in the future, they should pay atten- tion to the merger, acquisition and assignment language in their con- tracts. There may be unfavorable lan- guage that would have an impact on their ability to implement a merger or acquisition strategy.

There has also been a recent increase in payer consolidation. How should ASCs respond to such developments? KEHAYES: If you hear about a payer merger or consolidation and your ASC has a contract with both payers, you need to look at whether your contract allows the payers to assign the lower rate to your ASC. This would be in the payer’s assignment language. If you find your rates are lower with

Trends in Payer Contracting

Naya Kehayes discusses industry consolidation, health insurance exchanges and spine codes

Naya Kehayes is manag- ing principal and founder of Eveia Health Consulting & Management. She spe- cializes in managed care

contract negotiations and analysis for ASCs, physician practices and surgical hospitals and support to health systems. Kehayes serves on the Ambulatory Sur- gery Center Association’s Government Affairs Committee and is past president of the Washington Ambulatory Surgery Center Association.

How are payers responding to the increase in consolidation in the ASC industry? KEHAYES: From a contract negotiations standpoint, payers are concerned about the increase in consolidation, both with respect to hospitals merging with or acquiring ASCs and multiple ASCs merging.


We are seeing changes in merger, acquisition and assignment contract language on a national level that makes it more challenging for facilities to automatically realize some value in contracting from a merger or acquisi- tion. Payers are creating more hoops for providers to jump through to obtain better rates. We are also seeing similar changes in contract language concerning two ASCs trying to merge. There are some- times structures where you can con- solidate two entities together and one contract survives over the other. We are seeing more language in contracts stat- ing that the surviving contract will be a blend of the rates. An ASC will not necessarily automatically receive the higher contract rate when it merges. If ASCs are negotiating new payer contracts today, and they have any thoughts about selling or merging

one of the payers than the other, you may want to consider terminating that contract so that you can try to preserve the higher-valued contract.

How are you seeing ASCs affected by health insurance exchanges? KEHAYES: At ASCs with payers that have multiple products (e.g., com- mercial,

traditional, HMO,


care, exchange), we are seeing more payers include contract language that allows them to amend their contract to change a provider’s rate based upon product type. For example, a payer may send an ASC a letter indicating that it is rolling out a new product and the ASC’s con- tract will come under this new prod- uct. This product may pay at a lower percentage of the existing contract rate and will be effective in a stipulated number of days. The ASC’s contract language may allow the payer to apply new products at various rates without requiring a signed amendment. The only way to get out of this change is by sending a termination letter. We are seeing more language in payer con- tracts, particularly with exchange prod- ucts, that allows the payer to assign a

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