Terminating a payor contract

Deciding to terminate a payor contract is always a tough proposition, especially when a payor contract provides you with a lot of your revenues. However, sometimes you just have to make a stand, especially with reimbursement “tanking” as much as it is lately.

 

I know of one medical practice that did just that. Their contract involved 28% of their business! But they planned for the change - they worked aggressively to review and cleanup anything they could in billing to ensure that the practice maximized the cash flow that it had. In addition, the practice advertised and built more business in other markets. Two years later they had a contract with the payer that was much better than our original one.

 

Before terminating any payer contract, always take a look at the soon-to-be patient’s out-of-network benefit coverage. Sometimes it’s not that onerous. However, if the patient-pay portion is a high, you can expect patients will look elsewhere for care.

 

Just because you are suddenly and out of network provider doesn’t mean patients can’t still see you. You’ll just have to be more aggressive with the discounts you apply to the patient-pay portion of your account receivable.

 

It can be done!

Can a managed care contract really be negotiated or renegotiated?

Absolutely! The problem is that most medical practices don’t even try to negotiate a managed care contract. Most feel it would be a waste of time and resources since it appears managed care companies hold the upper hand most of the time. However, many medical practices will find that they do have hidden negotiation leverage that they don’t realize exists. Perhaps even more surprising for some is that this “hidden” leverage is especially true for smaller medical practices and can result in a measurably more successful contract negotiation.

 

Managed care reimbursement isn’t going to get any better so you better start developing a strategic negotiation strategy to address this issue.

Contractual tools to challenge payer collaboration on products

More and more provider organizations are beginning to incorporate contract language that protects their revenue streams. When facing payer consolidation and collaboration, consider these tips to make sure you continue to receive the full value of contracts you have already negotiated.

1. Remember all redistribution: Account for any redistribution of the market share impact on the hospital's revenue stream from mergers, acquisitions, and joint ventures, and prevent potential silent PPO activity
2. Consider the effects of grouping services: Quantify the effect of consolidation by type of service(e.g., medical/surgical, centers of excellence, transplant services, behavioral health services, and ancillary services) and by product line.
3. Add up your administrative costs: Account for administrative costs associated with changes in billing policies and procedures, full-time equivalent (FTE) allocation for billing and collections, FTE allocation for pre-registration and authorizations, and training and education .
4. Discourage selective contracting: Prevent selective contracting to ensure that the hospital continues to be included in payer networks for all services at previously determined reimbursement rates, and negotiate revenue-neutral adjustments for any services (e.g., transplant and other designated centers of excellence, behavioral health, and lab) that are redirected to select networks as a result of the payer collaboration.

Imaging accreditation

Obtaining your imaging accreditation promotes the appropriate and rational use of imaging services, standardizes the level of care a radiologist can offer, and covers a broad range of imaging areas. It can also be a confusing and time consuming process for the unprepared. Follow these four steps to ensure imaging accreditation goes smoothly:

1. Start early. Expect a six- to nine-month lead time for initial accreditation, which covers a three-year period.
2. Obtain relevant reference materials. Visit the American College of Radiology (ACR) Web site at www.acr.org and the Intersocietal Accreditation Commission (IAC) Web site at www.intersocietal.org to view the specific accreditation guidelines and standards. Pay careful attention to the step-by-step instructions offered in the online applications.
3. Get organized. Gather information on the list of all imaging modalities offered at your practice site, existing ACR or IAC accreditation identification numbers, contact information for supervising physicians and technologists, basic information for each unit, and modality-specific unit information. The more organized the imaging site, the easier it is to complete the application process.
4. Ask for help. The accrediting agencies have technical experts available at 800/770-0145 (ACR) and 800/838-2110 (IAC). ACR is fielding dozens of calls per day from sites seeking accreditation.

FTC Commissioner Gives Speech on Clinical Integration

From the American Health Lawyers Association; to join, go to www.healthlawyers.org:

On April 27, 2009, Federal Trade Commissioner (FTC) Commissioner Pamela Jones Harbour gave a speech on clinical integration at an annual meeting of the American Hospital Association (AHA). The speech, entitled "Clinical Integration: The Changing Policy Climate and What it Means for Care Coordination," provides the Commissioner's views on the FTC's policy on clinical integration and how that policy might be affected by the Obama Administration's healthcare reform plans. The Commissioner emphasized that the FTC's continuing approach to clinical integration will be a "flexible, case-by-case approach," and that the FTC staff is always willing to work with providers to resolve any antitrust concerns surrounding clinical integration plans.

In her speech before the AHA, the Commissioner commented on a number of themes relevant to clinical integration that were part of the Obama/Biden campaign health plan. First, the Commissioner said it is clear that the Obama Administration regards competition as an important element of the American healthcare system. For example, President Obama has suggested that any government-sponsored insurance plan should compete with private health insurers. Additionally, the Obama Administration has emphasized better coordination of care at all levels of the healthcare system, which the Administration notes can be partially accomplished through improved health information technology (HIT) measures and by linking physician compensation to the value of care provided. The goal is a quality-based, pay-for-performance model combined with changes in reimbursement methodology for doctors and their patients. The Commissioner noted that HIT could serve as a "hub for effective coordination-of-care efforts" and is "completely consistent with procompetitive clinical integration," but she emphasized that the FTC's and the Obama Administration's real focus should be quality of coordination and improved efficiency.

The Commissioner next explained that the FTC would not be issuing bright-line rules on clinical integration, but rather would continue to employ a flexible, case-by-case approach when analyzing clinical integration programs. Reacting to past criticism that the federal antitrust agencies have not been providing sufficient guidance to healthcare providers, the Commissioner said that the criticism was in effect a request for clinical integration safe harbors. She pointed to the thirty-seven-page advisory opinion recently issued by the Commission to TriState Health Partners as evidence that antitrust analysis of clinical integration programs is a highly fact-specific endeavor, and she emphasized that bright-line rules would stifle innovation in the development of such programs. The Commissioner also called for more empirical studies analyzing the clinical integration's overall effectiveness.

At the conclusion of her remarks, the Commissioner noted that the FTC had offered more guidance on clinical integration than on any other area within its competition jurisdiction. She emphasized that the doors were always open to speak to the FTC staff about any clinical integration plans, and that ultimately innovation and creative thinking would be what would most benefit the healthcare industry.

Addressing Decline Payer Reimbursement

Here is a recent email exchange between practice administrators:

 

First administrator:

 

I was in the dumps already since Aetna and BC/BS of Texas alerted us least week of fee changes.  Today I get a letter from United that they will also change effective 5/15.  I know for sure that two of these will be significant reductions.  All of them are on the CMS RVU bandwagon which means, that all of them will change with Medicare every year from here on out.  And what's the likelihood that will ever be in our favor? I need some encouraging words.

 

Second administrator:

 

I too am feeling the pressure of "take it or leave it contracts."  I just met with our BCBS rep and that's substantially what they said they do statewide.

I think I'm going to move to another industry where an owner can charge what he pleases and not have his living in jeopardy by the Feds or much less the commercial payors.

 

We all know the major impact payer fee reductions have on practice cash flow. This is why all medical practices need to develop a managed care strategy RIGHT NOW to address the issue of declining reimbursement. The first step in any strategy is a thorough analysis of your current managed care relationships. Who are your profitable payers? Who are the unprofitable? Why is the practice still dealing with unprofitable contracts? Just because you are busy seeing patients doesn’t mean you are making any money.

 

The second step is to get out there and attempt to negotiate with your major managed care payers, no matter what size of a practice you are. This is the only way to find out the payers’ attitude towards your own medical practice and what it will take to succeed in a managed care environment. You will use this information to develop a future managed care strategy for the practice.

 

Managed care reimbursement is not going to get any better any time soon. Payers will continue to force their own economics down your collective throats. Now is the time to do SOMETHING about it. What is it going to be??

Six strategies to create a meaningful financial performance report

Contracting and financial managers must communicate their practice's performance by presenting data to a variety of audiences, including administrators, governing boards, and physicians. Following are some strategies for examining your data critically and selecting the appropriate vehicle for each report:

1. Study your target audience. What is the group's level of experience? Do some have a financial reporting background? High-level reports, especially to physicians, should include only summary data that will engage them.
2. Consider the purpose of your charts and graphs. Charts and graphs have only four valid purposes in a medical practice: to analyze, monitor, plan, or communicate.
3. Look at the data critically. Often, physician practices must convey quantitative messages using multiple data sets, such as numbers of patients and procedures or charges, net revenue, and adjustments. The type of quantitative data generally dictates whether a chart or a graph will be more useful.
4. Select the appropriate vehicle for your message. Whether it be a chart, a graph, or a table, make sure you choose the appropriate design. For example, with graphs, a time-series design (e.g., each month during a 12-month period) could be used to illustrate appointment or collections data. Ranking designs are more appropriate for communicating best-to-worst performance, such as physician productivity by relative value units or revenues by location. With charts, use the same, easily readable font, such as Times New Roman or Arial, throughout the chart. White space adds to readability, especially when used to separate the data. Decimal points should always be aligned, and everything else should be justified
5. Organize the data carefully. When designing charts and graphs for a medical practice, managers often neglect basic elements that can either enhance or weaken their presentations. For example, the number of data elements should be reduced to essentials, because a cluttered graph confuses the message.
6. Use bar graphs for emphasis. Bar graphs can paint a compelling picture of a medical practice's financial results, but the design should follow the data. Although vertical bar graphs are more common, use a horizontal format for longer names or a large number of categories.

Out of network patients - collecting the money

Offer out-of-network patients a good prompt payment discount for payment at time of service then allow them to decide what to do.  Unless they are in HMOs, these patients will have an out of network benefit.  Your only decision then will be whether to file the claim on their behalf (paid to beneficiary) or give them the superbill and let them do all the work of dealing with their insurer.  If you’ve already terminated the contract, is there ANY down side to taking this course?   

Transitional discounts for out-of-network patients

If you have recently terminated a contract with an insurance carrier and now have become an “out of network” provider, how best to deal with your affected patients? Of course you will need to notify them of your decision to do so but how do you structure an appropriate fee structure so that you minimize the potential loss of patients? 

 

Many practices in this situation have had success using the phrase “transitional discounts” when implementing a pricing structure for out-of-network patients. The concept helps keep the patients in the practice (i.e. they don’t bolt to an “in network” provider) but doesn’t permanently reduce fee schedules for out of network patients.  It will take a bit more management but financially this is a good idea in the longer run.  

The dreaded favored nations clause

While you are in the process of renegotiating your contract with a managed care carrier, they want you to sign an agreement that states that the rate being offered will remain as favorable as those granted to other carriers (i.e. their competition).

 

Should you ever grant any other carrier a more “favorable” rate (i.e. a higher rate), you will need to notify the carrier within 30 days and the contract will then be amended to the more favorable rate, and all overpayments shall be refunded.

 

To make matters worse, the carrier tries to insert a clause that says it shall have the right to audit your books upon 90 days notice, to determine if the rate is favorable.

 

As experienced healthcare people know, this is the dreaded “favored nations clause” that many payers try to put in to their provider agreements. NEVER sign an agreement with this type of clause in it – seeing how it can shackle a practice should be painfully obvious.