Revenue Cycle Management Best Practices to Negotiate Well-Aligned Managed Care Contracts

As fewer emergency department groups practice independently, the strained relationship between emergency department provider groups and managed care companies is increasingly apparent. In recent years, private-equity backed physician management firms have received heat for sending patients surprise, out-of-network, medical bills (See Exhibit A, B, and C). This has led to intervention by the federal government in the form of the No Surprises Act.

As an independent group, we believe the antidote to surprise bills is a collaborative revenue cycle management strategy that aligns the needs of payers, providers, hospitals, and patients. This starts with a positive culture within our emergency department team and continues through our entire revenue cycle management process. We spoke with Ron Decker, Founder and CEO of our revenue cycle management manager partner Innovative Healthcare Systems, Inc. about how the No Surprises Act impacts independent physician groups. He joined us to share revenue cycle management best practices physician groups can follow to negotiate well-aligned managed care contracts.

Q: What should independent groups know about the No Surprises Act?

Ron Decker: The No Surprise Act was passed in December of 2020. The intent was to bolster protections for consumers against surprise out-of-network bills and balance bills statements from healthcare providers. It affects all health plans, including some self-insured plans. There are some limited exceptions. In states with balanced billing laws already in place, the federal law reverts to the state rules, but in places like Wyoming, where there are no state billing laws related to the balance billing and surprise bills, the law will take effect again in January of 2022. There is much work to be done between now and then.

Update: Recently (July 1, 2021) the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury (collectively, the Departments), along with the Office of Personnel Management (OPM) released an interim final rule with comment period (IFC), entitled “Requirements Related to Surprise Billing; Part I.

Source: https://www.aha.org/system/files/media/file/2021/01/detailed-summary-of-no-surprises-act-advisory-1-14-21.pdf

The Federal Government is still ironing out some aspects of enforcing the act. For example, they need to determine how to prevent patients from unknowingly signing away their protections, how initial medical payments should be calculated for out-of-network providers, how to settle disputes between providers and payers, and any punitive actions that will be put in place for providers who do not abide by the act.

I suggest that all provider groups familiarize themselves with these three factors and discuss them with their revenue cycle management service provider:

1. PREVENTING PATIENTS FROM UNKNOWINGLY SIGNING AWAY PROTECTIONS

The act outlines that if notice is not given, cost sharing responsibility of the patient shall be the same as if the service was provided by an in-network provider. In other words, if a patient goes to an out-of-network facility or sees an out-of-network provider, notice must be given to patients in a timely and orderly fashion. If notice is not given, the provider will be paid as in-network or at in-network rates. This is a big opportunity for hospitals and provider groups to align and to monitor that process to have those discussions with the revenue cycle team and registration.

2. DETERMINING HOW INSURERS SHOULD CALCULATE INITIAL PAYMENTS TO THE OUT-OF-NETWORK PROVIDERS

As you can imagine, there was a large lobby effort by payers to get some sort of a standardized rate calculation in place. The legislators did not put that provision in the act. However, they did put in three different areas that cannot be considered: Medicare, Medicaid, or other government payer rates, bill charges, or usual and customary rates.

3. SETTLING DISPUTES BETWEEN PAYERS AND PROVIDERS

When there is a dispute, there is a cure provision. Disputes will be sent to an independent dispute resolution process in which an arbitrator or mediator will have the authorization to resolve the dispute within 30 days.

Additionally, it is important to know that this act is causing disruption among insurance companies that may be an opportunity for provider groups. Insurance companies are regulated and required to keep a reserve amount to pay future claims. So, in a normal environment, they know how many insureds they’re covering, and they know the risk or the health of those patients. Their actuaries can project their reserves to make sure that they have enough money to offset claims in the future. However, the Affordable Care Act and this No Surprises Act has disrupted how insurance companies manage claims and judication. Historically, insurance companies have thrived using a “one-to-many” approach in which they use one contract and one payment methodology to manage many different patients. The No Surprise Act has flipped that model upside down. Now, the system is designed to be “many-to-one”. In other words, many different patients and many different claims that are being arbitrated or mediated against one insurance company. Insurance companies are not set up to handle that very well, and I think this is an opportunity for provider groups and hospitals to lean into this situation together for the betterment of the patient experience.

Q: What are best practices independent groups should use to abide by this act and implement an in-network billing strategy?

Ron Decker: I would start by looking at your contracting process. This boils down to two important best practices:

1. KNOW YOUR MARKET

  • What’s the concentration of patients?
  • Who’s in your market?
  • Do you have competition among specialties?
  • Who are the large employers?
  • Who are the large payers in your area?

Once you have a solid understanding of your geographic market, you are in a good position to start a discussion to align your goals and objectives going forward with all players: your hospital leadership, your group leadership, and the payers.

2. ALIGN GOALS OF HOSPITAL AND GROUP LEADERSHIP

Everyone has the same objectives, achieve a positive patient outcome and make a profit. Negotiating a positive managed care contract should center around those objectives. Your revenue cycle management service—whether it is in the back office of the clinic, the clinical environment, or outsourced—should take time to understand who the players are in the contract negations, what their goals are, and shepherd the contract negotiation process and the RCM process around enhancing patient experience.

Q: What are best practices independent physician groups should implement within their RCM processes?

Ron Decker: Historically, claims submission and receipt of payment have been the primary aspects of revenue cycle management. The claims submission focused on the insurance and demographic information about a patient’s visit and combined that with the CPT code to file a claim. After payers adjudicated the claim, they submitted payments which were posted to an account and the RCM service provided a monthly report about the financials and economics of the provider or group. Today, RCM is much different. It includes the entire billing cycle as outlined in the graphic below. The patient authorization and pre-authorization process must take place before a claim even enters the revenue cycle process. Every step outlined has critical requirements that revenue cycle management services must comply with. If anything is out of compliance, you could get rejection of a claim, or a denial and have to do follow up work on the backend. There are many more pieces of information in the normal claims environment than there were even 20 years ago (e.g. different levels of benefits, and different levels of care through telemedicine or APPs). As there are more hoops to jump through and more variables to consider, denial rates on claims are rising. The whole process, from pre-authorization to accounts receivable follow up is a nuanced process that has a major impact on any hospital and group’s bottom line.

These are the thoughtful patient billing process and RCM fundamentals I suggest for every group:

1. Ensure your group understands and has a relationship with the RCM staff and leadership.

This means working closely with your RCM service to ensure the information going into your claims is clean and that you are working with accurate, complete, and clean data throughout the revenue cycle.

2. Optimize patient communication from your call center to your statements.

Design your call center scripts, patient statements, patient advocacy process, and patient messages around each patient’s insurance provider and employer. Customizing your communication to each category of patient’s needs and each specific payer is critically important to reduce denials and improve patient experience.

3. Gather, measure, and monitor revenue cycle data.

The revenue cycle tools available today are so much more advanced than in the past. Leverage analytics to understand your revenue cycle at a micro and a macro level to analyze payer responses. Look at payer responses by place of service, complaint, diagnosis, day of week, time of week, by available bed or room, and by provider to identify any patterns that may be impacting denials or reimbursements. Those metrics are important because they tie into patient experience and reimbursement. Looking at that data at a granular level gives you the information you need to adjust your RCM process within your practice. Those are critically important factors as we shift to more of a patient-centric environment. At the end of the day, we want to build an RCM process that has a repository of usable data to help us transform groups from the historical transaction or fee-for-service model into a value-based model.

Interested in Learning More?

Check out our webinar on negotiating well-aligned managed care contracts here.


ABOUT RON DECKER, CHBME

Ron Decker, CHBME is Founder and CEO of Innovative Healthcare Systems, Inc., a healthcare RCM and coding services company designed to meet the ever-changing needs of modern medical practice. Ron has more than 30 years of experience serving hospitals in the RCM/Health IT industry.