I recently received several dozen emails about billing, contracts, and how to build incentives for surgeons to use your facility, both hospitals and ASCs. Here is some more information:

Payer Contracts. How many of you have good payer contracts? Probably not many. We have contracted with two new clients in a large, Midwestern city about 20 miles apart. Each independently negotiated their payer contracts. One facility with a major payer is receiving 125% of Medicare while the other receives 249% for the same specialties. Guess who hired a professional company to handle the negotiations?

Surprisingly, both hired professionals, but they used two different companies. Clearly, mistakes were made. The first facility blindly accepted 125% without conducting their own due diligence on the rates. Newbies should not be allowed to accept a contract. All payer contracts must be approved by the governing body of the hospital or surgery center. The problem is that this group of individuals typically has no idea of what makes a good contract or a bad contract. That is management’s responsibility to advise them.

Never sign a bad contract. Walk away, and keep trying until you get one that is fair and you can live with. By the way, one of those two facility administrators has been terminated.

Billing. I am sure most of you deal with billing issues. In fact, I would love to hear from someone who does not experience problems in this area. Even if outsourced, billing and collections require a full-time person just to check all transactions. It is your money, not the billing company’s. The “low-hanging fruit” usually is easy to for anyone to collect, and the smaller dollars often are overlooked. But a lot of smaller dollars add up very quickly. Inspect billing activity often (every day, ideally) to make sure you are getting the money you have negotiated and due to you.

Collections. Do you send delinquent patients to a collection agency? Why not? It is your money, and everyone knew up front what their responsibilities were, so why aren’t you going after what is rightfully yours? I know that surgeons often are hesitant to send patients to collections if they don’t pay their surgery bills. But I would bet that they have collected their professional fee already. I always ask surgeons who wants to provide free surgery and whether they are waiving their own professional fee, too.

There is a way you can avoid sending patients to collections: Ask them to pay up front — and not just their deductible, but also their copayment. There is software that can track what it due from the patient at the time of posting the case. Can you go to supermarket, take the food home, and eat it, and then pay the store after it is gone? Of course not. Why should this be any different? You will probably hear complaints from some patients about paying for their surgery up front, but those probably are the same patients who will not pay their copay anyway. Healthcare providers have lots of compassion, but it is also a business that runs on cash flow.

Surgeon Incentives. If you are a Medicare-certified surgical facility, then you know that CMS sets limits on how you can provide incentives to surgeons who work in your facility — hospital or ASC. Read them and follow them. Google “surgeon incentives for patient referrals.” Some facilities use clever readings with regulations, and others don’t even know about them. I always advise people to take the conservative approach when attracting surgeons to hospitals and ASCs.

Earnhart & Associates is a consulting firm specializing in all aspects of outpatient surgery development and management. Earnhart & Associates can be reached at 5114 Balcones Woods Drive, Suite 307-203, Austin, TX 78759. Phone: (512) 297-7575. Fax: (512) 233-2979. Email: searnhart@earnhart.com Web: www.earnhart.com.