increasing leverage in payer negotiations mgma national conference october 2013
TRANSCRIPT
INCREASING LEVERAGE IN PAYER NEGOTIATIONS
MGMA National ConferenceOctober 2013
• List the three elements that drive leverage in payer contracting
• Determine their cost to establish a pricing policy
• Use a reimbursement analysis to establish a contracting strategy
Learning Objectives
Your Average Day
Your Efforts Have Ended Like This
You have more leverage than you think
and More than payers will
acknowledge
Central Message
Position You For Success
• Compels the payer to do what they are not already inclined to do
• Increasing leverage can be accomplished by any practice
• Improving Market Power is a strategic issue– It is not a task that can be completed a few
days before the big meeting• There is a resistance to hope
Leverage is Market Power
Market Position• Three Parts –
• Competition• Primary Care Orientation & • Geographic Isolation
• Need to know, but little influence
The 1st Leverage Element
• How many physicians are providing the same services vs. how many does the market need?
• The population is being treated now, who is doing the work?
• Can you take that business / are they taking yours?
• Examine communities with similar populations.
Competition
10
These Elements Work Together
Geographic Isolation
Prim
ary
Care
Orie
ntati
on
• Primary Care Orientation– Increase name recognition – Raise consumer demand– Improve customer service– Increase consumer directed services
• Geographic Isolation– Increase specialization– Focus on sub/micro markets– Provide some exclusive services
Improving Market Position
First Know Your Business
Opportunities Threats
WeaknessesStrengths
Positive Negative
Inte
rnal
Ext
erna
l
• Capacity and Demand–Excess demand = a full practice
–Excess capacity = insufficient demand
The 2nd Element Is Capacity
Managing Capacity is Strategic
• We don’t think about capacity this way• Usually more capacity is assumed to be a good
thing• Gets confused with growth• You have more control over capacity than
demand
• We don’t think about capacity this way• Usually more capacity is assumed to be a good
thing• Gets confused with growth• You have more control over capacity than
demandPosition your practice to have slightly more demand than capacity
Managing Capacity is Strategic
• New patient visits to all visits• Look at payer mix over time• Survey patients that request records• Monitor appointment wait times• Compare the number of physicians to
similar markets
Assess Demand
Getwell Medical GroupReimbursement Analysis
Autograph Healthcoil
Center Point
Zeus
UB Well
Yomama Sigyes
Divided
Blue Circle
100.00%
105.00%
110.00%
115.00%
120.00%
125.00%
130.00%
135.00%
140.00%
145.00%
0 5,000 10,000 15,000 20,000 25,000
RVUs
% o
f M
ed
ica
re
Cost
Avg. Comm. Rate
The Power of Excess Demand
• Manage payer mix• Identify and reduce the lowest paying payers• Manage the appointment schedule as an
alternative to cancelation• The best solution is to renegotiate
– This data documents why your rate request is appropriate
– The data helps change the conversation
The Power of Excess Demand
• Most practices are not as referral dependent as they believe– Don’t let it become an excuse for inaction
• Classify referral sources with a Referral Margin Analysis
• Talk to your referral customers– “We will treat your patients”– Help them understand
Referral Dependence
• You are the source of the data• Use the data to know what to ask for• Strengthen resolve by knowing the facts • The facts tell us what to negotiate
3rd Element is Using Data
Getwell Medical GroupReimbursement Analysis
Autograph Healthcoil
Center Point
Zeus
UB Well
Yomama Sigyes
Divided
Blue Circle
100.00%
105.00%
110.00%
115.00%
120.00%
125.00%
130.00%
135.00%
140.00%
145.00%
0 5,000 10,000 15,000 20,000 25,000
RVUs
% o
f Med
icar
e
Cost
Avg. Comm. Rate
Getwell Medical GroupReimbursement Analysis
Autograph Healthcoil
Center Point
Zeus
UB Well
Yomama Sigyes
Divided
Blue Circle
100.00%
105.00%
110.00%
115.00%
120.00%
125.00%
130.00%
135.00%
140.00%
145.00%
0 5,000 10,000 15,000 20,000 25,000
RVUs
% o
f Med
icar
e
Cost
Avg. Comm. Rate
Getwell Medical GroupReimbursement Analysis
Autograph Healthcoil
Center Point
Zeus
UB Well
Yomama Sigyes
Divided
Blue Circle
100.00%
105.00%
110.00%
115.00%
120.00%
125.00%
130.00%
135.00%
140.00%
145.00%
0 5,000 10,000 15,000 20,000 25,000
RVUs
% o
f Med
icar
e
Cost
Avg. Comm. Rate
23% Increase
Can you walk away?
Svcs % MC Rate ValueDivided 7,000 103% 38.46$ 269,203$ Cost 113% 42.19$ Average Commercial Rate 127% 47.42$
Excess Demand Assume all RVUs replaced at Avg. Comm. rate($47.42 - $38.46) x 7,000 = $62,727
Using Data To Make Your Case
Can you walk away?
Svcs % MC Rate ValueDivided 7,000 103% 38.46$ 269,203$ Cost 113% 42.19$ Average Commercial Rate 127% 47.42$
Excess Demand Assume all RVUs replaced at Avg. Comm. rate($47.42 - $38.46) x 7,000 = $62,727
Using Data To Make Your Case
(23% improvement)
• Increase confidence• Build internal support • Give you something to go back to in the
heat of battle• Test and measure challenges to your plan
Use data to prepare yourself
• Communicate through someone to decision makers
• Reduce emotion• Take control over the discussion• Let the facts speak for you
Make a compelling argument
There is no “Best Way” or “Right Answer”
The data tells us how to argue
• Walk-away calculation• Reimbursement Analysis• Cost analysis (with commercial minimum)• Silent PPO Enforcement Strategy• Fee Schedule Analyzer• Contract Analysis• Benchmark Comparison• Service/Margin Analysis
Useful Tools - Data
• Reporting off your Practice Management System (Crystal reports, BI vendors or similar)
• Training (Excel, RBRVS, data transfer)• Off the shelf help (Win-Zip, Adobe,
Monarch)
Invest In Reporting
1. Manage capacity to less than demand2. Do all that can be done to improve
Market Position3. Analyze data to know the facts and to
form your argument4. Use data to demonstrate your
“Correct” position to payers5. Sometimes your maximum leverage is
not enough – but is always more
To Increase Leverage to Maximum
If we pull this off, We’ll eat
likekings
