract is supposed to adhere to that, but they're paying less. Then another thing to know as far as your payers,
00:19:41
Speaker
is get to know who your reps are, and this is easier said than done, okay? When I first started in this, the thing that took me the longest to do was find someone to talk to. me I struggled for a long time trying to find a live person that I could establish a relationship with, my actually assigned provider rep. Knowing your payer, a lot of what you're going to learn comes from that provider rep.
00:20:11
Speaker
So I encourage anyone to be persistent in trying to find that person. It's changed over really since COVID. A lot of the internal structures of these payers are changing. There have been some big layoffs at a lot of these payers. And so those who remain have taken on the job of maybe five people. They've closed down certain departments. So whereas you'll find some payers that used to have a provider's relations department,
00:20:40
Speaker
where you could call and you could talk to someone that could tell you your contract date, locate a copy, send it to you, answer questions about anything dealing with your contracts. That has now gone away and now you just have most cases just an email. And you send this email, it floats out in space, someone picks it up and then they respond to you, but then you have to play this waiting game of actually getting someone on the phone.
00:21:06
Speaker
So knowing your payers, I think a big portion of that again is trying to establish in a relationship with at least a single point of contact would be very helpful in being able to just learn about the changes that are happening because ah there are a lot of internal changes going on with these payers that I would not have known about If it and really, I learned a lot this past year and that just was me being a bother a little bit. I became a little bit of a new nuisance to say, Hey, where's the policy, the medical policy for this? Or Hey, has, have you released the updated drug schedule? Quick question. I noticed that there's an amendment to this agreement that I haven't received different things like that. Anything I can do to stay in the presence and in the face of my representative. That's what I wanted to do.
00:21:54
Speaker
Yeah, the squeaky wheel, it's a real thing and it works sometimes, pays off. It does. You have to be persistent when you are in contract management. if You have to be. You will get a lot of no's or go talk to this person or I don't have that answer and you just have to remain persistent. Be like, I thought about this and I think I want to know more about this or can you pass me along to somebody else? Persistence is so key in contract. Yeah.
00:22:20
Speaker
Is there any world where they would have like a standing quarterly call with you? like It's on the calendar. it's Is that too much to ask? That's asking a lot. dad and I think that's wishful thinking. In their world, they won't. I will say that there are some negotiations actually I just completed maybe about a month or so ago that were ongoing for a year. okay they wow they They lasted a year if not longer.
00:22:50
Speaker
And it took maybe about six months, but it was after that six months where we were already in active negotiations that I was able to get the provider rep to agree to a biweekly call, just so that we could stay in communication. I could get updates, even if there was no new information to share, ah right? But that came after I, again, was emailing Him or her every two weeks, just in general setting a reminder on my calendar. Hey, it's time to follow up with this pair, but for them to just offer that just because, or just as a means of trying to stay connected to the provider. Unfortunately, that's not something that I have yet to experience. Yeah. I think that was the answer I was expecting.
00:23:38
Speaker
from you, but I was hoping maybe that they would be more open to it, but it makes sense. It can be a good thing and then it can be a bad thing. It just yeah depends. yeah Okay. You had mentioned negotiations, which is a perfect segue. What do you need to do when you go, you're going into these negotiations? So pretty simple, straightforward, at least for me it is. You should prepare, you should ah analyze, and then you should be ready to implement that. I think Of the three, probably preparation takes the longest. And, but I like prep work, the preparation portion of it, because that means you get to do all the research, right? It gives the contract manager the opportunity to go and find any and all information they can. And this is where you should push the limit, right? Because in most cases, we know that a payer is going to come back and tell us, Oh no, we can't give you what you're asking for.
00:24:37
Speaker
And they'll give you all the different reasons from it exceeds the planned budget we have for the year already. That's above CMS. We can't do that. CMS won't allow this, all these different things. But what's nice is that if you prepare and you know where to go look, then you're able to arm yourself with all this information. So you should be doing research about your own institution or your group, right? You should be learning what's new.
00:25:06
Speaker
innovative technology you're using, new services that you're using or offering. ah You should also consider maybe remote areas that you're now providing these services to. Anything that makes you stand out is real big for payers right now. It catches their attention. Other research you should be doing is, and we talked about this before, when you're looking at your collections and your compensation, you should now be comparing yourself to others within your market. We all know by now that the Price Transparency Act that was passed a couple years ago, it has given providers access to information that they never had before so that they can really see what other competitors locally are being paid. And this is information that you should use
00:26:02
Speaker
to create some to do, put together somewhat of a market analysis. So you can see where your ASC sits in relation to others and you can do it by type. Maybe your ASC is privately owned or maybe it's a network ASC. You need to look at all these different moving parts, right? So that you can get a good idea of what you look like in relation to the rest of the market. That's part of your preparation. Once you do all that, then.
00:26:29
Speaker
Maybe some might say the boring part comes around because then you sit down, you put all of your information into a nice Excel table. You start to use pivot tables, V lookups, all this fun stuff. But really you take what it is that you've learned and you're now putting it in number format so that you can really see how strong your agreement is compared to maybe again, the rest of the market. And again, forecasting what it can look like when you ask for such and such percentage, right?
00:26:59
Speaker
And then after that you implement it. So implementing means I've looked at my PAIR portfolio. You've done basically steps one through four. And now I'm ready to put together this really nice letter. I've located my provider rep or someone decided to acknowledge themselves as my provider rep. And I'm ready to put this nice letter together. Maybe you give them an executive summary would be nice to let them know about your ASC and your facility.
00:27:27
Speaker
and you send it, that is the implementation part is now you are ready to formally engage in your negotiation or your request for ah renegotiation. Perfect. Yeah, I think the negotiation part of it is fascinating. I forgot who we had on, but we had someone on just to talk about negotiation. This is probably about a year ago, and just all the metrics that they prepare for the discussion, just very impressive, all the stuff that you put together.
00:27:56
Speaker
It is. it It takes a lot, but I think, again, you use this information because obviously you want to sway your payers, right, to give you more. That's what the goal is. But I look at it, and and back to a point we talked about before, is you can use this information to really, again, improve a lot of your internal processes or just a lot of your internal functions.
00:28:19
Speaker
Um, which I think is great, right? Cause if I can make us look better or if we can make us look better, then that makes us look better to our payers. And something I always like to tell people is we do all these analytics and we run all these numbers and everything like that. And.
00:28:36
Speaker
Truth be told, your payers, they know your collections better than you do. right they have the the They know everything based upon their claims data, their pricing team, like they know it all. But it still is a good practice for any contract manager to have, right? Because it you can establish internal trends, which are very important. And once you pass that information on to your payer, your provider the response you get from your rep is actually very different. When they know that you are on top of it, they see that you're tracking yourself maybe quarterly and you're seeing the trend of maybe particular service, your response is going to be a little bit different, right?
00:29:18
Speaker
And then also again, it's just information you can share with your, again, maybe it's your billing department or really it could be with your physicians, being able to share that information with them. It's all tied together and it really helps everybody I think as an organization. Yeah, definitely. All right. What is our sixth and final tip? So the final one is something I think is important as well. And that is you should know what mistakes are common for your payers.
00:29:47
Speaker
I think maybe when you do your contracts and you go through this lengthy process and all this discussion right and then finally you're at the end and everyone has their signatures you're like oh thank goodness it's over now I'm just ready to get paid. Doesn't really work like that. There are still some potential errors that payers make and I think they're more common than they should be and it's good if you know them. So what I strongly suggest is once you have your effective date And I have learned that sometimes people confuse an effective date with the date for credentialing, right? And those are two separate things. So when you are credentialed, that just means that now your organization is identified as a network, right? The effective date is the date that typically the payer signs the agreement, right?
00:30:37
Speaker
And it can be either that day or they can have language that says it'll be 30 days past the first of the next month, right? um But that is a day that we know for sure we can start seeing patients and we will be paid according to our contracted rates. What I have learned and I've experienced is in some cases, the payers fail to load your fee schedule.
00:31:06
Speaker
So what that means is, let's say that we have one fee scheduled that was 100% of CMS, just to make it simple. We had a successful negotiation. We got them to agree to 135% of CMS. The effective date was supposed to be November 1. We said, okay, great. We started seeing patients November 1. We wait about a month. We run a collection a production summary to see what the collections look like, to make sure that it is paying, the contract is paying, and we notice it's not.
00:31:35
Speaker
That's, we go back to the payer. The payer says, oh, we had an internal error. We forgot to load your fee schedule. That is a common error. You should know that. And the way you're going to know that is because again, you should be doing your due diligence with monitoring your contract. It goes back to what I've talked about. If you already have some of these ah processes in place and you practice them every so often,
00:32:04
Speaker
then you can run your collection report and you already know, hey, I'm looking for maybe two months worth of data. It should be paying to this fee schedule. You can catch that sooner than later. So that way, when you initiate a claims project right to go back and clean up all of this mess, you have the data. You know exactly what you should be paid. You have the claim information. It could be a simple and easy process and you can catch it at two months before it turns into maybe six months, right? And then we've lost a lot of money. That's one mistake. Making sure that you don't have any credentialing errors as well. The credentialing process I've experienced, in most cases, I expect for credentialing to happen first. And then after you're credentialed, usually that's when they will say, okay, you're good to have a contract. But I have experience with some payers where they actually
00:32:55
Speaker
do the opposite. They will issue a contract first and then credential later on the back end. People should know to go into their portal and check. Make sure that all of your physicians are credentialed the way they should be. Make sure that all of them are accounted for. Make sure all your locations are showing. Make sure your 10 numbers are correct. That's been a mistake. Make sure your MPIs are correct. You should always know that At the end of your negotiation, once everyone's signature is on there, the contract manager's job is never done. You now have a requirement to go back and make sure that they are upholding their end of the contract, which is, in most cases, difficult to do.
00:33:43
Speaker
But if you do it, it's, it helps a lot. It really does. Then the other thing I would say is just be knowledgeable of maybe certain payment mistakes. Those don't happen as often, but I think it's important as the contract manager, if you are able to become familiar with your CPTs and maybe modifiers, know which ones are bilateral.
00:34:09
Speaker
know about the multiple surgery rules. It requires you to put on a little coding hat, but if you have someone like an ASC manager that you can sit down and talk to and understand more about how they code, why they code, what this code is for, how it should look, then you're able to, as you go through your production summary reports and you monitor your collections, you're able to say, okay, hey, I see that this is a problem. I see that we have a problem here. And you can bring it again.
00:34:39
Speaker
to the attention of your payer sooner than later. Trying to clean up claim errors six months down the road, it is a lot. And it usually requires you to do more work in terms of trying to stay on top of that payer than you could possibly imagine. Sometimes the negotiation process seems a little easier than trying to initiate a claims project. It really does. If you're able to just catch small things first and sooner than you will actually save yourself a lot of time on the back end. Perfect. That is great advice. So I have one final question for you. We do this every week with our guests. What is one thing our listeners can do this week to improve their surgery centers?
00:35:29
Speaker
If you're not already doing this, I think it's always a good idea to go through all of your contracts and make sure you have all the right copies. Even after doing this for five years and gosh, all of the contracts that we have, I'm still surprised that some of the smaller ones that maybe we don't have a lot of volume with, it comes up randomly as a conversation or a question because something happens. And I'm like, wow, I just realized I don't have maybe the original copy.
00:35:59
Speaker
or I have the original copy, but I don't have the all the amendments that have been made. So if there's one thing that I would suggest that you could start today, it would be to make sure you have all of the copies of all of your contracts, even the smaller ones, and be mindful that sometimes amendments are made maybe from someone who was in the position before you, or just a change was made by the payer themselves. It should not happen without the providers being notified, but I think that would be the best thing to do is to just make sure you have copies of everything that that you could possibly need. So you feel secure in being able to answer some of those random questions because they all happen and being able to know contractually what you are allowed and what they are obligated to provide. Perfect. Thank you so much for coming on today, Kristen. You are a wealth of knowledge and I really appreciate it.
00:36:56
Speaker
Thank you. This was a lot of fun. I hope I provided some help for information. Contracting is fun. Thank you. Thank you.
00:37:09
Speaker
As always, it has been a busy week in healthcare, so let's jump right in. Looking back to 2024, Becker's reported around 30 closures of ASCs and physician practices. So let's break down the three main reasons why these facilities closed.
00:37:25
Speaker
The first should come as no surprise, but it is simply due to financial strain. Many closures stemmed from financial hardships, often worsened by the lingering effects of the COVID-19 pandemic. For example, the Children's Medical Center in Martinsville, Virginia shut down after 55 years, citing unavoidable financial hardship. Similarly, Rocky Mountain Eye Center in Colorado filed for bankruptcy, which unfortunately impacted six facilities and tens of thousands of patients.
00:37:54
Speaker
Now for existing ASCs, this just continues to highlight the importance of monitoring financial health closely and even exploring creative solutions. We really need to focus on what ah specialties are bringing in that the highest net revenue per case. What does your physician mix look like? Who's coming? Who's going? And really just staying on top of everything you possibly can in order to mitigate those challenges.
00:38:20
Speaker
The second reason was actually more strategic, so some closures weren't total shutdowns, but strategic moves instead. So facilities integrated with larger health systems to improve efficiency and ease those aforementioned financial issues. For instance, Baptist Health Fort Smith in Arkansas did close its ASC, but they did it in order to integrate its ASC operations with its main hospital operating rooms.
00:38:46
Speaker
so You know, going back to those creative solutions, this trend just really showcases the potential value when you do have flexibility. ASCs should assess whether partnerships or integrations like this could enhance their long-term viability. And then lastly, physician retirement. So some centers simply close due to to their retirement of their physician leaders and owners. For example, Commonwealth Gastroenterology in Virginia closed when its owner retired after 30 years of service.
00:39:17
Speaker
So, if you are are having these conversations with your physician owners or you want to begin having their these conversations, you really could put together a really effective succession plan, if preferred, and you can act proactively plan for leadership transitions to make sure that the continuity of care and operations are not interrupted.
00:39:38
Speaker
So there you have it. Those are the three most common reasons for closures in 2024. Again, the count was 30 and I hope when we look at this report next year, it is even lower than that.
00:39:50
Speaker
All right, moving from 2024 to 2025, ASCA published an excellent article in ASC focus, summarizing what ASC leaders are anticipating for the coming year. Now, as usual, I'm going to just summarize the article today, but I would highly recommend going to read the full version as there's a ton of great insight in there. And as always, I'll include the link in the episode notes so you can easily find it. But again, we're looking at what are the trends ASC leaders are looking at in 2025.
00:40:18
Speaker
The first one, headwinds. As always, ASCs are facing several challenges. For those looking to expand specifically, rising labor and construction costs are really making it difficult, as well as those pesky certificate of need laws in certain states.
00:40:34
Speaker
And then additionally, legacy ASCs often lack the infrastructure to bring in new procedures and accommodate more complex procedures, especially those requiring surgical robots or specialized equipment. Going back to our first story about why ASCs close, you might know, okay, I really want to focus on this one specialty. We want to bring in this physician. He can do all these new procedures, but the, your operating rooms, your infrastructure just isn't built for it. The possibility, you might know what you need to do, but the expansion part of it can be extremely tricky for a multitude of reasons. And then on the other hand, tailwinds. So despite challenges, ASCs are benefiting from strong momentum right now. Private equity investment in innovations like smaller surgical robots are enabling growth. Policies expanding patient eligibility in a shift toward outpatient care are driving procedure volumes. And then consumer preference for lower cost convenient care also supports the ASC model.
00:41:31
Speaker
Okay. Let's circle back to those certificate of need laws. They continue to remain a significant barrier in some states, but are not the sole factor in ASC growth. States without CON laws like Pennsylvania still report low ASC penetration for procedures like joint replacements. However, recent easing of CON regulations in some areas is expected to pave the way for new surgery centers in the next 18 to 24 months, which will just be another factor accelerating the shift to outpatient care.
00:42:02
Speaker
And we can't talk about trends without mentioning orthopedic. Orthopedic procedures are a standout growth area. Yet again, outpatient knee, hip and shoulder replacements are projected to increase by 69% over the next decade with more than 90% of those procedures expected to occur in outpatient settings. However, barriers like legacy ASC designs and limited access to surgical robots, which we discussed may slow adoption.
00:42:28
Speaker
And lastly, one of my favorite topics, cardiovascular. This specialty is also poised for outpatient growth, though progress is slower and highly market dependent. While some procedures such as cardiac diagnostics and interventions are moving to ASCs, the majority do still remain in HOPDs. Factors like physician alignment, payer support, and regulatory constraints really do influence this shift.
00:42:53
Speaker
And ASCs focusing on low acuity CV procedures may find opportunities to expand access and reduce costs. And if cardio is something that you're interested in, whether it's in your state or not yet, we do have a three-part series on kind of capitalizing on the cardiology boom, which if you just search that on our YouTube channel or any of your favorite podcast platforms, you could find them.
00:43:16
Speaker
As always though, the year does look very promising for the industry. There are significant opportunities for forward thinking organizations to lead the way and capitalize despite the challenges we will continue to face.
00:43:29
Speaker
All right, third story, SCA Health, the ASC Division of Optum has made a big move in the orthopedic space with its acquisition of Ortho Alliance, which is an orthopedic management services organization. The deal, which was effective November 1st, 2024, strengthens SCA Health's network and ortho and sports medicine services across Ohio, Indiana, and Kentucky.
00:43:53
Speaker
Ortho Alliance, which is headquartered in Sharonville, Ohio, partners with over 200 physicians across specialties like joint replacement, spine care, and sports medicine. And in addition to surgical and non-surgical treatments, they offer PT and imaging services, giving patients this comprehensive care under one roof.
00:44:12
Speaker
As part of SCA Health, Ortho Alliance will continue to focus on improving patient outcomes while delivering high-quality, efficient care. And the acquisition really reflects a larger industry trend, the growing demand for orthopedic procedures and outpatient settings, which we just talked about.
00:44:28
Speaker
And HST stated the industry report, we shared that the average net revenue per orthopedic case is $6,419, which is not only the highest specialty by a landslide, but also a 4.5% increase from 2023. So you can certainly see why SCA Health was very interested in partnering with ah Ortho. It really just continues to underscore how investing in these partnerships and infrastructure can help you capture a larger share of this market.
00:44:59
Speaker
And to end our new segment on a positive note, Baxter, a company providing essential medical and surgical products shared an update on the recovery of its North Carolina manufacturing facility, which was heavily impacted by flooding from Hurricane Helene. This is important because this plant is a key supplier of IV solutions and other critical products for healthcare providers, including surgery centers.
00:45:23
Speaker
As of mid-December, eight out of 10 manufacturing lines were operational, restoring approximately 85% of pre-hurricane production levels. And Baxter expects to fully resume production in early Q1 2025. So the outlook is positive. Allocations for key products are increasing and many ASCs are cautiously optimistic. ah Conservation efforts do remain essential, but Baxter's progress is a reassuring sign for the year ahead.
00:45:54
Speaker
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.