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Mississippi MGMA – June 28, 2013 Orange Beach, AL Penny Noyes, President, CEO & Founder Financial Analysis in Negotiating Your Payer Reimbursement.

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Presentation on theme: "Mississippi MGMA – June 28, 2013 Orange Beach, AL Penny Noyes, President, CEO & Founder Financial Analysis in Negotiating Your Payer Reimbursement."— Presentation transcript:

1 Mississippi MGMA – June 28, 2013 Orange Beach, AL Penny Noyes, President, CEO & Founder Financial Analysis in Negotiating Your Payer Reimbursement

2 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

3 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/

4 Create a Summary Report for Easy Reference

5 Locate and/or calculate your payer and network reimbursement rates Expect a Long Journey with Lots of Tacks in the Road

6 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

7 Locating your contract rates …sounds easy, but much harder than it should be From 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

8 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 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

9 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, 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%

10 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

11 Example of Banding in Rate Exhibit

12 Banding w Multiple Schedules as Basis Nightmare but in most markets Note the varying percentages & FIVE different schedules –

13 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

14 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)

15 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

16 Network Mergers & Acquisitions Integration often takes years. Which Rates Apply? EXAMPLES: CIGNA/Great West PHCS/Multiplan/BeechStreet/Viant Aetna/Coventry

17 Other Contract Provisions Impacting Reimbursement Assignment Product Participation Amendments Payment Policies

18 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

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

20 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

21 Why Charge the Same for All Same 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

22 Determine Who’s Robbing You Most

23 Get Your Notice On The Table Determine 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 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

24 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

25 Take a Macro Look by Service Type

26 Understand Years of Medicare for Your Specialty Example: 2011 vs 2009 Weighted by Utilization - Macro Look

27 Gain can be Deceiving $34k improvement on $293K =11.6%

28 Increase Percent of 2011 Medicare from their initial offer of 100% to 110%

29 Change Default if No Mcr Value from 40% of charges to 50%

30 Add Carve-Out –Bingo $80K

31 Payer Says OK but Bases Final Offer on 2009 Instead Lost 18K with year change

32 What if not on Percent of Medicare but based on Conversion Factor & Don’t Forget Site of Service Differential

33 Do A Similar Analysis Using CF vs %

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

35 Drill Down - Banding by Surgical Codes

36 Banding by E&M

37 Banding by Medicine Codes

38 Banding by Lab

39 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!

40 Figure Worst and Best Case Scenarios if your practice terminates If 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

41 Take Control of Perceptions Prepare 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

42 In Conclusion Locating 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.

43 Mention your attendance at this session and get a ContractMaster tool FREE Offer Expires July 31, 2012 For more info visit Penny Noyes, President, CEO, Founder Health Business Navigators 701 Dishman Lane Extension, Suite 3 Bowling Green, KY


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