It’s always a good idea to know the details of your payer agreements. When renegotiating your existing health plan agreements, it’s essential. The time you spend understanding your payer agreements will pay off continually during the many months it takes to renegotiate them. And the data you gather is an invaluable tool for the entire practice even after the contracting efforts are over.
Define Your Payer Market
First, define the payers who are available for contracting in your state and region. Instead of limiting your scope of possible payers to the existing contracts, look at the big picture and define all payers in your market. Some resources for your state would be:
- Health maintenance organizations (HMOs): Check with your state’s department of insurance, or similarly named government oversight agency, such as California’s Department of Managed Care. HMOs must report their membership numbers on a regular basis, so this information is readily available.
- Preferred provider organizations (PPOs): Your practice’s insurance broker might be able to provide you with key information, as would large employer “watchdog” groups who keep an eye on the insurance market consolidation for its impact on employer health insurance premiums.
- Medicare Advantage: Look at the Medicare beneficiary website.
- Workers’ compensation (WC) carriers: Check with your state’s department of WC site.
- Independent practice associations (IPAs)/physician hospital organizations (PHOs): Look to your local hospital(s) website(s), under “Payers We Accept.”
Determine How Your Agreements Are Held
Renegotiating contracts is also a time for “housekeeping” your existing agreements. It is very complicated for a practice with multiple providers—and certainly for one with multiple practice locations—to be (and remain) loaded correctly and in the payer databases (online and hard-copy physician directories). Look at payer directories online to check how your practice is listed. You also can call payers’ toll-free numbers to check which providers and locations are listed under your practice’s tax identification number.
Consider also that if a physician has been a provider in the network for a long time, there may be multiple contracts attached to that provider. Payers will, most likely, default the payment to the lowest fee schedule.
This review with each payer of the demographics for your group is a great beginning to a contract renegotiation. You might start by saying, “We noticed not all of our providers are listed at South office on your website.” This is something a health plan should want to rectify because it gives the payer a more robust network. Now that you’ve begun the conversation, you can follow with, “While you’re at it, perhaps you can review the rates that we have been receiving since 2005 without any improvement?”
Define Your Practice
Have a thorough understanding of what is important to your practice before contacting payers to renegotiate your existing agreements. With all of our clients, we start with a few reports that help us understand what is unique about the practice and the provider’s specialty. These reports are:
Productivity by CPT®/HCPCS Level II code: Know your practice’s high-volume procedures. Your mix of evaluation and management (E/M) codes relative to procedures is good to know when payers offer fee schedules with different rates for office visits. Also know if the practice does consultations, preventive exams, in-house labs, X-rays, injections, supplies, and other services that are valued outside the “traditional” Resource-based Relative Value Scale (RBRVS) fee schedule before contacting any payer.
Note: The procedure frequency count is essential to define for a given time (e.g., a month, quarter, or year). A list of only the CPT® and HCPCS Level II codes does not allow for the weighted analysis of future contract offers during the renegotiation phase.
ICD-9-CM frequency: Generate a list of diagnoses with a frequency of use for each code for a period (e.g., month, quarter, year) to understand which diseases your practice treats. This helps you define your practice to the payers. It’s also good to see how well your practice is coding (red flags would be codes that end in “9,” or include “unspecified,” “not otherwise specified” (NOS), or “not elsewhere classified” (NEC)). Especially with payers that serve Medicare Advantage members, the specificity of ICD-9-CM codes is increasingly taken into consideration when offering rate increases.
Fee Schedule (charges by code for insurance and self-pay): Knowing your fees for each CPT® and HCPCS Level II service is important. We do a quick calculation of the fee relative to Medicare to evaluate existing payer agreements. If your fees are set too low, for example, and you approach the payer for a rate increase, you won’t get it because the payer will know that you are already receiving, for example, 90 percent or even 100 percent of your charge.
Define Your Providers
We find it helpful to have a “cheat sheet” of the salient credentialing items that define a practice, as well as each physician and non-physician practitioner. As shown in Figure A, this spreadsheet helps us to gather necessary items when completing payers’ credentialing applications. The “Group Info” column is where information relevant to the practice should be entered. The “Physician Info” column should be repeated for each provider within the practice (doctor of medicine (MD), doctor of osteopathy (DO), doctor of optometry (OD), physician assistant (PA), registered nurse (RN), etc.).
Define Your Payer Experience
Gather data on your practice’s experience with each payer before contacting the payer. Know how much volume the payer represents to your practice, and have a sense of the payer’s “hassle factor” to your billers. In other words, you need to know if each payer pays you accurately and on time.
- Payer mix: Know the number of patients and/or volume of revenue that each payer brings to the practice for a given period, (e.g., all of 2011). Prioritize those payers who deserve time and attention.
- Insurance accounts receivable (A/R) aging: This report allows you to monitor, at a glance, how timely your claims are being paid and the age of your outstanding accounts. This is the best way to identify issues with a given payer that may need to be addressed through a renegotiation.
- Clearinghouse reports: The summary data available from most claims’ clearinghouses is a quick way to see the volume of claims sent to each payer, and the adjudication of those claims (paid, denied, etc.).
- Contract allowable exception report: This report shows the exceptions if insurance pays incorrectly, bundles, or reduces payments.
- Denials detail and summary reports: These reports reflect which payers are causing denials. You should know the percentage of total receipts denied by payer. This can be leveraged in your renegotiations to quantify how bad the loss is to the practice.
Identify Online Payer Log-ins
In a renegotiation, one of the first questions our practices are asked by payer representatives is, “Do you have online access to our provider relations’ materials?” You want to answer “Yes,” which requires having online access to each payer’s web portal for providers. This sounds easy, but it actually took us 24 hours in one week to do the first time on behalf of one of our clients. Now that we know where to go for the registration, one of our practices can set up online payer access with most payers in about seven hours, which is still a long time.
A great place to get started is with Navinet (www.navinet.net/about/navinet-customers), which connects your practice, if you participate with each carrier, to its 30 insurer customers. Take the time to identify web portals and set up access for each payer with which your practice currently holds an agreement.
This does, indeed, take time. But the more data you have gathered and organized, the easier the renegotiation process will be for you. And even if you don’t renegotiate, understanding the payers that represent 100 percent of your practice’s revenue is always a worthwhile endeavor.
In the next installment of this series on contracts, we look at how you can prepare your data to better understand your practice, in anticipation of approaching your contracted payers.
Marcia Brauchler, MPH, CPC, CPC-H, CPC-I, CPHQ, is the founder and president of Physicians’ Ally, Inc., a health care consulting firm and concierge billing company for specialty physician practices. She works with physicians on managed care contracts, reimbursement, and practice administration. Her experience includes hospital, health plan, and independent practice association administration. Her firm sells updated HIPAA policies and procedures and online staff training. She is a published researcher and a frequent public speaker.