Contracts’ Language Review,
ACO’s Capitated Agreements
and 10 Best Practices
o
Session
Sample4Title Slide Headline
Here Up to Two Lines Long
Presented by: Steve Selbst, Regina Vasquez, and
Susan Charkin
Presented to:
John DoeSteve Selbst
Name:
President & CEO
Title:
CEO / Co-Owner
Anybusiness Corporation
Healthcents Inc.
October 18, 2011
7/18/13
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!
Your Contracts’ Assessment and proposal letters
• Contact Susan Charkin at 831-455-2695 or charkin@healthcents.com
 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
support@healthcents.com for feedback
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: https://www.payerwebsite.com
Protocols
Read manual / review
Familiarize staff with Payer protocols; review Payer's online information with
your office staff:
Payer's Affiliates
Read manual / review
Request a current list of Payer affiliates.
Representations and Warranties of
Practice
Read manual / review
Obtain Additional Manuals referred to regarding policies and protocols for
certain Benefit Plans.
Services not covered under a Benefit Plan Read manual / review
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
Payer may change its Payment Policies from time to time, but will make Payment
offered here
Policies available
Time to File Claims
Ideally 6 months or more
Denial of Claims for Not Following
Protocols, Not Timely Filing, or Lack of
Medical Necessity
12 months is likely reasonable for appeals on denials
Timely filing requirement is 90 days from date of service
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
Member information is subject to change retroactively and payer may bill
Retroactive correction of information
As long as you are not a party to the payer collecting over individual/other responsible party for any services deemed overpayments due to
regarding whether patient is a Customer payment to a patient, this should be okay.
member ineligibility at time of service.
More Operational Language Review
Section Title
Desired Language
Sample Payer Clause
Payment under this Agreement is
payment in full
This is okay but, make sure that your billed charges
are set at UCR thresholds and review and verify
patient benefit plans
Practice will not seek payment in excess of the Payer's contractual rate,
even if it is less than Practice's billed or customary charges.
Correction of overpayments and
underpayments of claims
Be careful, here, since the 12 month period specifies
that practice has 12 months to get payments that
were made incorrectly. Make sure that the payer's
time frame on retrospective reviews, as well, does
not exceed 12 months. Also, remember "Best
Practice 10", conduct a spot audit of your top
codes, every month, to insure accurate payments.
If either party determines claims were not paid correctly, the party may
seek correction of payment but Practice must seek correction prior to 12
months after payment was made, overpayments may be offset from future
payment.
Term
Can be either 1, 2 or 3 years depending upon your
risk acceptance, tolerance and COLA offers for
subsequent years from the payer
The agreement proposes an Initial Term of 3 years, renewable
automatically for one year terms
Termination
Benefit Plan Descriptions
Contract Rate, "Lesser of…"
Multiple Outpatient Procedures
Practice-based Physician and Other
Provider Charges
Better to have 90 days without cause, also, be sure
that there is language to address substantive changes
to the contract, such as fee schedule changes, which
allow you to terminate with as little as 30 day notice
when such changes happen. Also require the payer
to notify you, in writing, in advance of such changes.
Make sure you know which payer products you are
signing up for e.g., which PPO(s), HMO, Medicare
Advantage etc.
Remember to set your chargemaster above any
contracted rate for all payers all key codes and set at
UCR thresholds, likely 250%+ of Medicare in your
locality. Consult with your CPA and tax advisor in
this area to be sure write offs and other accounting
concerns are balanced. Also, make sure the payer
does not place limits on your ability to increase your
billed charges, especially when contracted rates are
not tied to billed charges.
By either party with 180 day notice prior to the anniversary date of the
agreement.
Agreement contains a Medicare Advantage benefit plan (with
corresponding payment appendix) and work comp benefit plan
Reimbursement rates are lesser of eligible charges or aggregate applicable
contract rate
Multiple procedure contract rate is based on Payer's OPG methodology at
Follow Medicare Guidelines of 100% of Primary and 100/50/50 (primary procedure plus up to two (2) additional procedures
50% for Subsequent.
during the outpatient encounter)
Make sure you complete credentialing prior to the
beginning of the contract term or renewal term for all Assure all Practice based physicians are contracted or contractual
physicians who practice under this agreement
payment penalty provisions will be implemented
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
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…
How are ACOs Structured?
ACO Model 1
ACO Model 2
ACO Model 3
IPA or PCP Group
Multispecialty
Group
Specialty
Group
Hospital Medical Staff
Organization (MSO)
or
Physician-Hospital
Organization (PHO)
Hospital
Hospital
Devers & Berenson, 2009, RWJF and The Urban Institute, Timely Analysis of Immediate Health Policy Issues
8
Should a Urologist 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!
Capitation
• Getting started
• What is capitation-based payment
• Methodology
– Parameters for evaluation
– Kinds of capitation agreements
– Risks assessment
How to leverage capitation agreement
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
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)
Continue
• For example, a Urologist 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
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.
Mosby's Medical Dictionary, 8th edition. © 2009, Elsevier.
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.
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.
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.
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.
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 1:
Phase 2:
Phase 2:
Phase 3:
Prepare
Negotiate
Continue to Negotiate
Monitor / Re-negotiate
Negotiations
Completed
We are here
Question (You have seen this before)
If we have two CPT codes, 52332 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 52332 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 52332
10 Best Contracting Practices boils down to…
PREPARE
NEGOTIATE
MONITOR
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 1:
Phase 2:
Phase 2:
Phase 3:
Prepare
Negotiate
Continue to Negotiate
Monitor / Re-negotiate
Negotiations
Completed
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
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 re-negotiate when the time frame allows
Best Practices 1 and 2: Evaluate and Benchmark
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 55700 add $200 for in office based incentive (In
addition to the 15% increase proposal)
 Note: 52332 left out due to unusually high reimbursement
26
Best Practice 3: Fee Schedule SWOT Analysis (Our offer / proposal to payer)
Best Practice 3: More SWOT, In vs. Out of Network Option
Best Practice 3: More SWOT,
Billed Charges Assessment
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?
a)
b)
Yes
No
S.W.O.T. – Identify Saleable Solutions and Potential
Obstacles to Getting an Increase (Best Practice 4)
Strength
Opportunities
•
•
•
•
•
•
•
•
Location
Size and market presence
Practice Patterns
Referral Network
Practice Collaborations
Employer Groups
New Services
Value Based Contracting
Weakness
Threats
• Competing Practices
• Payer Reimbursement
Policy
• Mergers
• Payer initiated ACOs
• Out of Network
Reimbursement Policy
31
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
32
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.
33
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.
34
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.
35
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)
Phase 1:
Prepare
• Follow Up (Practice
7)
• Analyze Counter
• Negotiate until
agreement is reached
• Escalate to Sr. Level
Manager (Practice 8)
• Consider Out of
Network Option
Phase 2:
Phase 2:
Phase 3:
Negotiate
Continue to Negotiate
Monitor / Re-negotiate
Negotiations
Completed
• Monitor Claims
• Re-negotiate
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
Best Practice 10, Monitor Claims
New: Value Based Contracting
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)
Quantitative
(1% if >70
points)
In network
referrals only
Follows Urology
Best Practices
Guidelines
>2.5:
50 pts
2.25 - 2.49: 60 pts
2.0 - 2.24: 45 pts
Active EPrescriber:
25 pts
75 pts
Patient Satisfaction
3 stars: 25 pts
2 stars: 20 pts
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
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
Questions/Comments?
• Class schedule/content
• Rick Rutherford, CMPE, CHA
• Director - Practice Management AUA
• Phone: 410-689-3713
• RevolutionSoftware™ Questions
• Regina Vasquez, Sr. VP of Accounts – Healthcents, Inc.
• Tel: (719) 243-3845
• rvasquez@healthcents.com
• Healthcents, Inc. Corporate
• Susan Charkin, President – Healthcents, Inc.
• charkin@healthcents.com
• Steve Selbst, CEO, selbst@healthcents.com
• Healthcents Inc. Tel: (800) 497-4970
• www.healthcents.com
Thank You for your participation and we wish you succe$$ in your contract negotiations!
Your Contracts’ Assessment and proposal letters
• Contact Susan Charkin at 831-455-2695 or charkin@healthcents.com
 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
support@healthcents.com for feedback