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1
4C: PAYOR CONTRACT
NEGOTIATIONS
1
Marcia Brauchler, MPH, CMPE, CPC, CPC-H, CPC-I, CPHQ
April 14, 2014 3:45 – 5:00 p.m.
All Rights Reserved.
Objectives:
• Get organized for successful payer
contracting negotiations
• Describe the predictable steps in any
negotiation
• Employ strategies to monitor your success
once the contract is in effect
2
2
Look
familiar?
3
WHY
BOTHER?
4
3
It’s your practice’s paycheck
5
You probably have more leverage than you think
Practices do succeed – if it is given priority:
April 6th: Contract improvement requested with payor
23 different contacts over 4+ months
August 15th: +7% increase (year 1) plus +5% increase (year 2)
6
4
Negotiation Summary
7
CPT Code
New Contract
Effective
Date
Increase
Weighted %
of 2012
Medicare
Original
Contract
Effective Date
Weighted %
of 2012
Medicare
Alpha HMO - Year 1 5/15/2013 5.1% 104.0% 12/6/2005 99.0%
Alpha HMO. - Year 2 5/15/2014 10.1% 109.0% 12/6/2005 99.0%
Beta PPO 4/1/2013 4.8% 110.5% 4/15/2009 105.5%
Delta Workers Comp 9/1/2012 25.4% 127.3% 9/1/2012 101.5%
Gamma Plan - Year 1 12/1/2012 7.5% 109.3%
10/1/2011
101.7%
Gamma Plan - Year 2 12/1/2013 12.5% 114.4% 101.7%
Negotiation Analysis
8
Carrier Name Payor Mix (1)
Total Patient Fees (Billing/Insurance)
(2)
Contractual Increase (3)
Annual Increase
($) Alpha HMO - Year 1 11% $270,352.53 5.1% $13,787.98 Alpha HMO. - Year 2 11% $270,352.53 5.1% $13,787.98 Beta PPO 15% $370,490.94 4.8% $17,783.57
Delta Workers Comp was non-par increase from
proposal: 25.4% Gamma Plan - Year 1 26% $642,184.30 7.5% $47,990.17 Gamma Plan - Year 2 26% $642,184.30 5.0% $32,203.93 Total $2,469,939.62 $97,977.67
NOTES:
(1) Payor Mix provided by Client for FY2011 (October 1-September 30) on 11/11/12
(2) Annual Revenue provided by Client for FY2011 (October 1-September 30) on
7/16/12
(3) Please see Negotiation Summary for calculation (based on 2012 Medicare
equivalents).
Calculated from existing contract or initial proposal.
Does not include some services that were fixed at a certain rate regardless of contracted rate.
5
NOTE:
Mandated fee schedules are not negotiable
9
The market place is getting smaller – payor consolidation
10
6
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 (Viant) • One Health Plan • PacifiCare • Private Healthcare Systems • Prudential • Rocky Mountain Health Plans • Sloans Lake • Take Care • Western Health Plan • United Healthcare
11
Colorado Payors circa 2014
Time commitment
• 100 hours
• 6 months
12
7
Objective:
• Get organized for successful payer
contracting negotiations
13
GATHER
DATA
14
8
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
15
Define your Practice Productivity by CPT/HCPCS
16
CPT
CodeDESCRIPTION
FREQ.
(2012)
E/M
99201 Office/outpatient visit new 92
99202 Office/outpatient visit new 1094
99203 Office/outpatient visit new 3630
99204 Office/outpatient visit new 835
99205 Office/outpatient visit new 68
99211 Office/outpatient visit est 837
99212 Office/outpatient visit est 559
99213 Office/outpatient visit est 8090
99214 Office/outpatient visit est 12255
99215 Office/outpatient visit est 550
99058 Office emergency care 4
99354 Prolonged service office 178
99355 Prolonged service office 16
99358 Prolong service w/o contact 51
99359 Prolong serv w/o contact add 8
9
ICD-9 Frequency
17
Define your Practice
ICD-9
Primary
# of
Charges
(8/12 -
2/13)
% of
Total
465.9 1,483 5%
V20.2 1,349 4%
462 1,098 4%
V70.0 1,037 3%
461.9 1,000 3%
786.2 937 3%
401.1 681 2%
599.0 647 2%
724.2 567 2%
719.47 535 2%
V04.81 516 2%
250.00 512 2%
V72.31 457 2%
719.41 442 1%
Define your Practice Fee Schedule
18
NEW (3 OF 3) ESTABLISHED (2 OF 3)
NURSE VISIT 99211 30$
98$ 99214 99$
153$ 99215 133$
Detailed
Comprehensive 99204
99203
Comprehensive 99205 192$
99201 39$ 99212 39$
66$ Expand. PF 99202 68$ 99213
Problem Focus
10
Fee Schedule Analysis
19
CPT
CodeDESCRIPTION
PHYSICIAN
CHARGE
GPCI'd
MEDICARE
Non-facility
(NF)
Maximum
Contracted
Allowable
as of 100%
1.16.13 2012 NF
Summary
Wtd. Avg. Reimbursement (excl. Lab) $148.85 $86.60 $104.06
Wtd. Percent of 2012 MC Non-Facility (NF) 171.9% 100.0% 120.2%
Wtd. Percent of 2012 Workers Comp 124.5% 72.4% 87.0%
Weighted Percent of Physician Charge 100.0% 58.2% 69.9%
E/M
99201 Office/outpatient visit new $72.20 $29.73 $42.47 $22.80 $49.40
99202 Office/outpatient visit new $123.00 $50.65 $72.35 $35.38 $87.62
99203 Office/outpatient visit new $178.11 $73.33 $104.77 $47.87 $130.24
99204 Office/outpatient visit new $271.90 $111.96 $159.94 $84.45 $187.44
99205 Office/outpatient visit new $337.64 $139.02 $198.61 $104.16 $233.48
99211 Office/outpatient visit est $58.65 $38.90 $19.75 $27.52 $31.13
99212 Office/outpatient visit est $72.20 $29.73 $42.47 $20.23 $51.97
99213 Office/outpatient visit est $119.49 $49.20 $70.29 $37.55 $81.94
99214 Office/outpatient visit est $176.66 $72.75 $103.92 $55.12 $121.55
99215 Office/outpatient visit est $237.22 $97.68 $139.54 $73.72 $163.50
Physician
Charge is
higher / lower
than indicated
Medicare
Physician
Charge is
higher / lower
than Maximum
Contracted
Allowable
Payor Mix (Example):
20
11
Determine how your Participation
Agreements are held
–For each physician
–Individually, Group, IPA
21
22
‘Red Light/Green Light’ Payer / Network
Participation Status
Products
Cigna ☐ Participating ☐ NOT Participating Agreement Type: ☐ Group ☐ Individual Contracting Entity: ☐ Direct ☐ IPA
☐ Commercial ☐ HMO Select ☐ LocalPlus
12
Define your Payer Experience
Insurance accounts receivable (A/R) aging
23
Insurance Co. # Charges 0 - 30 days 31-60 61-90 91-120 >120 Total
AARP 0 $790 $332 $0 $0 $150 $1,272
Aetna 9 $24,913 -$576 $0 $183 $0 $24,521
Allegiance 1 $0 $0 $0 $0 $6,750 $6,750
Assurant Health 7 $12,864 $0 $0 $184 $241 $13,289
BCBS 7 $7,704 $554 $0 $0 $5,244 $13,502
CNIC Health Solutions 5 $6,235 $2,992 $0 $0 $0 $9,227
Champus/Tricare 3 $0 $0 $0 $0 $1,105 $1,105
CIGNA 14 $9,089 $2,865 $0 $0 $6,071 $18,025
Cofinity 2 $0 $183 $0 $0 $6,750 $6,933
Humana 4 $1,118 $5,505 $0 $0 $0 $6,623
Medicaid 41 $6,349 $120 $21 $42 $30,327 $36,858
Medicare 57 $42,979 $0 $40,155 $32,137 $59,605 $174,875
RMHP 7 $21 $0 $6,469 $0 $5,441 $11,931
Self-Pay 5 $11,632 $10,184 $3,436 $226 $2,369 $27,846
United Healthcare 40 $48,662 $411 $17,116 $0 $6,803 $72,991
VA 18 $0 $296 $0 $0 $17,152 $17,448
Workers' Comp 12 $0 $28,343 $0 $183 $183 $28,709
Define your Payer Experience
• Contract allowable exception report
24
Srvc
Date
Post
Date Code Description Charges
Expected
Payment
Actual
Payment
8/9/12 8/28/12 99214
Office/OP
Visit, Est.
Patient $197.66 $111.86 $61.50
-$51.36
13
Define your Payer Experience Denials reports
25
Denial Reason Totals
Diagnosis code incorrect 0 0.00% $-
Ins Req Info From Patient/Clinic 18 5.34% $1,645.50
No Prior Auth/Referral 2 0.59% $48.00
Duplicate claim/service 0 0.00% $-
Procedure code incorrect 0 0.00% $-
Timely limit for filing has expired 0 0.00% $-
Can't ID/ Incorrect ID 1 0.30% $21.00
Procedure Incidental/Bundled to another 226 67.06% $6,087.00
No coverage 56 16.62% $2,842.50
Patient has another insurance 0 0.00% $-
Deductible 0 0.00% $-
Lifetime benefit max has been reached 0 0.00% $-
Co-insurance 0 0.00% $-
Co-payment 0 0.00% $-
Pre-Existing Condition 1 0.30% $21.00
Service not covered/ Not a benefit 33 9.79% $1,395.00
Total Denial Errors: 337 $12,060.00
Voucher Count/Denial Benchmark: 14795 2.28%
Ancillary Provider Map of
Insurance Plan to Ancillary
Networks
26
OptumHealth
Health New England
United Healthcare
Healthways
Aetna
Humana
Kaiser
Principal
Sterling
American Specialty Health
CIGNA
Fallon Community
TUFTS
UniCare
14
27
High-Level Summary (Handout):
Non-RBRVS-valued Codes:
• Lab
• X-ray
• HCPCS
– DME
– Supplies
– Injectables
28
15
PREPARE, PREPARE,
PREPARE
29
Weighted Payment
30
CPT Code DESCRIPTION ALPHA HMO
10/1/2011
108.48%
2010 NF
Summary
Weighted Average Reimbursement $87.65
Weighted Percent of 2013 Medicaid 153.4%
Weighted Percent of 2013 Medicare 101.7%
Weighted Percent of Physician Charge 81.8%
Office Visit Codes
99201 Office/outpatient visit new $43.20
99202 Office/outpatient visit new $74.40
99203 Office/outpatient visit new $108.40
99204 Office/outpatient visit new $168.40
99211 Office/outpatient visit est $21.20
99212 Office/outpatient visit est $43.20
99213 Office/outpatient visit est $72.40
99214 Office/outpatient visit est $108.40
16
Aetna CEO Compensation
31
Mark T. Bertolini
http://online.barrons.com
$36.36 million (2012), plus $11.1 million in stock awards
Example of Past Utilization:
CPT Procedure Count Allowed 2012 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
32
17
Pure Average:
33
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% -15%
Weighted Average:
34
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% -22%
18
Establish a reference point
• Determine financial outcome
35
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
Objective:
• Describe the predictable steps in any
negotiation
36
19
BEGIN WITH
THE END IN
MIND
37
Now what?
38
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
20
Contracting – 0% Completion
0% Identify Payor Contact
• 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.
39
Alphabetical Payer Contact List
Insurance Company
Name
Contact
Name
Title Phone &
Fax
E-mail Address
Alpha HMO
Beta PPO
Delta Workers Comp
Gamma Plan
40
21
Contracting – 10% Completion
10% Draft & send
Health Plan Proposal
• Send in a written request.
• Define your practice and needs to Payor.
• State your reimbursement needs.
41
Contracting – 20% Completion
20% Follow-up with Payor
•Acquire verbal commitment.
•If no verbal agreement, ensure payor understanding.
42
22
Contracting – 30% Completion
30% Receive offer from Payor
• Represent Practice’s unique circumstances.
• Codes.
• Ensure circumstances are represented in calculating acceptable rates.
43
Expect a “No” or a Nominal
Cost-of-Living Increase:
44
“I am unable to increase your current reimbursement as I
show it is already above market in [city]. Please let me know
if you would like to discuss.”
For a Provider on the Health Plan’s “Market Fee Schedule:”
“Our unit cost trends in [market] across the entire network are roughly 3%.]
“I did review our proposal of [up $1 on the conversion factor] and compared
to other [specialty] groups we have contracted and that is a [Payor] market
competitive rate. With that said, at this point – I do not believe it is warranted
to give any more than what is already on the table. While this most likely is
not the answer you were seeking – this is the position that [Payor] is going to
take. I know it is a business decision you will have to make as to whether or
not you remain contracted in our network and we hope that you do on behalf
of your patients our members.”
23
Contracting – 40% Completion
40% Read Language & Draft Revisions
•Review language and fee schedule terms.
•Know the deal-breakers.
45
NEGOTIATION
STRATEGIES
46
24
Key Terms
• Rates
• Timely Filing Limit
• Termination
• Amendment
47
Sample Language: Rates
48
“[PAYOR] Market Fee Schedule”
“Payment for services . . . may be less than
this based on Payor’s then current payment
policy.”
Products/Rates:
25% off Provider’s billed charges OR
where federal or state mandated fee
schedules applies, Provider agrees to
10% below federal or state fee schedule
120% Medicare (2010) for Surgery, Radiology, E&M, Medicine
100% Medicare for Routine Venipuncture (36415-6) and Immune Admin
(90465-74)
25
Sample Language:
Timely Filing Limit
49 49
“Group shall use best efforts to submit claim forms
within thirty (30) days following the date of service,
but in no event later than sixty (60) days following the
date of service.”
At Company’s request Group may be required to
submit claims electronically. Group agrees that
Company shall not be obligated to make payment for
claims received over ninety (90) days from the date of
service.
Claims for covered services must be submitted within 180 days of the
service, or if payor is the secondary payor, within 180 days of the date of
explanation of service from the primary payor.
Sample Language:
Term/Termination
50 50
“This agreement has an initial term of two (2) years.”
Evergreen: This agreement shall be automatically
renewed each Anniversary Date for additional periods
of one (1) year unless either party provides the other
with ninety (90) days prior written notice.
Either party may terminate this Agreement without cause by
providing the other party ninety (90) days prior written notice of
termination.
Continuing care obligations after the agreement
remains in effect. . . (provisions remain in effect)
26
Sample Language:
Amendment
51
Payor may amend this Agreement upon sixty (60)
days’ written notice to Provider to comply with
regulations . . .
This Agreement may be amended in writing as mutually agreed
upon by the parties.
“In the event payor makes a material
change in the terms of this Agreement it
shall provide at least ninety (90) days written
notice to Provider of such change. Provider
must object within XX days . . .”
Endure the Negotiation Process
52
• Stakeholders apprised
• Commit everything to writing
• Ensure language is acceptable.
• Practice agrees acceptable.
• Print agreement
• Assemble
• Get signatures
27
Contracting – 50% Completion
50% Language & Rates Acceptable
•Ensure language is acceptable.
•Practice agrees acceptable.
53
Contracting – 60% Completion
60% Signature on Contract
•Print agreement
•Assemble
• Get signatures
54
28
Contracting – 70% Completion
70% Credentialing Packet Submitted
• Complete packet
• Provide requested documents
• Work with billing person/company
• Set up Online Payor log-ins
55
Get Payor Online Access
• Find the payor(s) provider sites.
• For example, Aetna, CIGNA and United Health Care:
http://navinet.navime
dix.com/Main.asp
• Why?
56 2ndLt Joshua Larson, USMC, www.defense.gov
29
Contracting – 80% Completion
80% Practice Returns Contract Correctly
•Scan document
•Save in easy to find location at Practice
•Return to payor with tracking number
57
Contracting – 90% Completion
90% Credentialing Approved
•Be responsive.
•Be proactive.
58
30
Contracting – 100% Completion
100% Effective Date
•Welcome letter to practice
•Get counter-executed agreement for files
•Effective date = ultimate confirmation
59
Objective:
• Employ strategies to monitor your success
once the contract is in effect
60
31
Now what?
61
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
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 . . .
62
32
Example for Payor Monitoring:
63
CPT Code DESCRIPTION Alpha HMO
Year 1
116.6%
2010 NF
Summary
Weighted Average Reimbursement $94.22
Weighted Percent of 2013 Medicaid 164.9%
Weighted Percent of 2013 Medicare 109.3%
Weighted Percent of Physician Charge 87.9%
Office Visit Codes
99201 Office/outpatient visit new $46.44
99202 Office/outpatient visit new $79.98
99203 Office/outpatient visit new $116.53
99204 Office/outpatient visit new $181.03
99211 Office/outpatient visit est $22.79
99212 Office/outpatient visit est $46.44
99213 Office/outpatient visit est $77.83
99214 Office/outpatient visit est $116.53
Mark calendar
Stay proactive
Conscientious monitoring . . .
Renegotiation Schedule
64
33
Contract never loaded correctly
by Payor: • Agreement for 180% Medicare
• Loaded (incorrectly) at 120% Medicare
• Not caught by billing company for >1 yr.
– $15,000 in lost revenue
• Payor offered 270% of Medicare for 6
months, beginning in January
– (new patient deductibles)
• Practice agreed to 200% of Medicare
(indefinitely) to recoup/offset lost $$$ 65
Go get it!
66
34
QUESTIONS?
67
68
Marcia Brauchler, MPH, CMPE,
CPC, CPC-H, CPC-I, CPHQ
Physicians’ Ally, Inc.
101 W. County Line Rd. #230
Littleton, CO 80129
(303) 586-9390
Fax: (303) 586-9393
Cell: (303) 250-3236