Blueprint for Success Effectively Negotiating Third Party Physician Payer Agreements Session 2 Data Analysis Preparation

Objectives By the end of Session 2 participants will be able to: 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 2

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 3

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

Contracts Negotiations Process 5 Escalate to Sr. Level Manager Consider Out of Network Option Data Analysis Proposal Letter Make Initial Contact with Payer Analyze Counter Negotiate until agreement is reached Phase 1: Prepare Phase 2: Negotiate Negotiations Completed Phase 2: Continue to Negotiate Phase 3: Monitor / Re-negotiate Monitor Claims Re-Negotiate

Process – Phase I 6 You are here Data Analysis Proposal Letter Make Initial Contact with Payer Phase 1: Prepare

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 7

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 8

Practice Management Revenue Cycle 9 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? DOQ/IT Reporting Clinical Patient Trends Cash Flow Management DOQ/IT Reporting Clinical Patient Trends Cash Flow Management Scheduling Coding & Billing, Collections Cash Flow Scheduling Coding & Billing, Collections Cash Flow

RevolutionSoftware™ Cloud Service 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 11 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? 12 Go back to the payer with a counter proposal: E and M up 40% Pathology up 30% Radiology if below 110%, then up 40% (77014, 77418, 77427) All other up 15%, including codes not priced as a PCT of Medicare Codes 52000, 55250, and add $200 for in office based incentive (In addition to the 15% increase proposal) Note: left out due to unusually high reimbursement

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)Yes b)No And Why? Question / Scenario…

“Across the board request” 14

“Define your fee schedule” 15

Why is this important? 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! 16

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 17

Your homework assignment and downloadable documents can be found on the class webpage at Homework (Go to Link Below) 1.Register for RevolutionSoftware using the promo code AUA1 (If you have not done so yet) 2.Prepare your csv files using the templates on the class webpage (one chargemaster and your payer file(s) 3.Load your data and produce your benchmark report 4.Complete and submit the Session 2 quiz from the “Survey Monkey” s from 18

Now for a “Steve Special Offer” 19 Send an between and next class, after you load your first payer into RevolutionSoftware, and we will provide advice and counsel, up to ½ hour, about patterns in this data and how to use it in contract(s) negotiations

If you have questions or need help… Class schedule/content Rick Rutherford, CMPE, CHA Director - Practice Management AUA Phone: RevolutionSoftware™ Questions Regina Vasquez, Sr. VP of Accounts – Healthcents, Inc. Tel: (719) Healthcents, Inc. Corporate Susan Charkin, President – Healthcents, Inc. Steve Selbst, CEO, Healthcents Inc. Tel: (800)