Mississippi MGMA – June 28, 2013Orange Beach, AL

Penny Noyes, President, CEO & Founder

Financial Analysis in Negotiating Your Payer Reimbursement

Objectives for this session

Determine when and with what payers/networks to negotiate

Initiate the contract notice and negotiation processes

Analyze your aggregate financial goal for a given contract negotiation

Achieve the aggregate goal through various reimbursement and negotiation methods

First Gather and Inventory Contracts

Make sure they are fully executed

Don’t forget the Amendments and Addenda

Determine if separate agreements are in place for various products or if is there a product list in base agreement.

Do you have a group agreement or individual ones for each provider? If individual do you have them all?

I have them gathered, now what/

Create a Summary Report for Easy Reference

Locate and/or calculate your payer and network

reimbursement ratesExpect a Long Journey with Lots of

Tacks in the Road

Just how hard is it to get your rates from payers?

Two Decades of Personal Experience requesting rates from national & local plans

June 8, 2012 study prepared by Frank Cohen* Survey May 4-18, 2012 – to understand level of difficulty to

obtain 92% (an “A”) said Medicare was easy to somewhat easy 57% (an “F”) said private payers - easy to somewhat easy Among major complaints:

– Payer said list of codes too long – limited to 10 or 25– Format often hardcopy or unusable pdf (not able to convert w/OCR)

– Referred to websites where < 1/3 able to find what was wanted

* Survey On Obtaining Fee Schedules From Payers – The Frank Cohen Group, LLC

Locating your contract rates …sounds easy, but much harder than

it should beFrom Contracts & Addenda

If Contracts are Individual – any variation?

With What Products Are you PAR?

Very few states’ laws require full rate disclosure

Rate Exhibits in Contracts rarely have dollar and cent rates for all of your codes

Rate Exhibits have narrative description based on % or CF of Medicare % of Proprietary Schedules Reference to several schedules Not always clear as to which products they apply Defaults if no value in FS absent or vague

What you are likely to find in Rate Exhibits

• Percent or Conversion Factor (CF) of Medicare Resource Based Relative Value System (RBRVS)

• Payer/Network’s Proprietary RBRVS OR Standard Market Schedule

• Relative Value Unit (RVU) Conversion Factor (CF) of Proprietary Schedule

• Unique Network schedule with payer/network assigned identifier (S82 or 007-805 or 08943/08944)

• % “of” or “off of” Charges OR State Schedules like WC & Medicaid

• Banding based on service categories (E&M, Surg, Lab, Rad, DME)

• Defaults – sometimes included in exhibit, sometimes not• Escalation clauses for multi-year- agreements -sometimes• Carve-outs

Illustrations of Rate Exhibit Language

What’s Wrong With These?• Provider Accepts as full reimbursement the lesser of 105% of 2010

Medicare RBRVS, or 60% of Provider’s usual billed charges.

• Maximum allowable for surgery, radiology, non-clinical lab, and E&M are calculated based on the RVUs and other factors included in the ABC Payer RBRVS Policy in effect as of December 31, 2010. Except for new codes added after December 31, 2010, no further updates will be made to RVUs and other factors in ABC’s Payment Policies and Procedures.

• Provider accepts Company’s Standard Market Schedule as payment in full

• J Codes are reimbursed at Average Sales Price (ASP) +6%

What if Not Medicare Based

If a proprietary schedule like Aetna Market Fee Schedule, CIGNA RBRVS, BCBS Standard Schedule, etc., is the basis, ask for the dollars and cents rates for the proprietary schedule and apply the % in the Rate Exhibit.

Be sure these proprietary schedules cannot be moving targets during the initial and subsequent terms without your written consent – If you agree to 110% of Std Mkt Schedule and it goes down 8% next year, your reimbursement goes down proportionately

Example of Banding in Rate Exhibit

Banding w Multiple Schedules as Basis

Nightmare but in most marketsNote the varying percentages & FIVE different

schedules –

Ways to Get the Schedules

Send Rep Spreadsheet with ALL practice Codes & Modifiers with Fac/Non-Fac columns for each product (HMO, PPO, Med Adv, etc) and ask to populate in Microsoft Excel or other useable format. A good rep will do this for you, but most will not Sometimes faxed or pdf – some convert to useable format, some not Some say go to portal or limit to small number of codes

Log in to portals with username and pw Numerous product names often do not match contract products Limit on number of codes at one time Portals need to be “enabled” Verify if % from Rate Exhibit already applied or not If Individual Contracts, schedules can vary by provider

Getting Tricare, Medicaid & WC Schedules

Tricare based on Medicare RBRVS for locality, but no values for many codes. Beware of lesser of discounted billed charges or discounted Tricare

Medicaid – Govt administered usually on state’s .gov site

Medicaid – Private administered- sometimes at 100% of state Medicaid rates but often at lower percentage or even % of Medicare

WC – Vary greatly – some high, some low; Some free fee schedules on state .gov site; Some must be purchase d through OptumInsight , f/k/a Ingenix (ex: NV & GA ); some complicated formulas (TN)

Contract Through IPA & PHO

Ask for copies of contracts associated with the “Messenger Model” – Many will not provide

Some have portals w all rates, some don’t

Some provide comprehensive summaries of key contract provisions, some don’t

Network Mergers & Acquisitions

Integration often takes years. Which Rates Apply?

EXAMPLES:

CIGNA/Great West

PHCS/Multiplan/BeechStreet/Viant

Aetna/Coventry

Other Contract Provisions Impacting Reimbursement

Assignment

Product Participation

Amendments

Payment Policies

Now that we know most rates Let’s Evaluate the impact on your

bottom line

Gather the following:

Medicare Rates for the last several years for your locality and possibly national in some markets

Charges for ALL of your CPT* Codes

Annual Utilization of each code in aggregate and by payer or network, including encounters under capitation

Expect Leased Networks’ utilization to be harder to find in PMS because these are rented by payers. The Payers that rent show up in the PMS, not the Network

* CPT is the registered trademark of American Medical Association

Create a Side-By-Side Line Up Networks, Medicare, Medicaid, WC Best to Include Charges + Aggregate & Payer Specific Utilization Too

At this Stage, Stop and Evaluate Charges

Why?• All too often, practices have certain codes that fall below

contract rates and almost all contracts have “lesser of charges or contract rate” provision

• Contracts that are primarily based on a percent off of charges will be devastating if charges are too low Example: Charges are at 150% of CY Mcr and the agreement pays 50% of charges – you are getting paid 75% of CY Mcr.

• Most agreements default to % “of” or “off of”charges if no value for a specific code is in fee schedule

_____________________________

• Note: With few exceptions - Charge the same for all payers for single analysis base

Why Charge the Same for AllSame denominator for collections comparison

You can adjust for self pay – prompt pay or hardship

Payers will take their due adjustments

Example of Varied Charges: Hand Surgery Practice

Charged the State WC Fee Schedule for Comp Largest WC Contract Reimbursement based on

Lesser of 3% off State FS or 17% off charges On every claim they gave away 14% too much Increased charges to never be less than 150% o

state FS and additional $100K/MO fell to bottom line in the first month for 5 doc group

Determine Who’s Robbing You Most

Get Your Notice On The TableDetermine when notice must be sent - Generally using term & termination timeframes from contract. Is it tied to anniversary?

Send signature required & save tracking info to contract notice address and email to rep

Include: Name & TIN of Practice Names of Providers tied to Agreement(s) Date by which you expect response Desire to renegotiate, but if terms not met by given

date, accept this notice as termination on _______ Means to reach the person who will be negotiating

They will likely tell you….

Not negotiating at this time – do not accept this

Tell us what you have in mind?

So let’s start modeling an offer: Ask Payer/Network what methodology can they

best support– Percent/Conversion factor of Medicare w locality– Proprietary– Carve-outs– Escalators – P4P

Take a Macro Look by Service Type

Understand Years of Medicare for Your Specialty Example: 2011 vs 2009 Weighted by

Utilization - Macro Look

Gain can be Deceiving$34k improvement on $293K

=11.6%

Increase Percent of 2011 Medicare from their initial

offer of 100% to 110%

Change Default if No Mcr Valuefrom 40% of charges to 50%

Add Carve-Out –Bingo $80K

Payer Says OK but Bases Final Offer on 2009 Instead

Lost 18K with year change

What if not on Percent of Medicarebut based on Conversion Factor & Don’t Forget Site of Service

Differential

Do A Similar Analysis Using CF vs %

What if all commercial utilization is paid at each network’s rates side-by-

side

Payer 1 Payer 2 Payer 3 Payer 4 Payer 5 Payer 6 Payer 7

ABC Spe-cialty Total

21923642.72 22572553.5418768

25287387.7731556

27634383.8908975

29732373.6497544

25156906.627475

30312206.9109962

$2,500,000.00

$7,500,000.00

$12,500,000.00

$17,500,000.00

$22,500,000.00

$27,500,000.00

$32,500,000.00

ABC Specialty Total

To

tal

Un

its

x R

eim

bu

rsem

ents

Drill Down - Banding by Surgical Codes

Payer 1 Payer 2 Payer 3 Payer 4 Payer 5 Payer 6 Payer 7

ABC Spe-cialty Sur-gical

1257535.23 1299571.05323962

1435074.2321167

1989365.95373872

1956202.48891334

1581882.61730372

1908248.0099004

$250,000.00

$750,000.00

$1,250,000.00

$1,750,000.00

$2,250,000.00

ABC Specialty Surgical

To

tal

Un

its

x R

eim

bu

rsem

ents

Banding by E&M

Payer 1 Payer 2 Payer 3 Payer 4 Payer 5 Payer 6 Payer 7

ABC Spe-cialty E&M

14881898.81 14109554.4978975

15747678.1039006

16110905.3138104

17023490.89404

14088065.5211638

16077237.1883491

$1,000,000.00

$3,000,000.00

$5,000,000.00

$7,000,000.00

$9,000,000.00

$11,000,000.00

$13,000,000.00

$15,000,000.00

$17,000,000.00

ABC Specialty E&M

To

tal

Un

its

x R

eim

bu

rsem

ents

Banding by Medicine Codes

Payer 1 Payer 2 Payer 3 Payer 4 Payer 5 Payer 6 Payer 7

ABC Spe-cialty Medicine

3546007.25 3665089.54148301

3457583.09140124

3925338.53512895

3804178.36054138

3214807.35806487

4238854.6311641

$250,000.00

$750,000.00

$1,250,000.00

$1,750,000.00

$2,250,000.00

$2,750,000.00

$3,250,000.00

$3,750,000.00

$4,250,000.00

ABC Specialty Medicine

To

tal

Un

its

x R

eim

bu

rsem

ents

Banding by Lab

Payer 1 Payer 2 Payer 3 Payer 4 Payer 5 Payer 6 Payer 7

ABC Spe-cialty Labo-ratory

1382408.57 1749169.22462831

2323526.17286855

2804387.04410971

3474250.95312985

3136075.5654713

4043933.54079129

$250,000.00

$750,000.00

$1,250,000.00

$1,750,000.00

$2,250,000.00

$2,750,000.00

$3,250,000.00

$3,750,000.00

$4,250,000.00

ABC Specialty Laboratory

To

tal

Un

its

x R

eim

bu

rsem

ents

Ask Yourself Some Tough Questions

If the practice drops Payer 1…Do you provide a service, hospital coverage or emergency care that few if any in market can replace?

Will the appointments be filled with patients of better paying plans or self pay? Example: Appts filled w/ better paying Mcr and patients

covered by termed plan still came and paid in advance.

…will there be opportunities to cut expenses due to reduced patient load after termination Example: Practice closed on Fridays reducing expenses and

improving margin. After one year the net revenue was only $3k less than previous years and everyone had Fridays off!

Figure Worst and Best Case Scenarios if your practice

terminatesIf you lost ALL of the revenue of the terminated payer what would that do to your bottom line?

Will the decision have an impact on the relationship or contracts with hospital, ASC, referral sources? Examples: Hospital based specialty, Free standing imaging center,

and Surgical group

Public perception of greed

Take Control of PerceptionsPrepare thoughtful and well timed correspondence: Patients/Members Area Employers Referral Sources and Facilities

Contact news media

Expect plan to send correspondence to members and media – request copy from plan in advance

Update website

Arm and train staff regarding how to handle calls, patients, etc Prepare script and have a point person for difficult situations Be prepared to calculate likely patient responsibility before services

are rendered

In ConclusionLocating and/or calculating your payer and network reimbursement rates can be daunting. Don’t let the obstacles flatten your tires.

Evaluate the impact of contract rates on your bottom line. After finding ALL rates, decide if you need to renegotiate…or

Determine whether you need to be PAR with every payer or network. If you pare down your payers, it may not necessarily mean less net revenue, might mean more net revenue with fewer expenses and less stress.

Mention your attendance at this session and get a ContractMaster tool FREE

Offer Expires July 31, 2012

For more info visit

www.HealthBusinessNavigators.com

Penny Noyes, President, CEO, FounderHealth Business Navigators701 Dishman Lane Extension, Suite 3Bowling Green, KY 42104

270-782-7272P.Noyes@HealthBusinessNavigators.com