modified rate or payment structure to the exchange product. While an ASC may not have any

exchange patients today, in a few years, the exchange enrollment may grow; thus, increasing the number of patients that are covered under the exchange product. In addition, the payer may sell over a commercial population to the exchange at some point in the future. People often do not pay enough atten- tion to contract language concerning amendment terms, termination clauses and the payer’s ability to add products, but this is something ASCs must pay attention to.

Are you seeing payers take any other actions to tighten their control over contracts? KEHAYES: We are seeing ASCs with existing contracts receive amend- ments on termination clauses or, upon renewal of contracts, material changes to the termination clauses. Whereas, in the past, an ASC may have been able to write a termination letter with or with- out cause that allows the ASC to pro- vide a 60–90 day notice at any time, payers are now sending a letter that indicates that they are amending the contract language that extends the time period to 180 days or the ASC must wait until an anniversary date on the contract to submit a termination letter rather than having the freedom to sub- mit it at any time with notice. Payers may also make these changes when the contract is up for renewal. When the time period is extended or an anniver- sary date is put in place, this locks the contract up for a longer period of time and makes it more difficult for an ASC to terminate the contract. There are usually clauses that allow

payers to send amendments. ASCs should examine their contracts and determine whether they can challenge these amendments. A payer may give 30 days for an ASC to respond. If you do not, then the amendment will

automatically go into effect. It is very important that the right people in your ASC are reviewing letters from payers and then working to have conversations with payers about contract and payment policy changes.

Do you think opportunities exist for ASCs to benefit from the Affordable Care Act? KEHAYES: Absolutely. ASCs play a crit- ical role in cost savings in the health care marketplace. The way for ASCs to create value in the market is to con- tinue to look at how they can move vol- ume from the more expensive hospital setting into the ASC setting. It is about demonstrating savings for the payers. There is meaningful opportunity

when an ASC is in a joint venture with a hospital, especially if the hospital is losing money on certain surgical cases. Even if the hospital’s revenue on these cases is higher, they are more costly to perform in the hospital. If an ASC can show its hospital partners how moving volume makes cases more profitable and saves the hospital money, every- one wins.

If the hospital is in a value- or risk-

based contract, it may benefit even more from this migration because the hospital can demonstrate savings to the

payer. If the hospital is in an account- able care organization (ACO)-type arrangement, the ASC becomes a vehi- cle for savings and can help the hospi- tal receive a bonus or reward if the hos- pital contract has this type of structure.

What implications do you think the Centers for Medicare & Medicaid Services’ (CMS) addition of select spine codes to the ASC-payable list will have on payer negotiations? KEHAYES: It is important to acknowl- edge that this was a positive develop- ment, but at the same time, there are some caveats and concerns. For ASCs that have been trying to get their com- mercial payers to approve spine but have been rejected on the basis that Medicare does not allow the cases in

the ASC setting, this develop-

ment should provide an opportunity for an easier discussion with payers about obtaining payer medical direc- tor approval for including these cases in their contracts.

There are a number of challenges. Just because CMS approved the codes does not mean their assigned reim- bursement rate or methodology is rea- sonable or adequate for performing these procedures. While CMS has reas- signed some of the codes to a higher paying ambulatory payment classifica- tion (APC) group than what they were previously assigned to for hospital out- patient departments, the APC rates do not always cover the cost of implants even though the APC reimbursement is all-inclusive of the implant cost and intended to cover the cost. Even if it is a spine CPT code that is classified as “device intensive” under the APC pay- ment system, the device cost allocations may not be enough to cover the cost because the cost varies based upon uti- lization of implants, which quite often are dependent upon the patient’s clinical needs and the surgical technique for the surgery. In addition, CMS does not pay for all of the add-on codes associated


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