1. Contracts’ Language Review, ACO’s Capitated Agreements and 10 Best Practices- Session 4
June, 2015

2. Learning Objectives Finish contract negotiations process
Language Review
Monitor Claims and remember to renegotiate (Best Practice 10)
ACOs and Capitation
Bringing it all together with the 10 Best Practices, review of:
How to evaluate a managed care fee proposal
Preparing a SWOT analysis to identify opportunities and threats to a practice’s reimbursements
Conducting a managed care proposal reimbursement analysis used for benchmarking, pattern identification and business modeling
Evaluate in-network vs. out-of-network options and maximize your billed charges to uniform, customary & reasonable (UCR) levels.
Techniques for negotiating “win- win” agreements with managed care companies
Simple technique for monitoring claims payments and comparing to your contracted rates to insure that you are not underpaid
Most importantly, make more money from your commercial payer agreements!

3. Your Contracts’ Assessment and proposal letters
Contact Susan Charkin at or
If possible (Not required), bring…
Revenue collected over a one year period for each payer
Overall % Medicare you are currently contracted at by payer
Any known issues with a payer, e.g., collections or other
Any knowledge you have about your competition and the market that you are in
Susan will discuss approaches to moving each of your agreements forward to higher reimbursement or other recommendations
This ½ hour high value assessment is included as a part of your class.
Also, remember to send a sample proposal letter to for feedback

4. Operational Language Review, example
Contract Language Template
*Note: Healthcents staff are not attorneys and offer recommendations based on operational language that can impact reimbursement not legal advice
Section Title
Desired Language
Sample Payer Clause
Payment Policies
Read manual / review
Familiarize staff with Payer's payment policies; review with staff, sign up for PayerOnline:
Protocols
Familiarize staff with Payer protocols; review Payer's online information with your office staff:
Payer's Affiliates
Request a current list of Payer affiliates.
Representations and Warranties of Practice
Obtain Additional Manuals referred to regarding policies and protocols for certain Benefit Plans.
Services not covered under a Benefit Plan
Prior to delivery of services, obtain written waiver for services not covered under agreement.
Cooperation with Protocols
Make this more specific, don't box yourself in!
Practice will provide notification for certain services, and respond to Payer for requests for clinical information; establish protocols for prompt turnaround time to provide requested clinical information. This list of services can vary by benefit plan, staff should verify benefits and eligibility prior to any procedure.
Payment of Claims
As short as possible, no more than 90 days from the date of service. Try to get this inserted vs. the language offered here
Payer may change its Payment Policies from time to time, but will make Payment Policies available
Time to File Claims
Ideally 6 months or more
Timely filing requirement is 90 days from date of service
Denial of Claims for Not Following Protocols, Not Timely Filing, or Lack of Medical Necessity
12 months is likely reasonable for appeals on denials
Claims may be denied for lack of timely filing or if Practice does not follow protocol; appeal period is 12 months after date of denial
Retroactive correction of information regarding whether patient is a Customer
As long as you are not a party to the payer collecting over payment to a patient, this should be okay.
Member information is subject to change retroactively and payer may bill individual/other responsible party for any services deemed overpayments due to member ineligibility at time of service.

5. More Operational Language Review

6. And other operational language items to look for…
Use of non-par providers, e.g., ancillary services, anesthesia
Timely submission of claims (120 is reasonable, shoot for 365)
Timely claims payments (30-45 days from receipt of claims)
Claims Refunds: Ask that you be responsible for making payment vs. payment is withheld from future claims payments
Claims Changes: Ask that they payer request your permission, in writing before re-coding, re-ordering or modifying your claims
Bi-Lateral procedure reimbursement
Eliminate “favored nation” language
Changes to contract should trigger 30 day termination without cause, fee schedule changes should be categorized as material changes
Silent PPO’s, understand the payment relationships among your agreements, primary and secondary
Make sure there is agreement on reimbursement for other listed and unlisted services
Have your legal counsel review for possible legal concerns, we recommend always having a legal counsel review your contracts

7. Monitor / Re-negotiate
Contracts Negotiation Process
Data Analysis
Proposal Letter
Make Initial Contact with Payer
Negotiate until agreement is reached
Analyze Counter offers
Escalate to Senior Management
Consider Out of Network Option
Monitor Claims
Re-Negotiate
Phase 2:
Negotiate
Phase 2:
Continue to Negotiate
Phase 1:
Prepare
Phase 3:
Monitor / Re-negotiate
Negotiations
Completed
We are here

8. About Commercial Payer ACO’s
ACOs are networks of providers who are held accountable for the cost and quality of the full continuum of care delivered to a group of patients.
Part of the Affordable Care Act
Intended to reduce fragmentation and improve coordination among various providers, to result in lower health care use.
PCP is the “Point Guard / Quarterback”, generally may participate in only one ACO
Specialists may participate in many ACO’s
Fundamentally, 3 different Structures, next diagram…

9. How are ACOs Structured?
ACO Model 1
IPA or PCP Group
Specialty Group
Hospital
ACO Model 2
Multi-specialty Group
ACO Model 3
Hospital Medical Staff Organization (MSO) or
Physician-Hospital Organization (PHO)

10. Should a Provider Participate in an ACO?
Evaluate options available in your area, PPO, HMO , ACO, IPA…
Compare reimbursement in the different payment models, ACO, PPO, HMO, other
Very Important: Evaluate bonus structures and reimbursement models (Value Based Contracting models)
Evaluate IT integration and patient data integration and tracking
Capitated vs. Fee for Service?
Go where your patients, employer groups and the money goes
Read our new article published by MGMA on the class web page!

11. Capitation Getting started What is capitation-based payment
Methodology
Parameters for evaluation
Kinds of capitation agreements
Risks assessment
How to leverage capitation agreements

12. Getting Started
Rules of Engagement:
Who is proposing capitation agreement (provider or carrier)
Know your practice statistics
Volume of patients
Fee-for-service carrier profile (Revolution Software)
Demographics
ICD-9 & CPT
Develop actuarial soundness (scope of services covered)
Request capitation agreement/proposal
Allow time to thoroughly review capitation proposal

13. Developing your capitation rate
For example, if a practice generates total payer 1 revenue of $1,000,000 and decided to assume cap shared risk of 4,000 assigned lives, you are collecting an average of $250 (i.e., 1M/$4K) per patient each year for payer 1. Cap payment payer 1 = $250/12 =$20.83pmpm (per member per month)

14. Continue
For example, a physician who is hired at $550,000 per year with benefits included, decided to start accepting cap payments. The capitated agreement is one of 5 agreements that generate equal amounts of revenue. The practice wants to know what will be a good capitation rate… Divide $550,000 cost by 2,860 (industry standard for the average number of patients a typical urologist sees per year). (550,000 / 2,860)/12=$16.02 then divide by 5 = $3.02 pmpm

15. What Is Capitation-Based Payment?
Capitation-a payment method for health care services.
Capitation based payment is when the physician, hospital, or other health care provider is paid a contracted rate for each member assigned, referred to as "per-member-per-month" rate, regardless of the number or nature of services provided.
The contractual rates are usually adjusted for age, gender, illness, and regional differences.

16. Methodology
Parameters for evaluation:
In order to evaluate a capitation based payment agreement, provider must evaluate what it cost to deliver care and what the carrier is willing to pay for services.
Establish a bench mark: the provider must examine the volume of patients, diagnosis (ICD-9), procedure or services to be provided (CPT), age and sex.
Do price or contract comparison (fee-for-service vs. capitation). If you do not have an internal tracking system in place, the Revolution Software. Healthcents can help you establish adequate contract rate comparisons.
Make sure that insurance is able to supply you with timely enrollment history. Confirm if payment is based on guarantee or assigned lives.
Check kinds of capitation payment agreement you are able negotiate.

17. Kinds of Capitation Agreements
Per-member-per-month (PMPM) Payment
- capitation payment based on number of patients assigned to the provider
each month to manage patient care.
Partial Global Payment (PMPM)
- capitation payment that does not only cover services provided by the
provider, it includes outpatient services provided to enrollee. For example,
laboratory and diagnostics services.
Global Payment (PMPM)
- Capitation payment that includes the total risk for all items and services
provided for patient assigned or enrollee selected. Includes facility services.

18. Manage risk by obtaining stop-loss insurance.
Risks Assessment
Risk based payment
- the provider is compensated on the ability to predict and manage future utilization for the population assigned (ability to manage risks). To leverage risks based payment provider should fully understand how risk is shared (upside vs. downside)
Upside Risk
- if provider provides adequate care and save costs the provider should be able to
benefit and share savings.
Downside Risk
- is there a clause in the agreement that penalizes provider for over utilization?
Manage risk by obtaining stop-loss insurance.

19. How to Leverage a Capitated Agreement?
Carve out high dollar services
New technology usually referred to experimental services should be included in agreement and paid at fee-for-service rate (billed with report).
Negotiate adequate number of enrollees.
Capitation payment should be based on date of enrollment and not date of assignment.
Establish division of financial responsibility (DOFR) between health plan and provider. (Wes Cleveland-AMA)
Surplus payment received from better utilization should not be refunded.

20. Trends and Directions
Medicare moving to efficiency based quality of care metrics, less fee for service, over time
See
Expect payers to follow
Number of ACOs and population of beneficiaries is increasing
About 15%-17% of US population is participating in ACO
IPAs and Hospital Systems moving in this direction
Efficiency metrics key to reimbursement on direct PPO and HMO agreements, often 5% today
FFS and Efficiency metrics, together determine reimbursements
Higher deductibles leads to the need for better patient collections
Telemedicine is here to stay and gaining traction with payers
Code 99490:
M and A acceleration
“E-everything”, technology dependent

21. Trends and Directions- Metrics moving to Efficiency Based
Limiting/reducing referrals to other providers who are non-par (this includes facilities and ancillary providers, e.g., labs and radiology services)
Increasing percentage of prescriptions that are generics vs. brand names, when a generic is available
Data baseline is payer’s data
Some contracts have a “reconciliation period” after which the provider has an opportunity to compare their utilization data with the payer’s and dispute negative measurement findings if the two data sets are not in agreement.

22. Trends and Directions- Value Based Structure
Shifting of higher percentages of reimbursement tied to incentives and value based vs. FFS
Credentialing: In state presence often required by payer(s)
In state presence means a full service, licensed, Medicare certified, accredited location in the state where the provider wants to get an agreement.
This has become an issue for smaller DMEs and
Credentialing not leading to a contract 100% of the time.
Why? To be recognized in payer systems when non-par claims go through.
Still, "bundled payment" contracts are rare. 
One of our clients was working on an episodic reimbursement scenario with a payer that included the practice and the ASC limited to total joint replacements and included the 30 days before and 90 days after the joint replacement surgery
This may not have closed since the risk balance could not be agreed to 
Other changes- number of cores Medicare will pay for on a biopsy
Used to be 12, now it's less

23. Trends and Directions- Value Based Structure
Depending on baseline there may or may not be a first year increase.
Increases are usually based on making an improvement of an agreed amount in each category.
No penalty, that we have seen on commercial payer agreements, if benchmarks are not met. 
The provider does not get their increase for that year.
In most cases the total increase (2.5% - 3.0%) is split among categories, for example:
Meeting targets on non-par referrals
Meeting targets on generic drug prescription rates
This works for most providers because it is not an “all or nothing” deal.

24. Monitor / Re-negotiate
Contracts Negotiation Process
Data Analysis
Proposal Letter
Make Initial Contact with Payer
Negotiate until agreement is reached
Analyze Counter offers
Escalate to Senior Management
Consider Out of Network Option
Monitor Claims
Re-Negotiate
Phase 2:
Negotiate
Phase 2:
Continue to Negotiate
Phase 1:
Prepare
Phase 3:
Monitor / Re-negotiate
Negotiations
Completed

25. 10 Best Contracting Practices boils down to…
PREPARE
NEGOTIATE
MONITOR

26. 10 Best Contracting Practices
PREPARE:
Best Practice 1: 
Evaluate top codes and figure out which ones are driving revenue
Best Practice 2: 
Benchmark against Medicare and payers to determine patterns of under reimbursement, use 20/80 rule
Best Practice 3: 
SWOT Analysis for your payer fee schedules: Bundled, Grouper rates, things that make it hard for you to negotiate rates, services paid outside of facility fee e.g., anesthesia, implants
Best Practice 4:
SWOT Analysis for your practice
Best Practice 5:
Prepare highly impactful proposal letter

27. 10 Best Contracting Practices
NEGOTIATE:
Best Practice 6:
Deliver highly impactful proposal letter to a contracts manager at the payer, initial follow up and establish rapport
Best Practice 7:
More Follow up, follow up again and again, keep the payer on the hook
Best Practice 8:
Evaluate payer proposals and look for ways to optimize counter offers if payer does not provide a proposal, don’t take first “No” as an answer. Be ready to escalate at the right time
Best Practice 9:
Review contract for language that affects reimbursement   
                         
MONITOR:
Best Practice 10:
Monitor payments and renegotiate when the time frame allows

28. Best Practices 1 and 2: Evaluate and Benchmark

29. What should we ask for? Go back to the payer with a counter proposal:
E and M up 40%
Pathology up 30%
Radiology if below 100%, then up 40% (77014, 77418, 77427)
All other up 15%, including codes not priced as a PCT of Medicare
Codes 52000, 55250, and add $200 for in office based incentive (In addition to the 15% increase proposal)
Note: left out due to unusually high reimbursement

30. Best Practice 3: Fee Schedule SWOT Analysis (Our offer / proposal to payer)

31. Best Practice 3: More SWOT, In vs. Out of Network Option

32. Best Practice 3: More SWOT, Billed Charges Assessment

33. Another Question / Scenario (Again this is a repeat)…
Two practices merge, Practice A and Practice B, into a new practice, named Practice C.
Prior to the merger, Practice A had an PPO agreement with Payer 1 that paid, in network, $1,000,000 the 12 months just before the merger. Their overall weighted average rate of reimbursement with Payer 1 is 100% of Medicare.
Prior to the merger, Practice B had an in network PPO agreement with Payer 1 that paid $200,000 the 12 months just before the merger. Their overall weighted average rate of reimbursement with Payer 1 is 120% of Medicare.
Practice C has decided to remain in Payer 1’s network, as long as their total group reimbursement with Payer 1 increases in aggregate. After a long and difficult negotiation with Practice C, Payer 1 made a final offer of 108% of Medicare, down 12% from Practice B’s current reimbursement. Assuming that, in the absence of change, revenues will remain constant, should practice C accept this new and final offer from payer 1?
Yes No

34. S.W.O.T. – Identify Saleable Solutions and Potential Obstacles to Getting an Increase (Best Practice 4)
Strength
Location
Size and Market Importance
Practice Patterns
Referral Network
Opportunities
Employer Groups
New or Specialized Services
Value Based Contracting
Weakness
Competing Practices
Payer Reimbursement Policy
Threats
Mergers
Payer initiated ACOs
Out of Network Reimbursement Policy

35. Putting together a highly impactful proposal letter (Best Practice 5)
Establish relationship, why am I writing to you Mr. or Ms. Payer?
Sell your Practice and address payer concerns
What are the reasons that it is advantageous to the payer to increase our reimbursement?
Close the “sale”, throw the hook

36. Establish the Relationship
State the reason for contact and establish Practice / Physician relationship with plan – Example of opening paragraph
I am contacting you on behalf of Practice NAME to initiate a renegotiation of their current fee schedule. Practice epitomizes “patient centered care” and is consistently performing services at 1/2 the cost of competing practices and is the single largest provider of orthopedic care in the area. Practice been doing so for the past ## years. In the past 12 months, they provided care to #### PAYER covered lives, receiving $$$ for rendered services from PAYER.

37. Sell your Practice and address payer concerns
Network coverage, specialties, clinical efficiency = lower cost, administrative efficiency = lower cost
Practice is the largest, most comprehensive orthopedic practice in the greater CITY/COUNTY area. They are the only Practice that provides SPECIAL PROCEDURES. Practice also provides extensive unique office based procedures. Their professional specialties include LIST SUB OR SPECIFIC SPECIALTIES. The effect of handling these procedures in our office vs. the local hospital is a savings of XX to PAYER.

38. Close the sale and “throw the hook”
Closing statement– restate the purpose of the letter and “throw the hook”
Following a review of the existing fee schedule, Practice has found that the reimbursement from your organization is not competitive and does not sufficiently reimburse the practice for the high-quality, coordinated care provided to your members. Practice is committed to remaining in PAYER network, but must do so at rates that make good business sense. To that end, Practice has included, in Appendix A of this letter, a reasonable proposal commensurate with the cost and value that Practice provides to your members and your network.
I am confident we can come to a mutually acceptable fee schedule agreement. Your written reply to this proposal is requested by no later than DATE (2.5 weeks from date of proposal). In the meantime, if you have any questions about the practice or the attached proposal, please do not hesitate to contact me.

39. Monitor / Re-negotiate
Best Practices 6, 7 and 8
Best Practice 6:
Deliver highly impactful proposal letter to a contracts manager at the payer, initial follow up and establish rapport
Best Practice 7:
Follow up, follow up again and again, keep the payer on the hook
Best Practice 8:
Evaluate payer proposals and look for ways to optimize counter offers. If payer does not provide a proposal, don’t take first “No” as an answer. Be ready to escalate at the right time
Data Analysis
Proposal Letter
Make Initial Contact with Payer
Prepare and deliver proposal letter, initial follow up (Practice 6)
Follow Up (Practice 7)
Analyze Counter
Negotiate until agreement is reached
Escalate to Sr. Level Manager (Practice 8)
Consider Out of Network Option
Monitor Claims
Re-negotiate
Phase 1:
Prepare
Phase 2:
Negotiate
Phase 2:
Continue to Negotiate
Phase 3:
Monitor / Re-negotiate
Negotiations
Completed

40. Review contract for language that affects reimbursements (Best Practice 9)
Term and termination (90 days without cause)
Use of non-par providers, e.g., ancillary services, anesthesia
Timely submission of claims (90 is reasonable, shoot for 180)
Timely claims payments (30-45 days from receipt of claims)
Multiple Procedures / Bi-Lateral
23 hour stays
Implants carved out as needed
Retrospective review of overpayments, 90 days maximum, reimburse them vs. they deduct automatically
Lesser of Language
Eliminate “favored nation” language
Changes to contract should trigger 30 day termination without cause, fee schedule changes should be categorized as material changes
Have your legal counsel review for possible legal concerns

41. Best Practice 10, Monitor Claims

42. Value Based Contracting
Efficiency
(2% if >70 points)
Qualitative
(2% if >70 points)
Quantitative
(1% if >70 points)
Generic Drug Utilization
>90%: 75 pts
%: 60 pts
%: 45 pts
Follows Urology Best Practices Guidelines
50 pts
In network referrals only
>2.5: pts
: 60 pts
: pts
Preferred Drug Utilization
>90%: 25 pts.
%: 20 pts
%: 15 pts
Active E-Prescriber:
25 pts
Patient Satisfaction
3 stars: 25 pts
2 stars: 20 pts

43. 10 Best Contracting Practices
PREPARE:
Best Practice 1: 
Evaluate top codes and figure out which ones are driving revenue
Best Practice 2: 
Benchmark against Medicare and payers to determine patterns of under reimbursement, use 20/80 rule
Best Practice 3: 
SWOT Analysis for your payer fee schedules: Bundled, Grouper rates, things that make it hard for you to negotiate rates, services paid outside of facility fee e.g., anesthesia, implants
Best Practice 4:
SWOT Analysis for your practice
Best Practice 5:
Prepare highly impactful proposal letter

44. 10 Best Contracting Practices
NEGOTIATE:
Best Practice 6:
Deliver highly impactful proposal letter to a contracts manager at the payer, initial follow up and establish rapport
Best Practice 7:
More Follow up, follow up again and again, keep the payer on the hook
Best Practice 8:
Evaluate payer proposals and look for ways to optimize counter offers if payer does not provide a proposal, don’t take first “No” as an answer. Be ready to escalate at the right time
Best Practice 9:
Review contract for language that affects reimbursement   
                         
MONITOR:
Best Practice 10:
Monitor payments and renegotiate when the time frame allows

45. Questions/Comments?
RevolutionSoftware™ Questions
Regina Vasquez, Sr. VP of Accounts – Healthcents, Inc.
Tel: (719)
Healthcents, Inc. Corporate
Susan Charkin, President – Healthcents, Inc.
Steve Selbst, CEO,
Healthcents Inc. Tel: (800)
Thank You for your participation and we wish you succe$$ in your contract negotiations!

46. Your Contracts’ Assessment and Proposal Letters
Contact Susan Charkin at or
If possible (Not required), bring…
Revenue collected over a one year period for each payer
Overall % Medicare you are currently contracted at by payer
Any known issues with a payer, e.g., collections or other
Any knowledge you have about your competition and the market that you are in
Susan will discuss approaches to moving each of your agreements forward to higher reimbursement or other recommendations
This ½ hour high value assessment is included as a part of your class.
Also, remember to send a sample proposal letter to for feedback