Blog Post

10 Factors That Impact the Value of Your ASC Payer Contract

Asc Payor Contracts Web

Payers are continually looking for ways to implement cost savings for employer groups, and this has resulted in the inclusion of language in facility contracts with providers that can restrict, reduce, and deny payment. Payers are getting creative and including new types of restrictions and requirements in Ambulatory Surgery Center (ASC) contracts and amendments; for example, they may make changes in their online provider manual or provider update letters that never make it to your desk for review.

It’s more important than ever to read an ASC contract or amendment prior to signing it and again after receiving the finalized version. We recommend highlighting key contract payment terms and language provisions that impact reimbursement for your business office so it may operationalize the contractual obligations and build them into policies and procedures to maximize contract rates and avoid lost revenue.

Juggling the time frames and rules of contracts can be difficult because they may vary greatly from plan to plan and even between products within the same health plan. You should establish a contract methodology tracking mechanism so your staff can keep your ASC business office compliant with the rules and update the claims system appropriately per payer and the various products in each contract. This can also help you and your staff identify trends and issues with various payers.

Below are 10 important managed care contract considerations that you should review with your ASC business office. Create clear policies and assign responsibilities for each so that your business office realizes the value of the ASC’s contracts and collects 100% of the reimbursement that is due from all payers.

1. Timely Filing Requirements

As electronic filing becomes the norm, payers continue to reduce the time to submit claims (we’ve seen this time frame as short as five days in ASC contracts) and are setting financial penalties that can include nonpayment of the entire claim. Be sure your business office knows the timely filing rules for each payer and all products in that contract. In many cases, Medicare Advantage’s timely filing limit will be longer than the one for commercial products because Medicare regulates the timely filing limit. Don’t assume that one payer has the same timely filing requirement for each product in the contract.

2. Dispute-Resolution Time Frames

Be sure to document in your policies and procedures the timeline to dispute a claim and file an appeal. The timeline normally starts from the receipt of payment from the payer. Many payers are reducing this time frame to one year or less from the date of service or payment date in ASC contracts.

3. Take-Back Process and Time Frames

Outline the time frame in which your business office must process refund checks to payers in the case of overpayments. This varies from payer to payer. Many plans only allow a month or less from the time your business office is notified to return the overpayment. If this overpayment isn’t returned, the payer can offset future payments, which can be time consuming to process for the business office staff. Having a process for sending refunds to payers will save your business office the time of posting partial payments in the future.

4. Contractual Obligation to Follow Provider Manuals, Including Electronic Update Requirements

Be sure to have an ASC business office representative responsible for periodically checking the various updates to provider manuals, as well as newsletters and written updates from payers. This is an important role in the business office to help ensure any changes to payer processes that may have a material change to reimbursement are tracked and then included in your business office’s policies and procedures. Payers are moving away from sending letters and hard-copy notices of changes in fee schedules and policies to making updates via electronic newsletters and website manuals. Most payer contracts reference provider responsibility and obligation regarding published changes in the provider manual. You must read the fine print under “provider responsibilities.” This means that the ASC is responsible, and a business office representative should be accountable for searching the online tools that the payer provides on a periodic basis and abide by any published changes because the ASC must comply in accordance with the contract language.

5. Time Frame for Access to Records

Many payers are requiring a quick turnaround time frame when they request clinical or billing records from ASCs. The time period for providing information requested from a payer is often included as part of the payer’s contract terms. Be sure the ASC business office team is aware of these terms and the timeline that is required to send information to the plans when requested.

6. Contractually Required Information Disclosures to the Payer

Check the contract for any information or updates that you are contractually obligated to send to the payer; this can include changes to the provider roster, credentialing, ownership, or management of the ASC. Be aware of any monetary fines associated with not complying with a contractual obligation to update the payer with this information.

7. Financial Penalties for Missing Time Frames

It is important to review contract terms to determine how long the ASC has to file a claim with each payer. Not all payers have the same timely filing requirement, and penalties may vary when applicable. Most payers are moving toward nonpayment of claims that are received after the timely filing period, and many payers are reducing that time frame in new contracts so it may change when you renew your contract.

8. Financial Penalties for Facility-Based Physicians Who Are Out of Network with a Payer

Many large payers are including contract language that allows the payer to reduce overall payments for a specific time period or indefinitely if nonparticipating facility-based physicians are utilized by the ASC to provide services. This includes but is not limited to anesthesiologists, radiologists, and pathologists, otherwise known as “hidden providers.”

9. Payer Methodology Variations

Review payment methodologies’ logic and terms in their entirety. Some other important questions to answer when conducting a contract review are: How does the payer reimburse for cases with multiple procedures at your ASC? Do they pay additionally for implants? Does the contract include surgery codes that are carved out of the methodology and paid at different rates? Are there any variances in how the payer reimburses for different products? For example, do commercial cases reimburse under a methodology that differs from the reimbursement methodology for the Medicare and Medicaid Advantage plan cases? Is there an annual escalator to rates, and how do you account for these updates in your claims payment tracking system? How do you communicate contract rates to the business office? These are questions you must work through and review with your business office staff to ensure standards are established.

10. Payer Contract Renegotiation Renewal Date Responsibility

If the term of the contract is for three years, track the term and approach the payer to renegotiate the contract. It’s important to request an increase, so plan to contact the payer approximately eight months or more prior to the date that you can exercise termination and/or to the final term of your contract so you have time to renegotiate rates before the start of the next contract term. Payers will not reach out to you to increase your rates, and they will normally have language in the contract that allows the last set of rates to continue—it’s up to you to negotiate your ASC contracts!

The Importance of Contract Management and Diligence

In addition to providing exceptional clinical services at your ASC, part of being a good steward of your payer relationships is ensuring that your team has knowledge of and the ability to comply with the rules, regulations, and time frames specified by the different payers. Policy and procedure implementation based on payer expectations and requirements is an important part of contract management. It is a good idea to review your contracts annually to ensure your office is in compliance with all payer contract requirements. Paying attention to these 10 key factors will help your ASC mitigate losses and optimize revenue while remaining in good standing with contracted payers.