contract negotiations 101

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CONTRACT NEGOTIATIONS 101

Marcia Brauchler, MPH CPC, CPC-H, CPC-I, CPHQ

April 4, 2011 10:15 – 11:45 a.m.

Track: Revenue Cycle Management Session: 7G

All Rights Reserved. 1

AGENDA

  Why bother?   Set yourself up for success   Prepare, prepare, prepare   Begin with the End in Mind

  Caution – don’t get stuck   Negotiation strategies   Monitor for continued success   Questions?

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  It’s your practice’s paycheck   You probably have more leverage than you

think   Practices do SUCCEED – if it is given priority   Mandated fee schedules are not negotiable   Commercial lives are dwindling   The market place is getting smaller – payor

consolidation

Why Bother?

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Colorado Payors circa 2000   Aetna   Affordable   Alliance   Anthem BCBS   Antero Health Plan   Beech Street   Colorado Access   Community Care Network

(CCN)   Community Health Plan of the

Rockies (CHPR)   CorVel   Concentra   CIGNA Health Care   CompreCare   Coventry Health Care   First Choice of the Midwest   First Health   GEHA/PPO USA Network

  FOCUS   Great-West   Humana, Inc.   Kaiser   MedRisk   MetLife   Mountain Medical Affiliates

(MMA)   Mutual of Omaha   MultiPlan   One Health Plan   PacifiCare   Private Healthcare Systems   Prudential   Rocky Mountain Health Plans   Sloans Lake   Take Care   Western Health Plan   United Healthcare

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Colorado Payors – Today

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Aetna Anthem CIGNA

Colorado Access

Coventry Humana Kaiser

Rocky Mountain

United Healthcare

Viant

RESOURCES for gathering Payor Data for Your State:

  HMO: your state’s Department of Insurance   PPO: proprietary, broker or employer advocacy group   Medicare Advantage: Medicare beneficiary website   IPAs/PHOs: hospital websites, under “Payors we

Accept”   Workers’ Compensation Carriers: Department of

Workers’ Compensation   Auto/Lien Payors: claims adjustor for large insurers,

like State Farm; lawyers with non-insured cases

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AGENDA



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Get organized, manage the process Where do you start?

#1 Define your Payor Mix

For example:

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Set yourself up for success

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TIP: “Twenty Percent Rule”

  No more than 20% of your total practice managed care revenue should come from a single payor   Ideal, but usually not reality

  Diversification is protection   Have an open mind when it comes to new

players

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Hypothetical Payor Mix: Year to Percent of

Date Total Plan Name Receipts Business Alpha Payor 130,439 17.20% Beta Payor 123,194 16.25% Delta Payor 107,512 14.18% Omega Payor 74,745 9.86% Theta Payor 67,916 8.96% Zeta Payor 42,207 5.57% Other 29,077 10%

100.00% 10


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#1 Define your Payor Mix #2 Define your Product Mix

  HMO   PPO   Medicare   Workers Compensation

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TIP: Gather your own Patients’ Plan Data

  How?   Practice Management system   EOB review   Front Desk “survey”

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TIP: Get Payor Online Access

  How? Find the payor(s) provider sites. For example, Aetna, CIGNA and United Health

Care: http://navinet.navimedix.com/Main.asp

  Why?

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#2 Define your Product Mix   Which EMPLOYERS offer which Insurance

Plans?   Health plans   Product Lines   Benefit exceptions (i.e. no preventive)   Vision & Dental

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TIP: Ancillary Provider Map of Insurance Plan to Ancillary Networks

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OptumHealth Health New England United Healthcare

Healthways Aetna Humana Kaiser Principal Sterling

American Specialty Health CIGNA Fallon Community TUFTS UniCare


#1 Define your Payor Mix #2 Define your Product Mix #3 Determine how your Participation Agreements are held   For each physician   Individually, Group, IPA

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#1 Define your Payor Mix #2 Define your Product Mix #3 Determine how your Participation

Agreements are held #4 Determine contracted reimbursement

terms by product   % of RBRVS, Conversion Factors, Discount

off Billed

Here’s how . . . 17


#4 Determine contracted reimbursement terms by product . . .

  Determine if reimbursement is fixed on a given year of RBRVS

  Consider what components of RBRVS does the payor utilize   Geographic adjustment, site of service differential, etc.

  A thought about “Term”

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TIP: Disregard payors who say you can’t negotiate now

  “Term” Section   Negotiation window . . . Ugh.

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Payor Contract Entity

Scheduled Change

Year of RBRVS

% of RBRVS

Last Reimbursement

Update

Alpha Payor IPA July 1st fixed 2007 130% 1/1/2008

Beta Payor Direct,

individual N/A fixed 2005 125% 9/1/2006 Delta Payor IPA Nov. 1 current 2011 140% 6/1/2011 Omega Payor Direct April 15th current 2012 110% 1/1/2012

Theta Payor Direct, Group Jan. 1st current 2011 125% 4/1/2011

Zeta Payor Direct,

individual 2nd Qtr current 2011 150% 7/1/2011 20


#4 Determine contracted reimbursement terms by product . . .

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Get organized, manage the process

  #5 Define Codes that matter to the Practice   Gather the following:

  Superbill with CPT and HCPCS codes   Fee schedule with charges for each code   Frequency count of CPT & HCPCS codes   Commonly used ICD-9 codes

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#5 Define Codes that matter to the Practice

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CPT Code DESCRIPTION

FREQ. (including

with modifiers)

Alpha Payor Beta Payor Delta

Payor Omega Payor

Theta Payor Zeta Payor

Contract through: IPA Direct IPA Direct Direct Direct Effective date: 1/1/2008 9/1/2006 6/1/2011 1/1/2012 4/1/2011 7/1/2011

1/1/2010 to 130% 125% 140% 110% 125% 150%

12/31/2010 2007 NF 2005 NF 2011 NF 2012 NF 2011 NF 2011 NF 10060 Drainage of skin abscess 16 $132.86 $134.41 $150.54 $112.34 $127.66 $161.30 11100 Biopsy, skin lesion 13 $124.36 $126.42 $141.59 $105.04 $119.37 $151.70 17000 Destruct premalg lesion 308 $96.50 $98.34 $110.14 $81.52 $92.64 $118.01 17003 Destruct premalg les, 2-14 184 $8.91 $8.80 $9.85 $7.71 $8.76 $10.56 20610 Drain/inject, joint/bursa 73 $93.15 $94.56 $105.90 $79.09 $89.87 $113.47 51702 Insert temp bladder cath 26 $100.15 $95.67 $107.15 $84.76 $96.32 $114.80 86580 TB intradermal test 82 $8.90 $9.21 $10.32 $7.71 $8.76 $11.05 93270 ECG recording 11 $21.79 $18.95 $21.23 $18.66 $21.20 $22.74 94010 Breathing capacity test 176 $42.66 $43.85 $49.11 $36.10 $41.02 $52.62 99202 Office/outpatient visit, new 59 $88.13 $87.89 $98.44 $72.19 $82.04 $105.47 99203 Office/outpatient visit, new 733 $127.95 $127.04 $142.28 $104.64 $118.91 $152.44 99204 Office/outpatient visit, new 205 $198.57 $195.25 $218.69 $161.82 $183.89 $234.31 99211 Office/outpatient visit, est 16 $25.17 $24.48 $27.42 $21.09 $23.97 $29.37 99212 Office/outpatient visit, est 161 $51.14 $51.31 $57.46 $42.18 $47.93 $61.57 99213 Office/outpatient visit, est 9908 $85.75 $85.36 $95.60 $70.16 $79.73 $102.43 99214 Office/outpatient visit, est 5105 $128.48 $126.61 $141.81 $105.04 $119.37 $151.93 99215 Office/outpatient visit, est 197 $173.44 $170.31 $190.75 $141.14 $160.38 $204.38

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AGENDA



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Establish a reference point Compare 100% of current year RBRVS year

after year   Example…

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Prepare, prepare, prepare

Current Proposed Percent

CPT Procedure 2005 2010 Change

77263 Treatment Planning $247.64 $172.57 70%

77280-26 Simulation $55.84 $37.59 67%

77290-26 Simulation $124.08 $83.60 67%

77295-26 Simulation $358.28 $245.81 69%

77300-26 Basic Dosimetry $49.12 $33.36 68%

77315-26 Isodose Plan $124.08 $83.60 67%

77332-26 Treatment Device $43.43 $29.14 67%

77334-26 Treatment Device $97.20 $66.35 68%

77427 Weekly Treatment Mgmt $199.18 $206.69 104%

77431 Trmt Mgmt (1 or 2 only) $143.21 $104.69 73%

79005-26 R.T. -oral administration $90.45 $94.73 105%

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Establish a reference point Pull past utilization by Payor

  History is the best predictor of the future   Example…

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Example of Past Utilization:

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CPT Procedure Count Allowed 2011 RBRVS

77334-26 Treatment Device 615 $97.20 $63.14

77300-26 Basic Dosimetry 494 $49.12 $31.85

77427 Weekly Treatment Mgmt 485 $199.18 $182.51

99213 Office Visit 390 $39.66 $49.80

77280-26 Simulation 102 $55.84 $35.71

77263 Treatment Planning 89 $247.64 $163.03

77290-26 Simulation 82 $124.08 $79.69

99205 Office Visit 72 $136.30 $163.52

77315-26 Isodose Plan 52 $124.08 $79.69


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Establish reference point using Utilization data. . . .

Analyze utilization data in conjunction with current RBRVS   Example of impact of Utilization data …

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Pure Average:

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CPT Procedure Allowed Proposed Change 77334-26 Treatment Device $97.20 $66.35 68% 77300-26 Basic Dosimetry $49.12 $33.36 68% 77427 Weekly Treatment Mgmt $199.18 $206.69 104% 99213 Office Visit $39.66 $51.39 130% 77280-26 Simulation $55.84 $37.59 67% 77263 Treatment Planning $247.64 $172.57 70% 77290-26 Simulation $124.08 $83.60 67% 99205 Office Visit $136.30 $169.11 124% 77315-26 Isodose Plan $124.08 $83.60 67%

85%

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Weighted Average:

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CPT Procedure Count Proposed Wtd Impact 77334-26 Treatment Device 615 $66.35 16% 77300-26 Basic Dosimetry 494 $33.36 13% 77427 Weekly Treatment Mgmt 485 $206.69 19% 99213 Office Visit 390 $51.39 19% 77280-26 Simulation 102 $37.59 3% 77263 Treatment Planning 89 $172.57 2% 77290-26 Simulation 82 $83.60 2% 99205 Office Visit 72 $169.11 3% 77315-26 Isodose Plan 52 $83.60 1%

2381 78%

Establish a reference point

  Determine financial outcome

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Current 1st Payor Offer

2nd Payor Offer

3rd Payor Offer

FINAL

Actual Dollars (using 2010 Utilization)

E&M Codes $41,586 $50,848 $53,292 $55,738 $58,181

Procedure Codes $246,794 $204,461 $209,966 $224,571 $234,384

Total $288,380 $255,309 $263,258 $280,309 $292,565

Impact to Practice N/A ($33,071) ($25,122) ($8,071) $4,185

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AGENDA



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Now what?

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0% Identify Payor Contact

10% Draft & Send Health Plan

Proposal 20% Follow-up

with Payor 30% Receive Offer

from Payor

40% Read Language & Draft

Revisions 50% Language & Rates Acceptable

60% Signature on Contract

70% Credentialing Packet Submitted

80% Contract Returned Correctly

90% Credentialing Approved

100% Effective Date

Police Reimbursement

for Accuracy

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Contracting – 0% Completion


•  Identify payor contact information. •  Identify specific person in-charge of

contracting, with responsibility for an entire network.

•  Once contact person is identified and recorded, you’re ready to start the negotiation process.


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10% Draft & send Health Plan Proposal

•  Send in a written request. •  Define your practice and

needs to Payor. •  State your reimbursement

needs.


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20% Follow-up with Payor

• Acquire verbal commitment.

•  If no verbal agreement, ensure payor understanding.


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30% Receive offer from Payor

• Represent Practice’s unique circumstances. •  Codes.

• Ensure circumstances are represented in calculating acceptable rates.


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40% Read Language & Draft Revisions

• Review language and fee schedule terms.

• Know the deal-breakers.


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AGENDA



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Contract Negotiation

Skim the Contract

• Skim – locate relevant data

• Focus on what matters the most

• Don’t get lost in the verbiage

Negotiation Strategies

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Read the Contract in Detail

• Comprehend the contract • Refer to checklist • Make no assumptions


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Prioritize Your Needs (Changes) & Prepare for Negotiation

• Prioritize • Prepare • Negotiation

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Dress Rehearsal   Who will be present from your side, from their side?   Where will the negotiations be held?   Who will say what and when?   How much time will be allocated?   Who will produce an agenda?   Who will summarize the actions and potential tasks?   Who will document the meeting?   Agree to not agree.

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Ask for Everything!

• Agenda • Prepared prioritization list

• Timing 43



  Introductions include:   name, title, function

  Distribute agenda   Establish parameters for negotiation   Present what you bring to the table   Present your data   Ask for what you want   Be willing to listen and hear what they are saying   Be open to explore all options   Document interaction, task, assign dates and who is

responsible   Summarize

“Taking initiative does not mean being pushy, obnoxious, or aggressive. It does mean recognizing our responsibility to make things happen.”

Stephen R. Covey

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Endure the Negotiation Process

• Stakeholders apprised • Commit everything to

writing

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Now what?

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Proposal

20% Follow-up with Payor

30% Receive Offer from Payor







100% Effective Date


for Accuracy

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50% Language & Rates Acceptable

• Ensure language is acceptable.

• Practice agrees acceptable.


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• Print agreement • Assemble •  Get signatures


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• Complete packet • Provide requested

documents • Work with billing company


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80% Practice Returns Contract Correctly

• Scan document • Save in easy to find location at Practice


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• Be responsive. • Be proactive.


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100% Effective Date

• Welcome letter to practice

• Legal document • Effective date = ultimate confirmation


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AGENDA



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Now what?

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Proposal 20% Follow-up

with Payor 30% Receive Offer

from Payor







100% Effective Date


for Accuracy

Monitor for Continued Success

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Educate Stakeholders   Get front desk schedulers & pre-auth coordinator

information on Payors   “Red Light/Green Light”   Online payor log-ins

  Share effective date and new reimbursement data with billing staff . . .

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Example for Payor Monitoring:

CPT Code MEDICARE 201X

Alpha HMO

7/1/2011

Beta PPO 201X

RBRVS

Delta Workers

Comp

Gamma Plan 201X

RBRVS

99201 $35.79 $48.32 $46.53 $62.08 $44.91

99202 $61.85 $83.50 $80.41 $90.73 $79.95

99203 $90.22 $121.80 $117.29 $133.70 $118.69

99204 $137.39 $185.47 $178.60 $191.00 $167.85

99212 $36.94 $49.87 $48.02 $57.30 $46.78

99213 $59.59 $80.44 $77.46 $85.95 $65.21

99214 $89.52 $120.85 $116.38 $128.93 $101.86

99215 $120.88 $163.19 $157.14 $186.23 $147.71 56


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  Mark calendar   Stay proactive   Conscientious monitoring

Renegotiation Schedule

Final Words . . .

  Organization on all levels is essential.   Follow the steps in the order outlined for best

results.


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Questions?

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Marcia Brauchler, MPH, CPC, CPHQ Physicians’ Ally, Inc.

101 W. County Line Rd. #230 Littleton, CO 80129

(303) 586-9390 Fax: (303) 586-9393 Cell: (303) 250-3236

[email protected]

contract negotiations 101

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