Blueprint for Success Session 2: Preparation / Data Analysis June, 2015

Objectives By the end of Session 2 participants will be able to: Perform a benchmarking analysis of payer fee schedules using RevolutionSoftware™ to set fee schedule proposals Identify and define patterns in reimbursement to use in an overall negotiation strategy 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 Compare any two of your payer fee schedules on a “normalized code” and volume base to benchmark against each other. Learn and use a practical technique for comparing claims’ payments to contracted rates and assess whether or not you are being “under reimbursed” Objectively assess in network versus out of network reimbursement

Typical Practice Revenues 5% 40% 55%

Preparing for Negotiations: 50% or more of your time is spent here! AGENDA Preparing for Negotiations: 50% or more of your time is spent here! Preparing for Negotiation: doing your homework Data Gathering Benchmarking Existing Fee Schedule Billed Charges Analysis Out of Network Modeling Negotiation Strategy

Question? 1) 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, What is the weighted average reimbursement if these are my only two codes? What is the average reimbursement? Why is it different and which calculation most accurately reflects the reimbursement to my practice?

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: Prepare Phase 2: Negotiate Phase 2: Continue to Negotiate Phase 3: Monitor / Re-negotiate Negotiations Completed

You are here Data Analysis Proposal Letter Process – Phase I You are here Data Analysis Proposal Letter Make Initial Contact with Payer Phase 1: Prepare

If you don’t know where you are going, any road will get you there. Proposal Letter If you don’t know where you are going, any road will get you there. – Lewis Carroll A well prepared proposal letter serves as a roadmap for negotiations Two Sections Letter Body – the narrative that makes the case for your practice’s value to the payer network. Fee Schedule Proposal – the result of your analysis that details your requested reimbursement rates for your new fee schedule

Most accept these agreements and are underpaid, by a lot Consider this… Practices have about 50%-70%% of their revenues determined by payer allowables on in-network agreements Most accept these agreements and are underpaid, by a lot Using tools like RevolutionSoftware and analytical techniques can increase revenues Great Practice Management will optimize revenue you are entitled to. Great contracts negotiations will create more revenue

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

Practice Management Revenue Cycle DOQ/IT Reporting Clinical Patient Trends Cash Flow Management Scheduling Coding & Billing, Collections Cash Flow Operational Business Management Operational Reporting Payer Contracts Analysis and Negotiations Practice Analytics Practice Management Systems Informational Operational Are my reimbursements maximized? Should I stay in network? Are my contract terms favorable? Are my billed charges high enough?

RevolutionSoftware™ Cloud Service www.revolutionsw.com Payer Fee Schedule(s) Charge Master More Profitable Contracts More revenue via Charge Master Adjustment Better data to negotiate with Quickly identify patterns in your data to increase revenue Other options: Out of network Cloud Service Benchmarking Payer Rates Compare any two payers, Payer Comparisons Contracted rates vs. Actual Payments In Network vs. Out of Network Analysis Billed Charges Analysis Inputs: Analysis: Results:

RevolutionSoftware™ Learning Session How to get data into RevolutionSoftware and Using Benchmarking Reports Payer Comparisons Analysis and Claims Analysis Business Models (Out of Network and Billed Charges Modelers) How to prepare an “Aggregate Payer” to compare your contracted rates across payers to make negotiations decisions Fee Schedule Proposal Options

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 120%, 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

Question / Scenario… 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? Yes No And Why?

“Across the board request”

“Define your fee schedule”

Why is this important? MAKE MORE MONEY! Benchmark payer agreements to other providers and to other agreements that you have with similar code mixes in your locality to: Determine which payer contracts to renegotiate Determine which payer contracts to terminate and go out of network Determine how much to ask for by agreement and by code or specialty groups, e.g., E and M, Surgeries, Labs etc. Compare out of network option vs. in network to maximize profit by agreement More out of network revenue by updating your chargemaster to reflect UCR rates Don’t allow yourself to get bitten by the “lesser of” language MAKE MORE MONEY!

Summary We covered how review and analyze your existing fee schedules to prepare for negotiations We covered how to use tools and techniques to flow new revenues into your practices

Homework (Your Analysis) Register for RevolutionSoftware at www.healthcents.com/revcentral using the promo code class2015 (If you have not done so yet) Prepare your csv files using the templates on the class webpage (one chargemaster and your payer file(s)) Load your data and produce your benchmark report Your homework assignment and downloadable documents can be found on the class webpage at www.healthcents.com/blueprint2015

If you have questions or need help… 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

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 charkin@healthcents.com or selbst@healthcents.com www.healthcents.com