Payer Contracts
What are payer contracts?
Payer contracts are the agreements between a provider and an insurance plan that set the terms and rates for covered care, defining what gets paid, for which procedures, and under what rules.
Glossary
Payer contracting, defined
Clear, answer-first definitions of the payer and managed-care terms ASCs deal with every day, and how you'd ask Rose about each one inside DataLily Insights.
Payer vs. Payor
Payer vs. payor: what's the difference?
Payer and payor mean the same thing: the entity that pays for healthcare, usually an insurer or health plan. There's no difference in meaning; payer is the common US healthcare spelling, while payor appears mainly in legal and contract language.
Payer Contracting
What is payer contracting?
Payer contracting is the process of negotiating and finalizing the terms and rates under which an insurer reimburses a provider. In DataLily Insights, you'd ask Rose where your rates sit against the market before heading to the table.
Payer Contract Management
What is payer contract management?
Payer contract management is the ongoing work of tracking, renewing, and monitoring your insurer agreements so terms don't quietly drift behind the market. It covers renewal dates, rate performance, and catching underperforming contracts early.
Payer Contract Review
What is a payer contract review?
A payer contract review checks an existing insurer agreement to see whether its rates and terms still hold up. Ask Rose how a contract compares to the market and you get a charted answer that ends in a recommendation.
Payer Intelligence
What is payer intelligence?
Payer intelligence is knowing how insurers pay: where your rates stand, which plans lead or lag, and how you compare to peers. In DataLily Insights, it's what Rose hands back as a chart and a next step when you ask.
Third-Party Administrator (TPA)
What is a third-party administrator (TPA)?
A third-party administrator (TPA) is a company that administers benefits and processes claims on behalf of a health plan or self-insured employer, without bearing the insurance risk itself. TPAs handle the administration; the plan or employer holds the coverage.
Payer Mix
What is payer mix?
Payer mix is the breakdown of where a provider's revenue comes from across insurers: commercial, Medicare, Medicaid, and self-pay. It shapes financial health, since each payer type reimburses differently. Ask Rose to chart your mix and how it's shifting.
Managed Care Intelligence
What is managed care intelligence?
Managed care intelligence is insight into how managed-care plans (HMOs, PPOs, and similar networks) pay and perform, so providers can negotiate and plan from knowledge rather than guesswork. Ask Rose and you get it charted with a next step.
Oscar Health Insurance
What insurance is Oscar under?
Oscar Health is an independent health insurance company, not a brand owned by a larger carrier. It sells its own individual, family, and Medicare Advantage plans, mostly through ACA marketplaces, and is known for its tech-driven, app-first approach.
Allowed Amount
What is an allowed amount?
The allowed amount is the total a payer recognizes as payable for a service, combining what the plan pays and what the patient owes. It matters because it, not your charge, sets real revenue per case. If you bill $5,000 and the allowed amount is $1,800, the plan might pay $1,440 and the patient $360.
Negotiated Rate
What is a negotiated rate?
A negotiated rate is the specific price a payer and provider agree to for a procedure under a contract. It matters because two centers doing the identical case can be paid very differently based purely on their negotiated rate. One ASC might hold $2,400 for a knee scope while another across town holds $1,600 for the same code.
Fee Schedule
What is a fee schedule?
A fee schedule is the full list of negotiated rates a payer assigns to each procedure code under a contract. It matters because it is the line-item map of your revenue, and a single low or missing line can quietly cost you thousands per year. Review it code by code, since a $900 line where peers hold $1,400 adds up fast across volume.
Percent of Medicare
What is percent of Medicare?
Percent of Medicare expresses a contracted rate as a multiple of the Medicare allowable for the same procedure, giving one comparable yardstick across payers and codes. It matters because it normalizes apples-to-apples benchmarking. If Medicare allows $1,000 for a case and your contract pays $1,500, you are at 150 percent of Medicare, a quick read on whether a rate is strong or soft.
Conversion Factor
What is a conversion factor?
A conversion factor is the dollar multiplier applied to a procedure's relative value units to calculate its rate, so one number scales an entire fee schedule. It matters because a small conversion-factor change moves every code at once. If a procedure carries 20 units and the conversion factor is $60, the rate is $1,200; raise the factor to $66 and the rate becomes $1,320.
Case Rate
What is a case rate?
A case rate is a single bundled payment covering an entire procedure regardless of the individual line items involved. It matters because it trades billing simplicity for margin risk: you win on efficient cases and lose on complicated ones. If your case rate is $6,000 and supplies plus facility cost run $4,200, you keep $1,800, but an implant-heavy case can erase that.
Carve-Out
What is a carve-out?
A carve-out is a contract provision that pays certain high-cost items or procedures separately, outside the standard case rate or fee schedule. It matters because without one, expensive components come straight out of your margin. If a $6,000 case rate includes no carve-out and the procedure requires a $3,000 device, a separate carve-out for that device protects you from taking the loss.
Implant Carve-Out
What is an implant carve-out?
An implant carve-out is a specific provision that reimburses costly implants separately from the case rate, often at invoice cost plus a percentage. It matters because implants are frequently the single largest cost driver in orthopedic and spine cases. If an implant costs you $4,000 and your carve-out pays invoice plus 20 percent, you recover $4,800 rather than absorbing it inside a flat rate.
Escalator Clause
What is an escalator clause?
An escalator clause is a contract provision that automatically raises your reimbursement rates by a set amount each year. It matters because without one, a multi-year payer contract silently loses value to inflation. Example: a $1,000 rate with a 3% annual escalator becomes $1,030 in year two and roughly $1,061 in year three, protecting margin over the term.
In-Network vs Out-of-Network
What is the difference between in-network and out-of-network?
In-network means you have a signed contract with a payer at agreed rates; out-of-network means no contract, so the payer sets its own allowed amount and patients owe more. It matters because network status drives volume and collectibility. Example: an in-network case may pay a contracted $1,200, while the same case out-of-network might be reimbursed at an unpredictable, often lower, allowed amount.
Single Case Agreement
What is a single case agreement?
A single case agreement is a one-time contract negotiated with an out-of-network payer to cover a specific patient's procedure at an agreed rate. It matters because it lets an ASC capture cases from payers it has no standing contract with. Example: an out-of-network center negotiates a $1,500 flat rate for one scheduled surgery before the patient's date.
Ghost Rate
What is a ghost rate?
A ghost rate is a contracted price that appears in a payer's fee schedule for a service a provider never actually performs. Ghost rates matter because they contaminate naive benchmarks; a median worth negotiating with filters to rates attached to real, performed procedure volume. Example: a fee schedule listing an inpatient code for a center that only does outpatient work.
Usual and Customary
What is usual and customary (UCR)?
Usual and customary is the prevailing charge for a service in a given area, used by payers as a benchmark to cap what they will allow, especially out-of-network. It matters because it sets a ceiling on reimbursement regardless of your billed charge. Example: you bill $2,000, the payer deems UCR to be $1,200, and reimbursement is calculated from the lower figure.
HOPD (Hospital Outpatient Department)
What is a hospital outpatient department (HOPD)?
An HOPD is an outpatient surgery setting owned by and billed under a hospital, which typically commands higher facility reimbursement than a freestanding ASC for the same procedure. It matters because the payment gap drives case migration and negotiating leverage. Example: a procedure paying $1,200 in an ASC might reimburse $2,400 as an HOPD under the hospital's rate structure.
De Novo ASC
What is a de novo ASC?
A de novo ASC is a surgery center built new from the ground up rather than acquired or converted from an existing facility. It matters because de novo timelines, licensing, and payer contracting run long and delay first revenue. Example: a de novo project commonly takes 12 to 24 months from planning to first case, per industry estimates, before any reimbursement flows.
Certificate of Need (CON)
What is a Certificate of Need (CON)?
A Certificate of Need is a state approval a provider must obtain before building or expanding a healthcare facility, meant to control duplication of services. It matters because in CON states, the approval process can block or delay a new ASC entirely. Example: a group in a CON state may spend months and legal fees defending an application against incumbent hospital opposition.
ASC-Payable Procedure
What is an ASC-payable procedure?
An ASC-payable procedure is a surgical service a payer will reimburse when it is performed in a surgery center rather than only in a hospital setting. It matters because a procedure moving onto the payable list opens new case volume for your center overnight. Example: a spine case that was inpatient-only last year becomes ASC-payable, so your center can now perform and bill it.
Site-of-Service Differential
What is a site-of-service differential?
A site-of-service differential is the payment gap between a hospital outpatient department and an ASC for the very same procedure code. It matters because ASCs are typically paid less for identical work, which pressures margins but also arms you with a cost argument. Example: a payer pays a hospital $3,000 and an ASC $1,800 for the same case, a $1,200 differential you can cite in negotiations.
Steerage
What is steerage?
Steerage is a payer directing patients toward specific lower-cost sites or providers through benefit design rather than contract rates. It matters because steerage can flood or starve your ASC depending on how the plan tiers you. Example: a plan waives the patient's $500 copay when a knee scope is done at an in-network ASC, pushing that volume toward your center.
Narrow Network
What is a narrow network?
A narrow network is a health plan that contracts with a deliberately limited set of providers to hold premiums down. It matters because inclusion means steady referred volume while exclusion can cut off an entire covered population. Example: an employer's narrow network names two orthopedic ASCs in the metro, and if yours is not one, those covered lives route elsewhere for surgery.
Credentialing
What is credentialing?
Credentialing is the verification process a payer completes before a provider is approved to bill as in-network. It matters because cases performed before credentialing finishes can be denied or paid at out-of-network rates. Example: a new surgeon joins in January but credentialing takes 90-150 days, so February cases risk denial until the effective date is confirmed.
Termination Notice
What is a termination notice?
A termination notice is the advance notice either party must give to end a payer contract under its terms. It matters because the notice period sets your leverage window and how quickly you can walk away from a bad rate. Example: a contract requires 90 days written notice, so a rate you flag in June cannot lapse until September at the earliest.
Unilateral Amendment
What is a unilateral amendment?
A unilateral amendment is a contract clause letting a payer change terms, often the fee schedule, without your signature and effective unless you formally object. It matters because silent acceptance can cut your rates automatically. Example: a payer mails a 30-day notice lowering a code's allowable, and if you miss the objection window, the reduced rate simply takes effect.
Lesser-of Clause
What is a lesser-of clause?
A lesser-of clause is a provision paying you the lower of your billed charge or the contracted rate. It matters because it caps reimbursement at your own charge, so setting charges too low permanently forfeits revenue. Example: your contracted rate is $2,000 but you bill $1,500, the payer pays $1,500, and you leave $500 on the table every case.
Silent PPO
What is a Silent PPO?
A silent PPO is when a payer or middleman applies a network's discounted rate to your claim without a direct contract that entitles them to it. It matters because an ASC can get repriced down with no volume promised in return. Example: you contract with Network A at $2,000 for a case, then a stranger plan pays $1,400 by claiming Network A access you never granted them.
Rental Network
What is a Rental Network?
A rental network is a third party that leases its contracted provider rates to other payers and administrators who did not sign with you directly. It matters because your negotiated discount can reach far more plans than you intended, cutting yield. Example: you agree to a $1,800 rate with one network, and a dozen unrelated plans rent that rate to pay you $1,800 too.
Stop-Loss
What is Stop-Loss insurance?
Stop-loss is coverage a self-funded employer buys to cap its exposure on unusually large claims. It matters because self-funded plans, not a carrier, actually pay your bill, and stop-loss shapes how aggressively they scrutinize high-cost cases. Example: an employer covers claims itself but buys stop-loss that reimburses the plan for any single member's costs above $75,000 in a year.
Bundled Payment
What is a Bundled Payment?
A bundled payment is a single negotiated price covering all services tied to one procedure or episode, rather than billing each line separately. It matters because ASCs win or lose margin on how well they control the full bundle. Example: one $12,000 payment covers the surgeon, facility, anesthesia, and follow-up for a joint replacement instead of four separate claims.
Episode of Care
What is an Episode of Care?
An episode of care is the full set of services a patient receives for a single condition or procedure across a defined time window. It matters because payers increasingly price and measure quality at the episode level, not per visit. Example: a knee scope episode spans the pre-op consult, the surgery, and 90 days of post-op rehab, all grouped as one unit.
Prior Authorization
What is Prior Authorization?
Prior authorization is a payer's requirement to approve a procedure before it is performed or it will not be paid. It matters because a missed or denied auth turns a completed case into unpaid work. Example: a scheduled procedure needs payer sign-off first, and without a valid auth number on the claim the payer denies the full $3,500 outright.
Clean Claim
What is a Clean Claim?
A clean claim is a submission with every required field correct and complete, so the payer can adjudicate it without asking for more information. It matters because clean claims pay faster and rarely deny, protecting cash flow. Example: a claim with the right codes, modifiers, auth number, and patient details clears in days, while a missing modifier can stall a $2,400 payment for weeks.
Remittance Advice
What is a Remittance Advice?
A remittance advice is the payer's explanation of how a claim was processed, showing what was paid, adjusted, or denied and why. It matters because it is where an ASC catches underpayments against the contracted rate. Example: the remittance shows a $2,000 charge paid at $1,300 with an adjustment code, letting billing flag whether that matches the agreed contract price.
Underpayment Recovery
What is underpayment recovery?
Underpayment recovery is the process of identifying and collecting the gap between what a payer contractually owes and what it actually paid on a claim. It matters because leakage is routine: an ASC billing a case at a contracted $5,200 that pays out at $4,000 may let the $1,200 short-pay slip by unless someone reconciles paid amounts against the fee schedule line by line.
Charge Description Master
What is a charge description master?
A charge description master, or CDM, is the master price list an ASC maintains for every procedure, supply, and service it bills, each mapped to a code and a gross charge. It matters because a stale or inconsistent CDM drives rejected claims and lost revenue. If a $1,200 implant is coded wrong or priced below contract, the center collects less than it earned.
Surgical Case Volume
What is surgical case volume?
Surgical case volume is the number of procedures a center performs over a period, usually broken out by specialty, payer, and physician. It matters because volume drives fixed-cost absorption and negotiating leverage. A center running 400 cases a month spreads staffing and overhead far better than one running 150, and steadier volume strengthens the argument for better payer rates.
Physician Alignment
What is physician alignment?
Physician alignment is the degree to which a surgery center's economic and clinical incentives point the same direction as its operating physicians. It matters because aligned surgeons bring cases, adopt cost discipline, and stay; misalignment sends volume elsewhere. A center that gives 10 owner-surgeons real distributions and reliable block time will hold cases a hospital employment offer would otherwise pull away.
Referral Leakage
What is referral leakage?
Referral leakage is volume a surgery center should capture but loses when referring physicians route cases to a competing facility. It matters because each lost referral is recurring revenue walking out the door. If a primary care group sends 30 of its 50 monthly orthopedic referrals to a rival ASC, the center is leaking most of a profitable pipeline.
ASC Syndication
What is ASC syndication?
ASC syndication is the process of selling ownership shares in a surgery center to physicians, and sometimes a management partner or health system. It matters because ownership aligns surgeons to bring their cases and share in the profits. A center syndicating 40 percent across 12 surgeons at $50,000 per unit raises capital while locking in the volume those owners control.
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