10 Best Payer Contracting Practices for Presented By: Mr. Steve Selbst, CEO Healthcents Inc. November 7, 2018

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1 10 Best Payer Contracting Practices for 2019 Presented By: Mr. Steve Selbst, CEO Healthcents Inc. November 7, 2018

2 Healthcents Services Payer contracts analysis and negotiations Healthcare Consulting Services Claims analysis / troubleshooting and payments Claims audits Credentialing services Online marketing services RevolutionSoftware, our unique cloud-based contracting software Education and training in payer contracting 2

3 Today s Speaker Mr. Steve Selbst, CEO and Co-Owner Healthcents Inc. Manages Healthcents Operations including contract negotiations Successfully negotiated 40,000+ payer contracts Invented RevolutionSoftware and designed the product Designed and delivered Blueprint for Success Payer Contracting Class 30 years as a Software and Business Executive in the Software Business at IBM BS Degree in Business Admin, Arizona State University, Summa Cum Laude, and invited to apply for a Fulbright Scholarship 3

4 Today s Webinar For questions that you would like to ask during the presentation: Send an to: question@healthcents.com We will gather, and answer, during and following the presentation Also, to ask a question, over the phone, *6 then when finished, *6 4

Collections Cash Flow Are my reimbursements maximized?

5 Completing the Practice Management Revenue Cycle Ops / Practice Management + Payer Contracts = Complete Revenue Cycle Scheduling Coding & Billing Collections Cash Flow Are my reimbursements maximized? Should I stay in network? Are my contract terms favorable? Are my billed charges high enough? = 5

6 Agenda Introduction / 10 Best Payer Contracting Practices Evaluate current reimbursements- analysis Prepare a SWOT analysis to identify opportunities and threats to a provider s reimbursements Techniques for negotiating win- win agreements with managed care companies (Proposal letters, payer objections, contract language) Monitoring claims payments and comparing to your contracted rates to insure that you are paid correctly Closed and Narrow Networks - Strategies for breaking through, Payer Contracts Types! Trends and Directions Wrap Up 6

7 Typical Medical Practice Revenues 5% 55% 40% 7

8 10 Best Contracting Practices boils down to: PREPARE NEGOTIATE MONITOR 8

9 How do I allocate my time? What about monitoring? 50% 50% Prepare Negotiate 9

10 Contracts Negotiation Process Data Analysis Proposal Letter Make Initial Contact with Payer Negotiate until agreement is reached Analyze Counter offers Escalate to Senior Management Monitor Claims Re-Negotiate Phase 1: Prepare Phase 2: Negotiate Phase 2: Continue to Negotiate Phase 3: Monitor / Re-negotiate Negotiations Completed 10

11 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 other payers with which you have contracts to identify areas where you may be under reimbursed compared to the market. Use the 20/80 rule. Best Practice 3: SWOT Analysis for your payer fee schedules: Look for opportunities to increase reimbursement for services that are not reimbursed at market competitive rates, and assess your chargemaster. Best Practice 4: SWOT Analysis for your practice. Best Practice 5: Prepare an impactful proposal letter. 11

12 10 Best Contracting Practices NEGOTIATE: Best Practice 6: Deliver your proposal letter to the appropriate network manager, do initial follow up and establish rapport. Best Practice 7: Follow up frequently and keep the payer representative engaged. Respond quickly to any requests they make for additional information and to any proposals you receive from the payer. Best Practice 8: Evaluate payer proposals and look for ways to optimize counter offers. Don t take first No as an answer, and use escalation to Sr. Management judiciously. Best Practice 9: Review contract for language that affects reimbursement. MONITOR: Best Practice 10: Monitor payments, identify reimbursement issues quickly and work closely with your payer representatives to resolve any payment issues as quickly as possible. 12

13 Best Practice 1 & 2: Benchmark and Review * (* Sample data. A few rows from report only, totals and averages will not correspond to original) 13

14 Best Practice 1 & 2: Benchmark and Review Work with Weighted Average Reimbursement, not Average Reimbursement * 14

15 Best Practice 1 & 2: Benchmark and Review Aggregate Payer 15

16 Merger Question? (participate at Two practices merge, Practice / Company A and Practice / Company B, into a new practice, named Practice C. Prior to the merger, Practice / Company 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 / Company 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 / Company 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 / Company 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 / company C accept this new and final offer from payer 1? a) Yes b) No 16

17 Best Practice 3: SWOT Billed Charges Assessment 17

18 Question? If we have two CPT codes, which is of Medicare, including patient co-payment, by the payer, at $1600/service and code which is of Medicare, including patient co-payment, by the payer, at $60/service and is performed 100 times a year and is performed 1000 times a year, What is the weighted average reimbursement % if these are my only two codes? a) 82.5% b) 85% c) 90% d) 84.25% (Payer rates * volumes for each code) / (Medicare rates * volumes for each code), therefore: Formula is ((1600*100)+(60*1000))/((2000*100)+(66.7*1000))=82.5% 18

Practice Patterns Referral Network Quality

Services Pricing Areas Served Value Based

19 Best Practice 4 - S.W.O.T. What makes your company / practice a good partner? Strength Location Size and market presence Practice Patterns Referral Network Quality Services Opportunities Employer Groups New Services Pricing Areas Served Value Based Contracting ACO / Exchange participation Weakness Competing Practices Payer Reimbursement Policy Quality Threats Mergers Closed Networks Excessive numbers of competing entities Out of network referrals 19

20 Best Practice 5 - Put together an impactful proposal letter Establish relationship, why am I writing to you Mr. or Ms. Payer? Sell your Company / Practice and address payer concerns What makes you a good partner and how are you providing value to the payer network and the payer s members? Close the sale, throw the hook. 20

21 Best Practice 5 - Put together an impactful proposal letter Establish your relationship with the payer - State the reason for contact and establish Company / Practice relationship with plan. Below is an example of an opening paragraph: I am contacting you on behalf of Company or Practice NAME to initiate a renegotiation of their current fee schedule. The Practice is focused on value and quality, and routinely performs surgical services in the office setting, when medically appropriate. Additionally, they utilize in-network outpatient surgical centers and work diligently to refer patients to innetwork ancillary providers for services outside the office setting. Company or Practice has been a capitated primary care group for public plan lines of business since YEAR. For commercial business, in the past 12 months, the practice provided care to #### PAYER covered lives, receiving $$$ for rendered services from PAYER. 21

22 Best Practice 5 - Put together an impactful proposal letter Incorporate what makes your practice a good partner. Highlight service area, specialties, unique services, clinical and administrative efficiency that makes your practice a good partner in the payer network. Company / Practice is the only Company / Practice in area (specify if possible, e.g. city, county, state ) 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 an estimated savings of $$$ to PAYER s commercial network. 22

23 Best Practice 5 - Put together an impactful proposal letter Close the sale. Restate the purpose of the letter and throw the hook : COMPANY / PRACTICE remains committed to continuing to working with you and caring for your members. To that end, attached to this letter is a proposal that is commensurate with the value they bring to your network and your members. I am confident we can reach an agreement on a mutually acceptable fee schedule. Your written reply to this proposal is requested by no later than DATE. In the meantime, if you have any questions about the practice or the attached proposal, please do not hesitate to contact me. 23

Best Practices 6, 7 and 8 Best Practice 6: Deliver an impactful proposal letter to the appropriate network manager, do initial follow up and establish rapport.

24 Best Practices 6, 7 and 8 Best Practice 6: Deliver an impactful proposal letter to the appropriate network manager, do initial follow up and establish rapport. Best Practice 7: Follow up frequently and keep the payer representative engaged. Respond quickly to any requests they make for additional information and to any proposals you receive from the payer. Best Practice 8: Evaluate payer proposals and look for ways to optimize counter offers. Don t take first No as an answer, and use escalation judiciously. 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 judiciously. (Practice 8) Monitor Claims Re-negotiate Phase 1: Prepare Phase 2: Negotiate Phase 2: Continue to Negotiate Phase 3: Monitor / Re-negotiate Negotiations Completed 24

25 Best Practice 9 Contract Language Review Some contract language that may effect reimbursement: be aware of your responsibilities Lesser of Billed Charges vs. Payer Contracted Rates Timely filing requirements Primary / secondary insurance billing Payment for non-covered / unlisted services Term and Termination notification requirements Pre-authorization requirements Retrospective reviews Third party and silent PPOs Always have a legal review! 25

26 Best Practice 10, Monitor Claims Bring any payment/claims issues to your payer representative ASAP. 26

27 What is a Closed or Narrow Network? Closed - Payer has established a practice (usually not a policy) that it is not accepting more providers into a specific network since its network is full Narrow - Payer has established a practice (usually not a policy) that it is generally not accepting more providers into a specific network type 27

28 Macroeconomics and You Current condition: Generally, pricing is too high and too many providers Bring price down and or add a compelling service or product differentiator Provider Surplus Provider Shortage 28

29 How to Differentiate your value First, there are no silver bullets Biggest, Best, Only Clinical Benefits leading to cost savings Product Advantages Service Advantages Geographic Coverage Referrals Out of Network Business, Book of business potential What about price? 29

30 Product Advantages Do you have product(s) in your portfolio or that you deploy which are unique and will save the payer money and provide treatment benefits? Product that reduces testing that eliminates biopsies An HME wearable device that reduces ulcers and saves limbs A remote monitor that enables patient s awaiting organ transplants to go outpatient A Davinci Robot for prostate surgery 30

31 Service Advantages Who are the key stakeholders in your referral network? Do you cover geographies that your competition doesn t? Do you serve rural and underserved communities? Do you provide 24x7 service (Medical Products Companies)? Is your order response time or service much faster or better than competition? Do you have specialists or therapists that do custom fits and provide custom one on one customer service? Are they in all key locations? (Medical Products Companies) Can you demonstrate better clinical outcomes including surgery avoidance and down stream complications? 31

32 Treatment Advantages Does your product or service eliminate inpatient stay days at a hospital? Does your product or service reduce the need for invasive surgeries? Does your product enable alternative treatment to invasive surgeries? Does your product improve patient health in a way that reduces payers costs? 32

33 Strategies for Closed and Narrow Networks First: Focus on a combination of pricing and value from the payer s perspective Complementary Payers IPAs Complementary Primary PPOs linked to Major Payers, ACOs, IPAs and Employers Medi / Medi Plans VA Plans Complementary Secondary Payers - out of network reimbursement Any Willing Provider Standing letters of agreement 33

34 Payer Contracts Types Commercial Payers, ACOs, IPAs Primary Payer Complementary Payer Insurer Re-Pricer Commercial Payers, TPAs, Medi-Medi, Employers, VA Complementary Primary Payer Complementary Secondary Payer Commercial Payers 34

35 Methods of Contracting Direct with Commercial Primary Payer Complementary Primary Payer IPAs PPO / HMO Medi / Medi ACOs ASOs / TPAs Self Insured Employer Groups Complementary Secondary Payers 35

Sample Value Based Contracting Structure Efficiency (2% if >70 points) Generic Drug Utilization >90%: 75 PTS 88-89%: 60 pts 86-87%: 45 pts Qualitative (2% if >70 points) Follows Provider Best

36 Sample Value Based Contracting Structure Efficiency (2% if >70 points) Generic Drug Utilization >90%: 75 PTS 88-89%: 60 pts 86-87%: 45 pts Qualitative (2% if >70 points) Follows Provider Best Practices Guidelines 50 pts Quantitative (1% if >70 points) In network referrals only >2.5: 75 pts : 60 pts : 45 pts Preferred Drug Utilization >90%: 25 pts %: 20 pts 86-87%: 15 pts Active E- Prescriber: 25 pts Patient Satisfaction 3 stars: 25 pts 2 stars: 20 pts 36

37 Just one more Question? If a payer contracts negotiator tells me that their network is closed, what is my best recourse? a) Pack my bags immediately and take the next plane to Honolulu b) Explain and emphasize your value proposition to the first level negotiator and ask him or her to arrange a meeting with you and his or her supervisor c) Send a letter to the VP of Payer Contracting d) Forget the VP, send the letter to the President Answer - B: Explain and emphasize your value proposition to the first level negotiator and ask him or her to arrange a meeting. 37

38 ACOs ACO Model 1 ACO Model 2 ACO Model 3 IPA or PCP Group Specialty Group Hospital Multi-specialty Group Hospital Hospital Medical Staff Organization (MSO) or Physician-Hospital Organization (PHO) 38

39 Payer contracting implications of current administration? Specialty IPAs and more IPAs Growth of Complementary Payer Networks Trends and Directions Medicare and commercial payers integrating performance based metrics over time with shift of greater percentage of reimbursement tied to incentives and value based contracts vs. FFS Limiting/reducing referrals to outside providers who are non-par (this includes facilities and ancillary providers, e.g., labs and radiology services) Bundled payments still in exploratory stages, but expect to see more pilots and demonstrations among commercial payers ACO numbers (both the number of ACOs and the lives they cover) are expected to continue to grow Higher deductibles and patient out of pocket expenses leads to the need for better patient collections Telemedicine is expected to gain traction among commercial insurers Continued M and A acceleration in provider sector (Payer mergers becoming vertical ) Narrow and closed networks - breakthrough based on services, locations served (rural), and breakthrough products 39

40 PREPARE: 10 Best Contracting Practices Best Practice 1: Evaluate top codes and figure out which ones are driving revenue. Best Practice 2: Benchmark against Medicare and other payers with which you have contracts to identify areas where you may be under reimbursed compared to the market. Use the 20/80 rule. Best Practice 3: SWOT Analysis for your payer fee schedules: Look for opportunities to increase reimbursement for services that are not reimbursed at market competitive rates, and assess your chargemaster. Best Practice 4: SWOT Analysis for your practice. Best Practice 5: Prepare an impactful proposal letter. 40

41 10 Best Contracting Practices NEGOTIATE: Best Practice 6: Deliver your proposal letter to the appropriate network manager, do initial follow up and establish rapport. Best Practice 7: Follow up frequently and keep the payer representative engaged. Respond quickly to any requests they make for additional information and to any proposals you receive from the payer. Best Practice 8: Evaluate payer proposals and look for ways to optimize counter offers. Don t take first No as an answer, and use escalation to Sr. Management judiciously. Best Practice 9: Review contract for language that affects reimbursement. MONITOR: Best Practice 10: Monitor payments, identify reimbursement issues quickly and work closely with your payer representatives to resolve any payment issues as quickly as possible. 41

42 Payer Contracting Lifecycle Data Analysis Proposal Letter Make Initial Contact with Payer Negotiate until agreement is reached Analyze Counter offers Escalate to Senior Management Monitor Claims/ Documentation Re-Negotiate Phase 1: Prepare Phase 2: Negotiate Phase 2: Continue to Negotiate Phase 3: Monitor / Re-negotiate Negotiations Completed 42

43 Your Free Contracts Assessment Contact Susan Charkin at or This ½ hour high value assessment is included as a part of this session If possible (not required), bring: Revenue collected over a one year period for each payer Overall % Medicare you are currently contracted by key 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(s) and / or other recommendations 43

44 Questions/Comments/Next Up Steve Selbst: Healthcents, Inc.: Or If you would like a PDF copy of this presentation or to view the complete recording, go to: 44

How To Get Contracted into t Closed / Narrow Networks The Secret Sauce. Presented by: Steve Selbst CEO / Co Owner, Healthcents, Inc.

How To Get Contracted into t Closed / Narrow Networks The Secret Sauce Presented by: Steve Selbst CEO / Co Owner, Healthcents, Inc. May, 2018 Healthcents Services Payer contracts analysis and negotiations