Blueprint for Success
Effectively Negotiating Third
Party Physician Payer
Agreements
Session 1
Introductions & Company Overview
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Largest national payer contracting corporation , founded in 1994
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Core Businesses, three major products / services:
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Services: Managed Care Contracting: Enabling physicians, hospitals, ASC’s and
ancillary providers to obtain more profitable contracts with health insurance
companies (HMO, PPO, ACO and Workers Compensation)
• Both analytics and complete soup to nuts end to end negotiations
Education: Managed Care Contracting Training and Education for providers and
insurers (Tulane, AUA, Alere, AAOE, ASCA and more…)
Products and Software Solutions:
 RevolutionSoftware web / cloud service for optimizing revenue in contracts
 RevolutionSoftware Claims Analyzer Solution (New)
 Real time analysis and comparison of claims to contracted rates
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On Demand, Internet and Intranet Based Business Model
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“Blue Print for Success” Payer Contracting class in partnership with the AUA and
Tulane University
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50 Active clients, 1000’s served
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Reference accounts, many published at our web site:
www.healthcents.com/html/testimonials.html
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Leadership Team
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Ms. Susan Charkin, President
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Mr. Steve Selbst, CEO
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The Nationwide Expert in Payer Contracting and Strategy, well known
President of Healthcents since 1994
15+ years of Senior Contracting Positions for payers and providers (Healthnet, BCBS, Aetna, University of California,
San Francisco, Maxicare and others)
Trustee of Natividad Hospital- largest public hospital in central California, a teaching hospital affiliated with UCSF.
Leading Author and National Speaker on Managed Care (Boston University, George Washington University, American
Ambulance Association, Specialty Capitation, Beckers ASC EMS Insider and others)
Expert in ACO’s, put together key roadmap for AUA, interviewed Dr. Elliott Fisher, Brookings Institute, Blue Cross of
CA and an early IPA implementer
Undergraduate Degree in Education (UVM) and MPH Degree (USF).
Manages Healthcents Operations including contract negotiations
Successfully negotiated 4,000+ payer contracts
Invented Revolution Softwaretm and designed the product
29+ years as a Software and Business Executive in the Software Business working for IBM
Managed 300+ people doing key Multi-site and Multi-company business intelligence software development projects (Put
together several key business alliances between major software companies)
BS. Degree in Business Admin, Arizona State University, Summa Cum Laude and invited to apply for a Fulbright
Scholarship
Ms. Regina Vasquez, VP of Account Management
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Leads all of our day to day client and contract management
Successfully negotiated 4,000+ payer contracts
Led the development of a major Skilled Nursing Facility Network for a Large Payer in California
Leader in a local economic development commission and in two large non-profit organizations
Very skilled negotiator, analyst and project manager, proven track record with references, has made 15%-25% ROI for
all of our clients, large and small, est. >$20M in the last five years
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Session 1 Objectives (Contracting Process Overview)
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History of Managed Care
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Is contracting worth the effort, why?
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Critical Success Factors:
 Analysis (Quadrant Analysis, Value Based Contracting, Data
Analytics)
 Winning Solutions for maximizing payer contracts
 Payer Contracting Process
 Understanding and matching provider’s and payer’s objectives
 Handling potential “Landmines” , including what to do when a
payer will not negotiate
 Contract Language “Cover Your Contracts”
 How to sell your practice to payers and to employer groups
• Wrap up, Q and A and Quiz
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Session 2 Objectives (Data Analytics)
1. Perform a benchmarking analysis of payer fee schedules using
RevolutionSoftware™ to set fee schedule proposals
2. Identify and define patterns in reimbursement to use in an overall negotiation
strategy
3. Analyze and benchmark billed charges against an established minimum percentage
of Medicare reimbursement to avoid being paid less than any contract rate and to
maximize your cash based business
4. Compare any two of your payer fee schedules on a “normalized code” and volume
base to benchmark against each other.
5. Learn and use a practical technique for comparing claims’ payments to contracted
rates and assess whether or not you are being “under reimbursed”
6. Objectively assess in network versus out of network reimbursement
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Session 3 Objectives (SWOT and Contracts Negotiations process)
By the end of Session 3 participants will be able to:
• Perform a SWOT analysis of your practice to identify
strengths, weaknesses, opportunities and threats to your
practice in your market with each payer
• Apply findings of SWOT and prepare persuasive payer
proposal letter that highlights their strengths and opportunities
to bring added value to the payer network
• Conduct contract negotiations
 How to handle various payer responses
 Learn how to handle payer objections and shut downs
• Handle escalations and other options
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Session 4 Objectives (Language, ACO’s, Capitation, 10 Best Practices)
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Finish contracts’ negotiations process
 Language Review
 Monitor Claims and remember to renegotiate (Best Practice 10)
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ACOs and Capitation
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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
o 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
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Session 1, “Overview” Agenda:
• History of Managed Care
• Is contracting worth the effort?
• Critical Success Factors:
 Analysis (Quadrant Analysis, Value Based Contracting, Data
Analytics)
 Winning Solutions for maximizing payer contracts
 Payer Contracting Process
 Understanding and matching provider’s and payer’s objectives
 Handling potential “Landmines” , including what to do when a
payer will not negotiate
 Contract Language “Cover Your Contracts”
 How to sell your practice to payers and to employer groups
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Your one stop shop for all class materials
For your convenience, we have established a class web
page: www.healthcents.com/aua that contains links to:
• Questions and Answers from class participants
• Pre-requisite viewing and reading materials
• Homework assignments and instructions
• Charts presented in class
The class web page content will be updated at least one
business day before each session to give you time to
review materials and to do your homework and preparation
work.
Overall Objective – Lay a solid foundation for Managed
Care Basics to enable your practice to make more revenue
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History of Managed Care & Third Party
Payers
1970s – First serious look at healthcare reform:
• Nixon Administration introduced HMOs
 HMO act of 1973
 Main informant was Dr. Paul Ellwood
 $375 million in federal funds
 Preempted state laws banning prepaid plans
 FFS (Fee for Service) had to be changed to achieve
positive reform.
1980s – Current:
• Continued growth in managed care plans as way to control
cost to employers/consumers.
• States using managed care models to control cost of
Medicaid.
 Trend continues to be increased enrollment in
managed care plans.
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Is contracting worth the effort?
Pros
– Potential to increase
volume and therefore
increase overall revenue
– Administratively higher
patient satisfaction
– Administratively potentially
fewer claims appeal issues
and less direct collection
from patients
– Access to more lines of
payer’s business and
covered lives
Cons
– Lower reimbursements
than out of network – no
ability to balance bill
• Assumes low patient
attrition, and low volume
loss
– Maintenance fee schedule
adjustments
– Potentially restrictions on
covered services
depending on patient’s plan
– Multi-year contracts with no
opt out if unsatisfied with
outcome
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Critical Success Factors
AnalySis
SolUtions
ProCess
ObjeCtives
Avoid PotEntial Landmines
ContractS’ Language (CYC)
Sales
Before you negotiate, do your homework!
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Analysis
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Quadrant Analysis, how much do you ask for?
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Value Based Contracting
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Where does your practice revenue come from?
– FFS Rate by CPT x Encounters = Revenue
– Bundled Payment
– Episode Treatment Groups
– Self-performed ancillary services
– Capitation
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The 20/80 Rule
– Identify the top 20 percent of codes that drive 80 percent of your
practice’s revenue.
– Use the same codes for each payer fee schedule for comparative
purposes
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Healthcents Quadrant Payer Analysis
Pay High
Conservative
15%-25%
5%-15%
Ultra Aggressive
Aggressive
35%-45%+
Pay Low
Ultra-Conservative
Open to Negotiate
25%-35%
Not open to negotiate
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Value Based Contracting Example
Efficiency
(2% if >70
points)
Generic Drug
Utilization
>90%: 75 pts
88 - 89%: 60 pts
86 - 87%: 45 pts
Preferred Drug
Utilization
>90%: 25 pts.
88 - 89%: 20 pts
86 - 87%: 15 pts
Qualitative
(2% if >70
points)
Follows Best
Practices Guidelines
50 pts
Active E-Prescriber:
25 pts
Quantitative
(1% if >70
points)
In network referrals
only
>2.5:
75 pts
2.25 - 2.49: 60 pts
2.0 - 2.24: 45 pts
Patient Satisfaction
3 stars: 25 pts
2 stars: 20 pts
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What Is a 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-permonth" rate, regardless of the number or nature of
services provided.
• The contractual rates are usually adjusted for age,
gender, illness, and regional differences.
• More to come in sessions 3 and 4…
Mosby's Medical Dictionary, 8th edition. © 2009, Elsevier.
Analysis – Benchmarking Before & After
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Analysis – Reimbursement Summary
Source: HealthcentsRevolution ™
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When the payer will not negotiate
Source: HealthcentsRevolution ™
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Analysis – Are your billed charges high
enough?
Source: HealthcentsRevolution ™
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Analysis– Are you getting paid correctly?
Source: HealthcentsRevolution ™
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Question?
If we have two CPT codes, 27130 which is paid @80% of
Medicare, including patient co-payment, by the payer, at
$1600/service and code 99213 which is paid @90% of
Medicare, including patient co-payment, by the payer, at
$60/service and 27130 is performed 100 times a year and
99213 is performed 1000 times a year and I can get a 20%
increase on one or the other, but not both codes, which
code should I accept the increase on to increase my
revenue the most?
a) Code 99213
b) Code 27130
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Saleable Solutions– Payers have
problems you can solve
• Practice size and revenue, recent merger
– Consult legal counsel about ramifications
• Financial- Do you have enough $$/patients to justify
a contract?
– In office vs. facility based procedures
• Geographic- Are you the only game in town? How
close is the nearest Physician Practice that practice
same specialties?
• Demographics- Does your practice include large
employer groups in the area?
• Unique Quality/Services- What are you doing that
no one else is doing?
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Saleable Solutions – Payers have
problems (Continued)
• Logistics- Where do you hold privileges? Are you currently out
of network and turning away patients?
• Economics- What cost efficiencies does your group offer?
– Electronic Health Records
– Generic Drugs
– E-prescribing
– In-network referrals to ancillary services
– Collaboration with PCP groups
– ASC utilization
• Quality- patient satisfaction survey, PQRI participation
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Contracts Negotiations Process
• Data Analysis
• Proposal Letter
• Make Initial
Contact with Payer
• Analyze Counter
• Negotiate until
agreement is
reached
• Escalate to Sr.
Level Manager
• Consider Out of
Network Option
• Monitor Claims
• Re-Negotiate
Phase 1:
Phase 2:
Phase 2:
Phase 3:
Prepare
Negotiate
Continue to Negotiate
Monitor / Re-negotiate
Negotiations
Completed
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Objectives
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Provider
– Optimize reimbursement
– Enhanced reimbursement for
high-cost, specialized services
– Increase capacity for new lines
of business and revenue
streams
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Payer
– Maximize revenue and profit
– Minimize fees paid
– Market competitive
– Cost Efficiency
– Quality
– Increased capacity for new
lines of business and revenue
streams
Performance based Contracting
Office Based Procedures
Reduction of length of hospital stay
Preventative care
Leverage market position (Provider)
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Avoid Potential Landmines
• There are things that payers would rather you do not know or
discover:
– Statewide fee schedules – several payers are moving to
statewide or locally regional fee schedules that pay uniform
fees to all providers. Consider the following to combat that
policy:
• PPO Only
• Office Based Surgical Procedures
• Carve outs
• Performance Based Contracts
– In-house, ancillary services
• Make sure you can get reimbursed for all of the services
you provide. Some payers are sole sourcing lab/path to
large chain vendors. Even so, there are usually some
services that will still be reimbursed in the office setting. 28
Avoid Potential Landmines
• Mergers/Consolidation…
– Hospitals and physician groups are not the only ones
merging! Aetna recently purchased Coventry, Cigna
purchased GW several years ago. 10/1/11 is the
consolidation date and GW fee schedules are going to be
converted to Cigna fee schedules. UHC bought options to
Healthnet of the Northeast contracts. As of 3/31/11,
Healthnet has no active contracts in the Northeastern U.S.
All of the Healthnet covered lives were offered as UHC
products on renewal. Multiplan purchased Viant
(Beechstreet) last year. Beechstreet may be phased out
over time and replace with Multiplan product lines. Practices
need to be alert to this activity and get ahead of the
negotiation curve, so that when old plans / companies phase
out the transition is seamless and reimbursement is not
negatively affected.
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Potential Landmines
• Benchmark your payer agreements against each
other. Identify service categories where you can
optimize your fee schedule through negotiation of
specific service groups (E&M, Surgical Urinary, etc.)
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Don’t take the first “no” you hear. Payer
organizations are usually several layers deep. The
front line negotiator may not have ultimate decision
making authority and it is worth requesting a meeting
with senior management if you are not getting
anywhere with the initial representative.
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When the payer will not negotiate
• The decision to go out of network:
– How much does that payer account for in the
practice’s total book of business?
– Will the payer write checks to the patient rather
than the practice?
– How many of your patients will you lose if you
have to collect directly from the patient rather than
billing the payer?
– How much additional administrative cost will you
incur on pre-authorizations and collections?
– How much of an increase would you need to make
it worth your while to stay?
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Contracts’ Language CYC (Cover Your Contracts)
• We recommend having all agreements reviewed by legal
counsel. But here are a few terms to watch for:
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Term, Termination w/o Cause & Termination for Breach
General / Fee schedule Amendment
- you want minimal notification requirements for termination that are
untethered to the anniversary date of your agreement, or annual.
Timely filing– make sure you have enough time to process
secondary insurance claims.
Timely payment– make sure that you receive payment within 30
days of receipt of a clean claim.
“Lesser of Billed Charges” Language. Make sure your
chargemaster is set high enough to avoid this.
Notification requirements – make sure the payer has to provide
sufficient notification for changes, administrative amendments to the
contract, including fee schedule maintenance changes.
Retrospective review Language: make sure that there is a
reasonable time, <90 days, if possible, for retrospective claims
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reviews for the payer to collect from you.
“CYC” continued…
• Silent PPO’s
• No “favored nation” language (i.e., you get a decrease if your best
contract is lower than this payer’s overall contracted rate
• Check rates across product lines and map the product lines to
your patients
 Multiple PPOs, HMO, Medicare Advantage etc.
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Carved out codes
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Calibration to current year Medicare %, watch out!
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Excluded services
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Multiple procedures and bundling
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Sales
• Accountable Care:
 If you have
significantly robust
IT capacity and/or
are active in a
virtual network of
coordinated care
providers, you may
want to float the
idea of participation
 Consult Legal
Counsel before
signing on
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Sales
 Employer Groups (Who
are a part of a payer’s
plan):
• Make direct contact with
the HR department to see
if you can reach out to
employees.
 Be creative, e.g., offer to
contribute health news to
the company
newsletter/bulletin.
 Offer to attend / help with
health fairs or workplace
wellness programs /
policies
 Employer Groups (Who
are self insured, “ASOs”)
 Reach out to these large
groups for participation
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Critical Success Factors
AnalySis
SolUtions
ProCess
ObjeCtives
Avoid PotEntial Landmines
ContractS’ Language (CYC)
Sales
Before you negotiate, do your homework!
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Summary
• We covered how to determine which payers to negotiate
with, if your practice will benefit from engaging in negotiation
with the payer and tips on how to navigate the process to
successfully complete a negotiation.
• Thank you for inviting us to be your tour guide and we wish
you Succe$$.
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Questions & Answers
Please submit your questions to PRACTICE
MANAGEMENT using the chat window. Access the
chat window by hovering your cursor over the green
menu tab at the top middle of your screen. When it
appears click on the chat icon in the menu bar at
the top middle of your screen.
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Homework
View RevolutionSoftware™ Demonstration.
AND enroll to get your no charge four month license. For
instructions on how to access and view
the demo and enroll, please visit RevolutionCentral at:
www.healthcents.com/html/revcentral.html
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If you have questions
• RevolutionSoftware Registration and Questions™
• Regina Vasquez, Sr. VP of Accounts – Healthcents, Inc.
• Tel: (719) 243-3845
• rvasquez@healthcents.com
• Class Help: support@healthcents.com or 1-800-497-4970
• Healthcents Inc. Headquarters:
• Susan Charkin, President, Steve Selbst, CEO, Healthcents, Inc.
• Tel: (800) 497-4970
• Ms. Inez Wondeh, inez@healthcents.com, 707-246-7243
• charkin@healthcents.com or selbst@healthcents.com
• www.healthcents.com
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