South Florida Hospital News
Sunday August 25, 2019
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April 2009 - Volume 5 - Issue 10

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Go Back To Basics During Hard Times - Part II

This is the second installment of a two part article. Now that you have done your homework and summarized the Strengths, Weaknesses, Opportunities and Threats Analysis (S.W.O.T.) for each of your payors. For example, identified by time period, code and amount, e.g. Code XXX was only paid at 50%, and denied 20% of the time, and received different amounts for the same code several times, and totaled these anomalies ($100K). Furthermore you have come up with some corrective actions to discuss going forward. For example, you determined that you want a reasonable explanation for each of the anomalies or at least the top 20% that accounts for =$80K of the total. You also have a list of items that need to be addressed, e.g. you have determined that for your top codes the best Medicare base year is 1977 along with the needed multipliers. Moreover, you want a list of reimbursements by code included in your agreement. The mental framework here is to "keep it simple".

You have also determined besides the mandated template language with few exceptions are superfluous and therefore should be deleted for the sake of simplicity because they are not applicable to your practice and relationship. Itís important to note that state insurance laws rarely apply to self-insured plans, so the contract language should address only "insured" and "self-insured plans".

A few more tips on the process:

Also, determine what Medicare year was your best year and the needed multipliers of that Medicare yearís resource based relative value scale, or conversion factor multiplied by relative value unit.

  • Request a new contract and new rates in your notice letter
  • Include practice name, tax identification number, physiciansí names, date you expect to receive the new contract/rates, ways to reach you, and intent to terminate, specifying a date
  • Calculate the effects of new rates on your bottom line, and if the newly offered rates are inadequate, send a written request for the rates you need
  • Read and "mark up" the contract (once rates are negotiated), indicating every change you want but focusing on deal-breakers, such as timely filing, timely payment, offsets, retro-eligibility denials, ability to bill the patient, and amendments to rates and provisions requiring your written approval (avoid provisions indicating your "silence" as acceptance)
  • Be cognizant that state insurance laws rarely apply to self-insured plans, so the contact language has to address insured and self-insured plans
  • Expect this project to take more than a year
The amount of leverage you have in negotiations varies, but the most powerful tool for any practice is putting termination on the table as a consequence of a payerís lack of good faith. You can take the termination off the table amid negotiations if the payer presents terms that provide significant improvement.

Donít accept payersí comebacks that you are getting what everyone else gets in the market. Rates less than or at Medicare rates are not reasonable. Be firm and tenacious, asking for the payer representativeís manager if he/she does not have the authority to make needed changes.

Up to this point, all you have accomplished is an analysis. Now its time to come up with a "method to the madness" or game plan for negotiations. That is, determine your objective and what are the risks, returns, trade-offs and mitigating points. For example, letís say that your practice represents a unique process and therefore your volume does not fit 100% within the established reimbursement guidelines. Make those items "bill-aboves", disposables and implantables that are billed in addition-to or use them as bargaining chip in exchange for something else. In any event only accept the financial risk for those things you can control.

From a strategic perspective you want to maximize your freedom and minimize your downside associated with the adjudication process. For example, you want to add services and not have to wait for contract amendments. Also, you do not want to give them an automatic amendment and put the burden on yourself.

When it comes time to negotiate, be nice, ask questions and donít accept the typical comeback "thatís what everyone gets". Remember the old adage "You donít get if you donít ask". Expect the process to take some time, .e.g. more than two quarters.

Finally, go to the Federal Register find out what CMS pays the HMOís in your area, e.g. AAPCC (what the HMO gets paid per member). Also go back 36 months and you may find payors have been getting double digit increases or not. In all cases, get professional help from a healthcare professional to coordinate your efforts with your CPA, attorney and office manager. The added cost will more than pay for itself in the long-run.

Michael Casanova, Healthcare Executive and Consultant, can be reached at mikecasanova@bellsouth.net or (305) 606-3409.
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