Ron Howrigon President & CEO 30 years in healthcare industry - PowerPoint PPT Presentation

Insider Secrets for Negotiating with Managed Care Companies Presented by: Ron Howrigon President & CEO Karl Johnson Sr, VP Business Development

Ron Howrigon President & CEO • 30 years in healthcare industry • 18 years in the managed care industry • Held senior -management level positions with three of the largest managed care companies in the nation • 12 years representing physicians and hospitals in their dealings with managed are companies • President & Founder, Fulcrum Strategies

Karl Johnson Sr, VP Business Development • 30 years in healthcare industry • Began his career at John Muir Medical Center, Walnut Creek, California • Senior management positions with Tenet Healthcare and a catholic multi-hospital system in New Jersey • Physician Practices operations, financial and new outpatient business development.

Ron Howrigon President & CEO Opening Remarks Agenda

Agenda • The reality of the exchange world and payer reactions to ACA Why are negotiations critical to your business success? • The negotiation process • • Position evaluation • Goal setting Strategy development and examples • Negotiation tactics and examples • • What happens next?

Newton’s Third Law: To every action there is always an equal and opposite reaction.

Healthcare Spending as a % of GDP

From Managed Competition to ACA and the Exchanges • 1993 Enthoven writes about “Managed Competition” • Create uniform benefit plans • Force universal coverage • Competition not only between plans, but also between delivery systems • Create a market place where transparent pricing drives purchase decisions • Drive budget-based capitation • End result - a more efficient and effective economic market for health insurance and the delivery of care

Payer Reaction - Consolidation • Aetna buys Humana - $37 billion • Anthem buys Cigna - $54 billion • Centene buys HealthNet - $7 billion

Consolidation – Before 1. United $141 B 2. Anthem $ 61 B 3. Aetna $ 58 B 4. Humana $ 48 B 5. Cigna $ 29 B 6. Centene $ 16 B 7. HealthNet $ 14 B

Consolidation 1. United $141 B 2. Anthem $ 61 B 3. Aetna $ 58 B 4. Humana $ 48 B 5. Cigna $ 29 B 6. Centene $ 16 B 7. HealthNet $ 14 B

Consolidation – After 1. United $141 B 2. Aetna/Humana $106 B 3. Anthem/Cigna $ 90 B 4. Centene/HealthNet $ 30 B Total $367 B Medicare $505 B

Payer Response? • Tiered Networks • Exchange Networks • ACO Model • Value Based Contracting • Capitation and Risk Transfer • Fee Schedule Reduction

Why Negotiate? • Healthcare reform means insurance companies are going to get more aggressive • Narrow networks are real • Medicare is still going broke • Managed care is targeting physician expenses • Protect your future. Remember: if you are not invited to dinner, you probably are dinner.

The Negotiation Process Evaluate & Evaluate Position Adjust Evaluate Close Deal Opposition Negotiate Set Goals Develop Strategy

Evaluate Your Position • Market position • Competition • Payer mix • Payer fee schedules • Value proposition

Karl Johnson Sr, VP Business Development Know Your Numbers! The MediGain Practice Analysis

Payer Mix – Average Reimbursement – Top 10 CPT by Top 10 Payers

Focus on Reimbursement Reimbursement by Payor Closed CPT codes Based on charges billed Excluding Total Write-off Payor Charges Payments Adjustments Reim % Adju % Reimbursement tests are based on Medicare Advantage $ 2,858,043 $ 842,334 $ 2,015,709 29% 71% Closed Claims. Self Pay $ 1,804,727 $ 1,708,465 $ 96,262 95% 5% BCBS $ 979,468 $ 452,381 $ 527,087 46% 54% In general Closed Claims are Claims Commercial $ 409,874 $ 202,737 $ 207,137 49% 51% which are: UHC $ 81,487 $ 56,186 $ 25,301 69% 31% Unallocated $ 77,156 $ 77,156 $ - 100% 0% • Paid or mostly paid by the Payor Indigent Agencies $ 57,300 $ 16,813 $ 40,487 29% 71% • Paid or mostly paid by the Federal $ 34,937 $ 17,400 $ 17,537 50% 50% Patient Work Comp $ 21,565 $ 15,844 $ 5,721 73% 27% Medicare $ 18,354 $ 17,325 $ 1,028 94% 6% • Contractual adjustments taken in Other Payors $ 370 $ 279 $ 91 75% 25% line with charge markup % Total $ 6,343,280 $ 3,406,920 $ 2,936,360 54% 46% • Minor remaining balances written off Charges Payments Reim % • These claims DO NOT include $3,500,000 120% Claims remaining in AR or 100% 100% 94% $3,000,000 100% 95% written off. $2,500,000 73% 80% 69% $2,000,000 50% 60% 49% $1,500,000 Ratios by Payor indicates that the 46% 29% 40% 29% $1,000,000 20% practice has a: $500,000 $- 0% 54% average Net reimbursement Advantage Self Pay BCBS Commercial UHC Unallocated Agencies Federal Work Comp Medicare Indigent Medicare ratio. Compare “Like” Payors or Financial Classes to their peers and to a baseline of Medicare or a Major Commercial Payor.

Focus on Accounts Receivable AR by Insurance Carrier & CPT Code Aging by Date of service CPT Code 30 Day 60 Day 90 Day 120 + Grand Total % The Highest outstanding is for the CPT code 28270 28270 $ - $ - $ 698 $ 28,384 $ 29,083 10% 28234 28122 28230 $ - $ 4,774 $ 6,826 $ 17,311 $ 28,910 10% 28270 73620 $ 7,618 $ 4,716 $ 4,643 $ 7,176 $ 20,152 7% 99213 20680 $ 4,436 $ 250 $ - $ 12,490 $ 15,175 5% 28124 $ 12,415 $ 876 $ 354 $ 495 $ 14,140 5% 11042 11721 $ 5,382 $ 3,406 $ 3,653 $ 2,612 $ 13,054 4% 11042 $ 1,769 $ 3,757 $ 1,658 $ 6,436 $ 11,620 4% 99213 $ 4,943 $ 1,983 $ 1,024 $ 3,515 $ 10,465 3% 28230 11721 28234 $ - $ - $ - $ 10,018 $ 10,018 3% 28122 $ - $ 345 $ - $ 870 $ 9,215 3% Other CPT's $ 31,261 $ 26,862 $ 26,821 $ 45,429 $ 138,372 46% 28124 20680 73620 Total $ 67,823 $ 46,969 $ 45,675 $ 134,736 $ 300,203 100% Accounts Receivable (AR) Test identifies that the same set of CPT codes that are previously paid by the same Payor mix are later Denied / Not recovered. The Highest outstanding Payor is BCBS of MI Rollover is occurring at day 45 from Date of Submission. Payor 30 Day 60 Day 90 Day 120 + Grand Total % Travelers Medicare Insurance Blue Cross Blue Shield of Michigan $ 15,906 $ 11,233 $ 12,141 $ 43,716 $ 77,996 26% United Health Medicare $ 23,923 $ 7,649 $ 6,426 $ 15,856 $ 56,854 19% Care Travelers Insurance $ - $ - $ 1,283 $ 11,584 $ 12,867 4% US United Health Care $ 2,629 $ 1,441 $ 1,559 $ 7,840 $ 12,469 4% DEPARTMENT US DEPARTMENT OF LABOR $ 4,416 $ 2,815 $ 292 $ 2,574 $ 12,098 4% OF LABOR Humana $ 261 $ 4,595 $ 7,041 $ 1,746 $ 11,643 4% Humana UMR $ 221 $ 2,274 $ 5,216 $ 3,778 $ 9,489 3% UMR Medicare Plus Blue $ 4,602 $ 1,922 $ 715 $ 3,423 $ 8,663 3% Medicare Plus Chubb Group Of Insurance Compaies $ 350 $ 2,248 $ 1,513 $ 4,008 $ 8,120 3% Blue Cofinity $ 462 $ 1,472 $ 686 $ 280 $ 7,901 3% Chubb Group Of Other Payors $ 15,052 $ 11,320 $ 8,802 $ 39,929 $ 82,103 27% Blue Cross Blue Insurance Cofinity Total $ 67,823 $ 46,969 $ 45,675 $ 134,736 $ 300,203 100% Shield of Compaies Michigan