I thank you everyone so much for joining us for Negotiating Managed Care Contracts. I have just a few housekeeping notes to get us started. All attendees are in listen-only mode. We're gonna be using the Q&A function today to gather questions for our speaker and we won't be using that raise hand function. So feel free to submit any questions into the Q&A or into the chat, we'll open that up for everyone to chat with each other as well as the panelists. If you have a question though, just make sure that all panelists and attendees is selected from the dropdown menu in the message box before submitting so everyone can see it. So this webinar is being recorded and we will be sending that out to all registrants afterwards, along with the slides in an email over the next couple of days. So without further ado, our speaker today is Ron Haurigan. He is the president of Fulcrum Strategies, apologies and I'm gonna turn over now to Ron to get us started. Great, thank you so much. Good morning or good afternoon, depending on what part of the country you're in. My name is Ron Haurigan and I'm gonna be presenting the webinar today. By way of quick background so you know where this information is coming from, I've spent the last 38 years of my career negotiating insurance contracts between insurance companies and physicians and hospitals. The first 18 years of my career, I worked for what some of you would refer to as the dark side. These are managed care entities. Some of you probably know Cigna, Kaiser, Blue Cross Blue Shield. And then in the last 20 years, I've been representing physicians and hospitals on that side of the table. So at times when I give my background, I feel like I need to say that I'm a recovering managed care executive and I've been clean and sober now for 20 years. So what we're gonna go through today is a little bit about the business reality of medical practices. It's important to understand what your business looks like because it will also then play into why it's important to negotiate your payer contracts. I'm gonna talk about the negotiation process and it is a process. We're gonna go through some tactics and strategies, some tools that you need, and then some conclusions and we'll leave time for questions at the end. The business of a medical practice is a different kind of a business. Think about it almost like an airline, okay? You sell a perishable good. And what I mean by that is unlike, let's say a computer or a car that sits on a parking lot. If your good isn't sold at the end of the day, it goes away. You sell appointment slots or surgical openings, et cetera. And there's only so much of that. And when the day is done, you can't resell that good unlike a hard good like a computer or a car. It's like an airline because you only have so much capacity. Each airline only has so many seats on an airplane. When that airplane is full, that's great. If those are empty seats, they can't resell them because once that airline leaves the tarmac, you can no longer fill that plane. You have a limited supply capacity I've already talked about. Now, the other problem with medicine is that you operate in what economists would call a price inelastic environment, which means you have a very limited ability to change the price of your product. When you really think about it, you've got a large purchaser, which is the government, Medicare, Medicaid, and you really have almost no ability to negotiate with them. And recently, not only have you not been getting cost of living adjustments, they've been taking money away. The rest of the purchaser of your product are usually these insurance contracts. And those are the things that must be negotiated in order for you to change price. You're not like a gas station where when the tanker truck rolls in, if the gas in that truck is more expensive, you can change a dial and change your price. The only way you can change the price of your product is really to negotiate these payer contracts. Healthcare right now is like a perfect storm. It's like a category five hurricane. We are in the middle of a bunch of factors that really have never happened before in this country. And it's important to understand them so you can understand what's going on, what may happen, and how you can affect it by looking at your payer contracts and making sure you're getting the right revenue from them. There are incredible macroeconomic pressures going on right now in this country. Those pressures are affecting healthcare because healthcare is the largest single segment in our economy. The government is under incredible budget pressures and healthcare is the largest single part of the federal budget. We're recovering from COVID-19, not so much from the clinical side effects of it anymore, but from the economic side effects of it. There is a continued political push for universal healthcare. We've now seen at a federal level, a bill introduced a couple of years ago that obviously didn't go anywhere, but it was reintroduced again. California, for example, is dealing with a statewide bill to potentially do universal healthcare. That political push will continue for many years, for example. There's talk about an expansion of the Affordable Care Act, namely the public option, the creation of an insurance company run and produced by the government. That could create interesting side effects to healthcare. And then there's also this idea of potentially allowing Medicare at age 50. Now, Medicare at 50, not having the government provide it, but having people buy into it at age 50. So individuals or employer groups could buy Medicare coverage for their employees at age 50. That's an idea that's been thrown around and that may come in the future. All of these things put incredible pressure on physician practices and the economics around those physician practices. So why negotiate? Why worry about your insurance company contracts? Well, there's several reasons. First of all, there's incredible cost and push for universal healthcare. Now, the insurance companies don't like that because that would be the end of insurance companies. And so they've got to get more aggressive to try to control cost. They know if they can control cost or trend inflation in healthcare, that will alleviate some of that pressure for universal healthcare. The flip side is if trend goes out of control and healthcare keeps inflating, there will be more pressure. Well, one of the things the insurance companies know is that the way to help control trend is to try to push down price. And that's the rate that they pay you and that's the rate in your contracts. The post-COVID economy we're struggling with. During COVID, the federal government printed, and they had to, $6 trillion. Okay, to put that in perspective, we printed more money than the entire economy of Germany or England. That was something that we had to do to keep our economy rolling, but it comes with side effects. Printing all that money and increasing money supply created inflation. Inflation created increases in interest rates. All of those things we're still dealing with. Inflation also increased wages and labor costs. That's why your nurses cost more. That's why your front desk costs more, et cetera. We're gonna be dealing with the post-COVID economy for several years now. Medicare is still going broke. There is still a date at which point the Medicare fund becomes unsustainable or unfulfillable. The federal government calls it a unfunded mandate. The federal government has to do something about that. We can't let Medicare go broke, and that's putting enormous pressure on insurance and on physician practices. It's the single biggest reason why they keep reducing the conversion factor to try to keep Medicare alive. Managed care is clearly targeting physician expenses, largely because it's a huge chunk of money, and you're the easiest ones to target. It's harder to target hospitals because of consolidation, so it's easier to target physicians, which are largely fragmented. And you need to protect your future. I've got a very good friend of mine who's fond of saying, remember, if you're not invited to dinner, it's probably because you are dinner. And right now, the physician in the practice of medicine and physician offices is dinner when it comes to a lot of these pressures. So let's talk about the negotiating process. And first of all, negotiation is a process. I don't care if you're negotiating a contract with an insurance company, trying to buy your next car or anything. If you go into it unlike a process, you're not likely to win because the other side probably is going to as a process. I remember reading years ago an interview with Lance Armstrong, and he was talking about how training for a tour de France or training for anything was a process, and how one day he ran a Boston marathon and he didn't get ready for it. He didn't train for it. And he said it was the worst athletic day of his life that he almost quit. Now, this is a guy who ran Ironman competitions, the tour de France, et cetera. And he said the whole reason was he didn't prepare. Negotiation is much the same thing. If you don't prepare for it, if you don't follow a process, you're going to have a very bad day. I can tell you when I worked on the payer side, there was not a single negotiation that I entered into without following a process similar to this. So let's go through the steps. The first step in any negotiation is evaluate your position and do it honestly, okay? Don't lie to yourself. You need to honestly understand your position. What's your market position? Are you the largest group in your specialty in your market? Are you the only group in your specialty? Or are you a small group and there are three larger groups in your specialty in your market? You need to know where that is because a lot of that will drive how much leverage and how much power you have in that negotiation. Who's your competition, okay? If your competition is a university and that's the only other option, that's important to know. You can use that in negotiation. If your competition is a huge group that really dominates the market, that's important to know. If you don't have competition, that's also important to know. So you need to know what your market position is and who your competitors are. What's your payer mix? Are you wanting to negotiate with, let's say, Blue Cross, who's 50% of your mix? Or are you wanting to negotiate with Bob's PPO that's 1% of your payer mix? Those things are important to understand and you need to know them ahead of time. All right, here's a very, very important one. Payer fee schedules. You need to be able to take your payer fee schedules, Cigna, Aetna, United, Blue, et cetera, and calculate them on a weighted average percentage of Medicare based on the mix of services you use and compare them to the same year of Medicare so you can compare them to each other, apples to apples to apples, okay? You need to know if Blue Cross is paying you 150 of current Medicare and United 155 and Cigna 120 and Aetna 130, or whatever the numbers are. Guess what? They all know what their competitors pay you and how it compares to them. Now, whenever I say this, a lot of people go, well, that's illegal, that's collusion. No, it's not. It's not because they get that information in a publicly available way. The reason how they get that is they will track EOBs when they are secondary. So for example, when you bill United Healthcare as a primary, but they have Blue Cross secondary and you bill the deductible amount to Blue Cross, what does Blue Cross get to see? They get to see how much the United allowed amount was. And it doesn't take their computers very long to reverse engineer that fee schedule. And then they know exactly how much they pay. I don't know how many times I went into a negotiation when I was on the payer side and somebody said, well, you guys pay us less than everybody else. And I could look at them and say, no, we don't. I know exactly how much my competitors pay you. Okay, so you need to know that ahead of time because if you're negotiating with somebody who's already your best payer, you need to be prepared for them to let you know that they are your best payer. Most importantly, when you evaluate your position is what's your value proposition? What do you bring to the table? Because if you can't show how you are valuable to the carrier, and we're going to talk about this in a little bit on tactics, you're going to have a very difficult time. I know this shouldn't surprise anybody, but just going to a payer and say, could you please pay me more money? Because I want more is not likely to be successful. You need to show them value. There's a lot of ways to do that. Once you've evaluated your own position, the next thing is to evaluate the opposition. What's their market share? Are they the biggest in the market or are they very small? Who's their competition? What's their current performance? Are they profitable and growing or not? Now, this is important for a couple of reasons. I remember when I was working for Cigna, the joke used to be, we had individuals who ran a state who were responsible for a whole state. They were called general managers. And the joke was, what do you call a general manager who's lost money three quarters in a row? And the answer was, you call him unemployed. A lot of these companies have no tolerance for losses. They're here to make money and that's what they do. Now, the flip side of that is, when they are making money and they're growing, they don't want network disruption. It's a little bit like, I think I was probably six or seven years old, maybe a little bit older, when I sort of realized that asking my father for money, for candy or something else, the day after he got paid, had a much higher degree of success than the day before he got paid. Well, cause it had to do with whether he had money himself. So asking a carrier for an increase in reimbursement when they are profitable and growing has a better chance of success when they are shrinking and not profitable. So you need to know their performance. You need to think about what leverage you will have against them. What can you use? What are they afraid of? What do they need? And those things need to be evaluated and when you evaluate that opposition. Do they have any weaknesses? Is there anything right now? For example, if you know that a carrier in your state has just received a fine from the Department of Insurance for doing something, well, what they don't want is another complaint to the Department of Insurance. That could be a weakness. Intangibles. Are there anything else going on with that carrier? Is the carrier going after a large employer group and you happen to be the group that cares for a lot of their executives? Did they just get a large employer group and they don't want to have problems? All of this goes into that evaluation of your opposition. Now, you've thought about what your position is. You've thought about your opposition. Now it's time to set goals. What do you want out of this? What reimbursement level do you want? And don't say more. Calculate what that is. What do you think you need to have? What is it that you're trying to get out of this from a reimbursement perspective? Contract term and termination. Are you looking for a one-year deal? Are you looking for a 10-year deal or a five-year deal? And do you want to be able to get out of that contract at any time? Or do you want to lock this thing up for five years? Now, a lot of that has to do with, again, looking back at your position and how that position might change. If you're in a pretty dominant position and it's likely to get better in the future, let's say you know that in the next year you're going to merge with your only other competitor, and you're worried about the future of inflation, et cetera, like that, you may want a shorter-term contract because you don't want to be locked in and you're in a pretty dominant position. Now, if the flip side's there and you say, man, I think my position's going to get worse over time. I know the hospital is going to start a group that's going to compete with me. You may want to lock this contract in long-term. It all revolves around your feeling about where you sit today and where you might be sitting in the future. Think about what kind of language you want in the contract or what kind of language you don't want in the contract. Do you want them to be able to unilaterally change your fee schedule or do you want it locked in? Do you want them to be able to add products or do you want the right of refusal on that? What are those language things that you either currently want or don't want? Things like auto-recoupment, et cetera. Put those on your list of setting goals. You need to calculate what your walkaway point is. Now, whenever I say this, usually groups will say, well, I couldn't possibly walk away from my Blue Cross contract or my United contract. It's too much money. At which point I say, well, what if they came to you and said, look, I know you're getting paid 150% of Medicare today, but tomorrow we want to pay you 10% of Medicare. Now, usually when I make that kind of example, the group will say, well, I would have to leave. I couldn't do it for that and say, okay. Then there is a walkaway point. It's somewhere between what you're being paid or full bill charges and zero. Let's calculate where it is. Where's that point where it's actually better for you not to have this contract? And it's important to calculate that ahead of time so you're not thinking about it in the negotiation. Look at it this way. Let's say you're buying a car and you decide ahead of time that the most you'll pay for that car is X dollars. If you know that ahead of time and the dealer says to you, well, I can only offer this, and it's above your maximum point, you don't have to think anymore. You stand up, you say, well, I appreciate your time and you shake hands. That also gives you incredible power in the negotiation because the other side knows that you're not joking. You've already figured it out and you aren't at your point yet. So calculate that walkaway point. And then what's your opening position? What are you going to ask for? What's your proposal, both from a financial and non-financial? This gets into language, contract term and termination, rates, et cetera. Now, you're not going to get your opening position. I don't know how many thousands of negotiations I've done over my career. I do know how many I've done where the initial thing I asked for, the other side said, yeah, that's great and shook my hand. And that's none. So build in negotiating points into that opening position. If you absolutely have to have a 5% increase in revenue, don't ask for a 5% increase in revenue, ask for a 9% increase in revenue or a 10% to give yourself negotiating room. So build those negotiating points into that opening position and part of that goals. So now you've set your goals. You know what you want out of it. You know what your walkaway point is and you know what your opening position is. Let's talk about strategies. Okay, how do I get those things? I know who I am. I know who my competitor is. I know what I want. I've got all that laid out. Now, the hard part becomes how do I do it? So I'm gonna walk through some managed care strategies so you can see what they're likely to do, how you can counter those. And then I'm gonna go through some strategies that you can use. One of the earliest and one of the most often used managed care strategies is delay. Remember, you're coming to them asking for money. So a successful negotiation means at the end of this, they're gonna have to give you some amount of money. That means the longer they delay that, the more they stay on the old fee schedule. So at one of the companies I worked for, we used to call this our lady of perpetual negotiations, which means I'll negotiate as long as you want me to, as long as I don't have to do a deal. You've gotta be careful about that. You've gotta try to lock them into timeframes. If you make a proposal and they say, okay, well, we'll take a look at this. We've gotta run some numbers. We'll get back to you. You should say, when will you get back to me? When can I expect a response? Can I set up another call or another meeting at that point so we know what your response is? Try to tie them down into timeframes. Another thing that managed care companies use all the time is limit of authority. Consider the, you know, everybody's done this, which is why I use this as an example. Consider the buying a car. You go in, you're talking to the sales rep, you make him an offer and what does he or she do? I need to go talk to my sales manager. Now, why do they do that? Well, they do that for several reasons. One is it gives them a chance to sort of think about how to respond to your offer. Secondly, it creates what negotiators call limit of authority. You now know that that person doesn't have the authority to sign a deal, which means you can't back them into a corner. You can't say, look, 10 seconds, I'll pay 30,000 for this car. Do we have a deal? And put out your hand, because they don't have the authority to do that. It also gives them somebody that you don't get to talk to that they can blame for things. Now, what the car salesman will do is he'll come back and say, oh, I tried really hard. My sales manager's not in a great mood today. And that's a really worthwhile car and everybody wants it. So I can't do this. Here's what I can do. And I make their counter offer. Again, it's not them. You can't get angry at them. It's that sales manager. When it comes to the managed care companies, they'll talk about things like they have to get corporate approval. They have to check with legal. They have to check with their budget. All of this is creating a limit of authority. It can be used as a delaying tactic or so that you can't get angry at the negotiator or point them into a corner. Another delaying tactic in a negotiation is what we call two steps forward and three steps back. You start to get things resolved, issues or items, reimbursement, some language issues. And then they start entering more items into the negotiation during the negotiation. Oh, I have another new thing I need from you. I need X. Okay. Whenever this happens at any negotiation, when a new item or a new negotiating point is added, you need to stop right there and go, wait a minute, wait a minute. What's this? I thought we had everything on the table. Oh, well, this is new and I just found out about it. And then you've got to make sure you stop that. Okay, so is this it? We're not going to get any new items, right? We have all the issues on the table. Funny math. So in case you haven't worked for an insurance company like I have, let me explain how insurance companies work. Insurance companies are run by actuaries. Now actuaries are an interesting breed. They are wonderful at math. They don't make math mistakes, but they do play around with math. Let me give you an example. Let's say that you are being paid 150% of Medicare and they offer and they say, well, I can do a 10% increase. And you say, great. 10% of revenue, that would be lovely. And you get a contract that now pays you 160 of Medicare. 160 is not 10% over 150. 150 plus 10% is 165. That's playing around with math. Another thing they'll do, you have this whole list of codes that you potentially bill. Some of them obviously more frequently than others. And you see a proposal and some of these codes go down a little bit, some go up a little bit, and you see a percentage change next to each one of these CPT codes. This one goes up by 10. That one goes down by two. This one goes up by 40%. That one goes down by three, et cetera. And then in that bottom right-hand quarter is an average. 9% increase. And you say, wow, 9%, that'd be great. Well, if that average is the calculation of the average of the percentage changes, that's not a change to revenue. That's not what we would call a weighted average. That's an average of the changes. And that's a funny math scenario. I watched a carrier do this one time and one of the codes that they offer this huge increase on, first of all, didn't get billed that much. Secondly, it was for Botox injections for migraines. They didn't cover Botox injections for migraines. So thank you so much for offering me an increase on a code I don't bill that much and that you don't even cover. That's funny math. So you got to watch their math and make sure you understand it. It's a little bit like when the salesman starts talking very quickly about numbers. Slow them down and make sure you understand them. The runaround. The runaround is another playing tactic. Oh, well, I'm no longer your negotiator. I've been moved to a different area. Now we've got a different negotiator that you're going to have to deal with. Or, oh, well, you want to talk about an ambulatory surgery center? Oh, that's an entirely different part of the company. That's the ancillary division. The Medicare contract, oh, that's an entirely different part of the company. So you'll get all this runaround. You need to try to put them into a corner and say, well, I need to know who I need to talk to. Can we get them all together? Divide and conquer. Pitting hospitals against physicians or pitting physicians against each other. Some of the payers have gotten very good at taking primary care physicians and putting them under some sort of a reward or risk-based or reward-based contract where if they control medical expense, they get more money. That's great, right? And then the next thing they'll do is say, well, you know what's keeping you from your bonus? Oh, it's those damn orthopods across the street. They're getting way too much money. And now they'll pit the primary care physicians against the specialists. You'll have a meeting with the primary care physicians. Well, they'll be very angry at you about what you're making and you need to lower your fees so I can make profit. In the meantime, the insurance company sort of has exited the room and they'll let the doctors fight against each other. They'll do the same thing with physicians and hospitals. One of my favorites is when you ask an insurance company for to negotiate a contract and you're only one medical group in the whole state and you ask them for an increase and their response is, oh, I'm really sorry. I didn't budget for an increase for you for this year. My budget's already fixed and so I really can't do that but call me next year. Now here's the problem with that. First of all, there isn't a single payer in the world out there that budgets increases down to the individual medical group level. It just doesn't happen. They budget at a macro level. This is just an idea to try to keep you from negotiating by spreading what it really isn't true. Not all products or narrow networks. You negotiate a contract with the insurance company and then you find out there's this narrow network or there's this other product that you aren't in and you thought you were in everything but you need to be in that product. Then you go to them and say, hey, I have a contract. I'd like to get into this narrow network whether it's an exchange network or a subset network or whatever. Oh, well, that one's gotta be priced lower. If you want into that one, you need to give us a better deal. Indifference is a managed care strategy. Let me tell you a story about how I used to use this when I worked at one of the payers. I would get a letter from a group. It didn't matter who the group was. They could be a very large dominant group asking to renegotiate their contract or renew their contract. I would respond with a letter that was clearly a form letter. Dear, fill in the blank, received your communication of May 15th. Unfortunately at this time, economic pressures and corporate budgets don't allow me to adjust your fee schedule. Thank you so much for your continued participation with our plan sincerely. And I would have my secretary sign it, an initial next to it. Now what I'm doing is I'm trying to send a message of indifference. You are so inconsequential to me that I'm not even gonna take the time to create a new response to you or even sign the letter. Now, in the days where now we're dealing with email versus paper letters, it can come from the administrative assistants. It can be from her email or his email. Now, here's the thing on that. A lot of times that will get rid of the negotiation. A lot of times the group would go, wow, I guess I really don't have any power here and they will go away. Now, a lot of groups had enough power that they would call me on it. And I would get either an email or a call from somebody going, Ron, I got this letter from you. Do you realize we're the largest orthopedic group in this city and we make up 80% of all of your capacity and how dare you tell me you're not gonna negotiate with me? At which point I've got a way out that I built in. Oh, I'm sorry. My assistant sent you that. I didn't know that was going to you. She's new or he's new. Boy, you know I'll negotiate with you. I'm sorry. Go ahead and throw that away. So I've got a way to deal with it when people get blow past it, but I'm trying to see if I can get people to just walk away without negotiating. Don't ever take indifference. Always make sure you talk to somebody and explain the value that you bring, et cetera. Employer communications or threats of employer communications. If you're in a negotiation with a carrier, a lot of times what you'll hear is 60 to 70% of our business is self-funded. I'm not spending my money. I'm spending the employer's money and they are really suffering right now. I have to be good stewards of their money, which is true that they're mostly self-funded, but it's also not true that those communications should be, that you should be afraid of those communication. If anything, lean into that one. Really, I'd like to talk to those employers because I think we bring value to the table. I think we're less expensive than the university option. I think we do such a good job of caring for their employees that they'd be more than happy to give us a small increase for what we're looking for to keep us viable and independent. So those are another things that carriers will use. All right, now let's talk about your side of it. Developing a strategy. First of all, negotiation is all about leverage. How do you create your leverage and maximize it? And how do you eliminate or reduce the leverage of the other side? And then one of my favorite quotes from John Kennedy is let us never negotiate out of fear, but let us never fear to negotiate. One of the things that's important to remember is you are the product. Insurance companies don't deliver healthcare, they finance healthcare. They deliver healthcare about as much as your bank built your house. No, no, the builder built your house, the bank just financed it. So remember that, and that's why you shouldn't be afraid to negotiate. All right, let's talk about some provider strategies. The value play. What value do you bring to the table? What do you do better, cheaper, faster than your competitors? Let's take the scenario where your major competitor is a university setting. Now we know that university settings are more expensive than non-university, that's a value. I can do it cheaper. Let's say that you know that you can take cases out of the hospital and take them to an ambulatory surgery center or out of an ambulatory surgery center into an office. That saves money, that's value. Let's say you're the only ones that have hand surgeons in the area. So you're subspecialized, that's value. Okay, so that's a value play. What do I bring to the table that you want or need? And then I'm gonna make sure that I get some compensation for that value. The non-participation strategy or the termination strategy. And let me take a step back. Not all of these strategies work in every situation and you can't randomly pick one. What you need to do is look at the strategy and say, what works best for us, okay? So the non-par strategy is saying to the payer, look, if I can't reach an agreement with you, I'm gonna have to go out of network. I'm gonna have to end this relationship and then you don't get access to our group. Now, one of the things when you're playing that non-par strategy that you wanna do, and this gets revolves around maximizing your leverage and minimizing the other one. A lot of times carriers will say, well, we have 500,000 covered lives in your area, okay? And they're trying to maximize how big they are. A quick response to that, which will both eliminate their value and maximize yours is, oh, good God, don't do that. Don't tell me that. My doctor's already overloaded. They can't get home at night. They're also overloaded. Our new patient appointment wait time is X weeks out. The last thing we need is a lot more business. We have more business than what we can handle because we're so good and so many people wanna see us. What that does is it minimizes their volume and it actually makes it a negative. Boy, the best thing that could happen to my group is to terminate you. You're our lowest payer. We're gonna be able to fill up those appointment slots with a better payer. My doctors will get home and be able to have dinner with their family every now and then. The court of public opinion. One of the things that medical practices haven't done a great job of in the past is really playing into the advantages that we have over insurance companies. I mean, let's face it, maybe, maybe tobacco companies have a worse reputation than insurance companies, but it's awful close. Nobody feels really warm and fuzzy about insurance companies. They've got a pretty bad reputation. Most of it well-earned. On the flip side, you represent doctors, people with white lab coats and stethoscopes, people who save lives, people who will get me to where I can walk again without pain, people who were there during the COVID pandemic and were risking themselves. We need to play on that, okay? We need to take advantage of that from a public opinion perspective and understand the public likes us and they don't like the other side. I'll give you a sort of a perfect example of how dramatically this can be used. There was a obstetric group, small obstetric group who asked their insurance company, and it was in their state, it was Blue Cross, for a raise and Blue Cross said, no, you're small, we don't have to negotiate with you. What can you do to us, okay? What this group did, realizing that they're obese, they deal with women who like them a lot. They deliver children for these women. They put a sign in their office that talked about how the fact that they had tried to get an increase in Blue Cross so they continue to be a viable, et cetera. Blue Cross said, no. And so they were asking each of their Blue Cross patients if they wouldn't be willing to give another $10 donation per visit. Now they worded that very carefully. Donation, that's not balanced billing. They didn't demand it, they were asking for it. And they really didn't want the money. What they wanted to do was embarrass Blue Cross, okay? Now Murphy's law for Blue Cross being what it is, a woman came in, she happened to be the wife of a CEO of a large employer in the area. And she saw that sign and she thought it was terrible that these physicians were reduced to asking for handouts because a big insurance company wouldn't pay them what they were due. So that evening, having dinner with her husband, she yells at her husband, do you know what your company's insurance company is doing? Do you know what they're doing to the individuals who delivered your children? And she ripped him a new one pretty good. Now he doesn't wanna have that conversation every night. So he goes to the office the next day and yells at the VP of HR who selected this insurance company. That VP of HR yelled at the broker, the broker yelled at Blue Cross. Blue Cross now has a problem. They immediately called the practice and say, you have to take that sign out of your window. No, we don't, we don't have to do anything we don't want to. And the way they got the sign out of the window was they gave the group an increase in their contract to get it out of the window. It's an example about how people's feelings about physicians can be used in this sort of court of public opinion. The musical chair strategy. All right, here's the musical chair strategy. We all know the old game. There's three chairs, there's four people, you circle the chairs until the music stops. You sit down, somebody doesn't get a chair, they're left standing and they're out. Let's say you're in a pretty dominant position and you really need to go negotiate all five of your major insurance contracts, but you want it done quickly. You don't want to have to mess around with them doing it one at a time. And you want to create some incentive for them to try to do it quickly. What you do is you tell all five carriers, look, I'm renegotiating and I need more money. Oh, and by the way, I'm also full to overflowing. I've got a doc who's going to retire. So I really only need four of you. So the first four companies that give me a doable contract, you're going to get at the fifth company, maybe not so much. You might not have access to us. Again, so only works if you've got a pretty dominant position, but it can create incredible pressure because what you're doing is saying four chairs, five companies. And then as one company gets done and you sign the deal with him, you let the other four know, oh, by the way, Cigna's already sat down. They gave me a deal. Now there's three chairs, four companies. I hope you're not the one that gets lost here. So that's the musical chairs. Sell to the hospital bluff. Now this one actually carries and can be used for almost any size practice. One of the things that really bothers and concerns insurance companies is consolidation. They don't like the fact that physicians are selling to hospitals because that puts those physicians under the hospital contract and it gives the hospital even more clout. And they usually have more clout than you do. So one of the things you can do is you can go to the carrier and say, look, if I can't get an increase from you, I'm not viable. It's not a long-term viable practice. I'm going to have to sell to the hospital or I'm going to have to sell to the big mega group in town or I'm going to have to sell to PE. That sale threat can be very powerful in the negotiation. And the insurance company may want to invest in your practice to keep you independent. The big thing in all of this and what you have to do is you have to make the pain of the change, that being an increase in rates to you, less than the pain of the status quo. They know the status quo. So you've got to figure out a way to do that. One way can be on a positive side. If you do this, I can move cases and save you money. The others can do it on the negative side. If you don't give me what I want, I'm going to do this and that's going to hurt you. But it all revolves around making that pain of the change less than the pain of the status quo. Remember that negotiating with payers involves either what you can do for them or what you can do to them or a combination of both. That's that whole leverage point. All right, I'm going to talk about contract language. Contract language can be more important if you miss some things than the rate negotiation. So I'm going to use some actual examples of payer contracts and I'm going to show you what the pitfalls are. Remember, whenever you're looking at payer contract language, if you don't understand it, it probably will be used against you and it's probably intentional. And that these agreements are not drafted to be fair. They were created and drafted by managed care companies for managed care companies to protect managed car companies. Don't look for fairness. So let's run through a few of these examples. This is a payment provision. Now, first of all, you'll can see that payments for covered services will be lesser bill charges or the fees under Exhibit C. That's where your fees are going to be subject to the payment policies, all right? Let's say in the middle of this contract, this company changes their payment policy on mid-levels and takes the 15% reduction. And you say, wait a minute, that's a violation of my contract. It's a violation of my fee schedule. No, it's not. You said subject to payment policies, I changed the payment policy. Also, agreement with respect to complete claims for covered services will be payable within the timeframes required by applicable law. Let's say that you live in a state like North Carolina, where I live, where there's a state law that requires that claims be paid within 30 days or interest has to be paid. You go, great, this really says that they're going to pay me within 30 days. No, it says applicable law. State laws only apply to fully insured covered lives, which are about one third of all the lives you see. The other two thirds are governed by the federal ERISA legislation, which has no language about timeliness of payment. The other thing I like about this is it says they're going to follow the law. Well, guess what? You have to follow it whether you don't have that sentence or not. That's why they call it a law. Another one. So let's say that you negotiate a contract and you think, well, you know, I had to give up some money on some of these things, but man, I did really well on, and I'll pick one, on my MRIs. You know, I gave up and I didn't get as much money on my surgeries, my EM codes, but man, I'm going to make a lot of money on MRIs. And you miss this section where it says this agreement excludes services that Cigna has elected between under an agreement between Cigna or a Cigna affiliate or a national or regional vendor or provider or capitated provider, except as otherwise provided by Cigna. It goes on to say that if you provide a service that's been excluded, you can't be paid for it and you got to eat it. Now, this gives them an enormous amount of flexibility. So let's say right after you sign this contract, you get a letter that says, hey, we've done an exclusive contract with MRI for Bob's MRI facility down the road. That's our regional vendor. You have to send all your MRIs there. And if you don't, and you actually do one on your scanner, you can't get paid for it. And you go, that's a violation of my contract. No, it isn't. You actually agreed to it in this provision right here. Another one of my favorites. Covered services will be reimbursed at the lesser of bill charges or the Cigna RBRVS allowable fee. Now, when you see RBRVS, you think Medicare. No, that's Cigna's version of Medicare, not the actual version of Medicare, and it's different. It also says that it can be updated periodically by Cigna. This is another one you've got to be careful of. This agreement may be terminated by either party upon 90 days written notice. Now if you stop right there and you say, okay, well, you know, if this gets bad, I can send him my 90 day termination notice and I'm out. No, you got to read the rest of it. Effective at the end of the initial term or at the end of any renewal term. What this does is it sets one day every year that you can terminate this contract. That's that anniversary date. And you've got to give at least 90 days notice. Now, some people will say this provision looks familiar. I think it happened in my contract. And if you pull the contract that this provision's in, I would bet you that there's more than a 50% chance it won't have the actual anniversary date on it. And that's by design. That's because that anniversary date is assigned after you sign it, and it's assigned by the payer. And in this case, this language comes from a UnitedHealthcare contract. And they don't send you the duly executed contract unless you ask for it. So you don't know whether your anniversary date is July 1, June 1, et cetera. And a lot of times if you miss that 90 days notice prior to that, you're stuck for a whole other year because it says at the end of any renewal term. Comparative pricing and certification of comparative review. This is a most favorite nation clause. And the clauses like this basically say you guarantee that they get the best deal or they're within X% of anyone else. You also guarantee that you will certify that and that they can do a review of that. It allows them to do an audit. And if they find that somebody else during the term of this agreement has a better deal, you have a rate adjustment and you owe them that money back. So be very careful about anything that looks like a most favored nation or I get the best deal kind of a contract. Some negotiation points to remember. There's a famous saying that says the best battle plan, railer survives first contact with the enemy. What that means is you can plan for all the various things. And they'll do something that will surprise you. That's okay. Expect it to happen. Again, I don't know how many thousands of negotiations I've done. I do know how many I've done that went exactly the way I thought they would from start to finish. That's fine. Don't get freaked out when something changes. And that's when you move on to the second point, adapt, adjust, and overcome. When that changes or when something new gets in, okay, well, how do I deal with this now? Rather than just folding up shop, adapt, adjust, and overcome. Everything is negotiable. Now, not everything is winnable, but everything is negotiable. And what I mean by that, there's some things you will negotiate purely to create points for something else or to set you up for something else. Let me explain what I mean by this. I live in ACC basketball country, okay? Coach Krzyzewski, who used to coach the Duke Blue Devils, was incredible at arguing for calls with refs. And I mean, he would argue like his life depended on it. You would think that somebody had just killed one of his family members, okay? I saw him interviewed one time and somebody asked him, they said, coach, have you ever won one of those arguments? Have you ever had a ref reverse his call? He said, no, never. And they said, well, why do you argue that? He goes, I'm not arguing that call. I'm arguing the next one. And what he meant by that is, when I point out that I think I got a bad call and I'm arguing with that ref, I'm making points with him. And I might get the next call in my favor. That's really what I'm choosing for. So you may be in a negotiation with a payer and you may negotiate something really hard knowing that you're not going to win. But what you're setting up for is, well, if you can't give me that, then I want this. It's that next call. And so understand and be cognizant of that. Another very important thing in negotiations, the difference between I can't and I won't, okay? And it's important not only semantically, but it's important inside the negotiation. So let's say you say, look, I need a 20% increase. My costs have gone up. Things are really rough. I need a 20% increase. If the person on the other side goes, I can't give you 20%, you have to stop right there. What do you mean you can't? Well, I can't do that. You mean like literally your computer system can't add 20% to all of my CPT codes and process the claims? Is that what you're trying to say? And what you're trying to do is point out that can't is an end. There's certain things I can't. I can't turn back time. I can't bring back the debt. I can't do it. Those are things I can't do. They're impossible. That's different than I won't. And what you want to do is get the other side to go, well, yeah, I guess, I mean, we could. It's technically feasible, but I won't give you a 20% increase. Okay. The reason I won't is negotiable. Can't isn't. When somebody says I won't give you a 20% increase, the answer is, okay, what will you give me? Will you give me 19? See now I'm negotiating. If I just say I can't and get away with it, there's nothing more you can do with that. So it's really important to watch the language and make sure you're still negotiating and not letting somebody just close something off without giving something in return. Some conclusions and then we've got time for some questions. The environment is not going to get better. Anybody who thinks that next year Medicare is going to suddenly wake up and go, you know, we've been wrong. We're going to give everybody a big increase in the conversion factor. You're kidding yourselves. Anybody who thinks that you're going to wake up tomorrow and the CEO of UnitedHealthcare or Signorette or Anthem or Blue Cross is suddenly go, you know, we've been kind of hard on doctors. How about a raise for everybody? This is not going to be like Oprah. It's not going to be like you get a car, you get a car, no, it's not going to get better. And in some ways the environment's good for physicians in this. There is a physician shortage right now that's only going to get worse. And remember, you are the product. So keep that in mind. The time to get ready is now. We're going to be dealing with inflation for quite a while. Labor costs are not going to go down. Your nurses suddenly aren't going to get a whole lot cheaper, et cetera. So you've got to start getting ready now, even if it takes you a while to get ready to negotiate. There's a great story, and I hope it's true because I love the message of it, of Napoleon when he was in power. And the story goes that in the middle of his power, Napoleon asked the engineers to plant trees on both sides of the roads leading to and from Paris. And he said, I want you to plant these trees because I want my armies to march to and from battle in shade. And one of the engineers said, sir, do you know how long it takes a tree to grow tall enough to cast that kind of shade? And supposedly Napoleon said, I know exactly how long it takes, and that's why you plant it today. So the point here being, do the work now. If you never get started, you're never ready to negotiate. You might have to invest six months. You might have to invest a year, and the things are going to get ready to negotiate. But until you get started, you're never going to get to that point, and things aren't going to get better. There are new tools and thinking that are definitely necessary for these negotiations. Specific tools. Thinking about your practice like a business and understanding that that's exactly what it is. Now, that doesn't mean you make decisions that are only good for the business and bad for patients. It just means you understand what those decisions are. There are also some new tools that are starting to become available for physicians. There was a law passed a couple years ago that required, and it didn't get a whole lot of attention, but it's out there, that required insurance companies to make publicly available all of their contracts with every physician they contract with. Publicly available. Now, they did that, and they did that in a very problematic format because they really don't want you to have access to it. So it's hard to get to the data. But there are some companies out there who have done it. So what this means is you will have access to how much United, Blue Cross, etc. pays for that orthopedic surgeon at the university or that orthopedic surgeon at that really big group, and you can get access to it by CPT code. This is incredibly valuable because it helps show the carrier, look, I know I'm getting paid X dollars less for each one of these surgeries. And if I joined that group or if I sold that hospital, you would suddenly have to pay that additional amount. Doesn't make sense for you to give me a small increase rather than have all of that happen. So think about these tools. Think about what's necessary and the thinking about your practice as a business. The physician shortage is real. It's very real. It's only going to get worse. I did some work with an entity that was taking a look at the percentage of practicing physicians. So they got rid of the teaching and the folks who aren't seeing patients. The percentage of practicing physicians that are over the age of 55, okay, and it was staggering. And the reason why they made that split at age 55 is these physicians are going to be retiring sometime in the next 10 years. And what we know is it takes at least 10 years to train a physician when you get them through medical school and residency, etc. So if you take a look at the percentage of doctors who are over the age of 55 and realizing that they're all going to retire in the next 10 years, it means their replacement better already be in training. They better already be in school. And that's if there's no increase in need, which there's going to be an increase in need. And what they know is there aren't enough doctors currently in training right now to replace the ones who are going to go. Remember again, you're the product and they need you. It is possible to succeed in the new world. And we've seen examples of it. I've seen examples of groups who have done a great job at looking at their value and saying, hey, I can do a bundle for a total joint or, hey, I can move these cases out of this hospital and this ASC or out of this ASC into an office. I can run urgent care clinics, which save the carrier a lot of money rather than having that sprain go to the ER. There are groups who have seen this stuff and are being very successful. You just have to figure out what that is and how you can be successful in this new world because it's possible. Even in the worst of all possible situations, people will see it at a time, make money and are successful. And if you don't believe me, just watch a movie called The Big Short. The Big Short is a movie about, it's largely a true story about the housing crash of 08-09 and how the stock market just went through the floor. And it's about the people who saw it coming. One of which in real life was a neurologist who went out of medicine and became an investment trader. But it's about the people who saw it ahead of time and made a ton of money getting ready being ahead of it. Again, people don't go into medicine just to make a ton of money. My point is, even in the worst of all situations, if you figure out what's going on and get in front of it, you can be very successful. So with that, I am more than happy to open things up for questions and more than happy to take any questions that anybody has. Awesome. We have had some come in through the Q&A. So I'm going to throw the first one out there to you, Ron. Is there a tool that you can recommend to help compare contracted rates to current Medicare and other than building it in Excel? I will tell you that there are some companies out there that have tools to do it that are really pretty good. And they'll take basically your fee schedules and they'll load it up into a database or whatever and run that comparison. I myself, my analyst uses Excel because it's really pretty flexible and robust. I would say whatever you're good at. If you've got somebody who can handle pivot tables, do things in Excel, do it there. If not, there's a ton of companies out there who will do it for you. It's one of those things where the tool isn't important, but getting the information and being able to view it that way is more important. Okay. Next one. Yeah. So you've got to understand where those ancillary services have value with the carrier and let me break them up into a few things. Therapy is difficult. And then I'm assuming they mean physical therapy. Therapy is difficult because the payers view it almost like a commodity because it's readily available. There's physical therapy, you know, in multiple locations. So when you try to say my therapy is different and I need more money, the carrier is likely to say, well, I don't think it is different unless you can show me, unless you've got data that shows you can do it for, you know, fewer number of visits than somebody else when you do that ACL repair. And if you can't show that, they're going to say, well, if you don't want to do it for the price I offer, that's fine. There's 80 people, you know, 80 other locations in this market that will do it. So that's a commodity. That one's tough. Let's think MRI, for example, or some imaging. If you're in an area where, let's say, you're able to do this and the other option that you would send it to would be a very expensive hospital or an expensive radiology group home center, that's helpful because you can say, look, if you don't pay me, I'm just going to send all these to the hospital and that's going to get really expensive. So that's one where you can show a value play because even with an increase, I'm able to do it cheaper than down the road. But you need to understand what those scenarios are. When it's really a commodity and you don't have something of value to offer versus when you are the low cost option. That's the key to getting ancillary increases in revenue. Great. Next question here, do most organizations create their own contract checklist to check some of the verbiage examples you pointed out, like the termination clause example? You know, I don't know of any sort of specific checklist because the contracts are very different by payer and oftentimes by state. It's not a uniform format. So what I usually tell people is if you can find an external resource, in many states, for example, the state medical society will have resources available for things to look at and they may even have attorneys that have created sort of, you know, tools for their state. So look for things like that. Associations, medical societies, et cetera. And absent of that, find yourself a really good health care attorney. That can be hugely valuable because they'll be able to find this stuff as well. This is a lot of these clauses by design are meant to be a little bit tricky. And so, you know, reading through it unless you're really familiar with what you're looking for can be problematic. And that's why I say either get an external resource or make sure you've got a very good health care attorney and have them scrub the contract. Great. How do we know which strategy would work best for our group? I think that gets into evaluating your position. You know, and what your strength is and what your weaknesses are and then matching it to a strategy. I'll give you an example. The musical chair strategy where you're really sort of threatening whichever carriers last with termination. That doesn't work if you're a two-man orthopedic group in the middle of downtown Atlanta, okay? Now, if you're the only orthopedic group in your city, whether it's a rural or an urban city and you pretty much own that market and maybe your only competition is an expensive university center, well, that works. Now, if you're that two-person group in Atlanta, the strategy of potentially bluffing a sale to the hospital or to a big group in your area, that might work because what that plays to is the more business you send to me since I'm cheaper than these others, the better and that could go away. In addition, since you're small, it's not that big of a dollar spend for them to do something to make you happy. So, you really have to match your situation, what you bring to the table, to the strategy that sort of fits with it. Okay. All right, last one here. What is the key to getting a payer to negotiate with your group? Well, that gets into that whole what can you do for them or what can you do to them. Getting the payer to negotiate with you, you've got to create a reason for them to do that. If you have an idea or a way to do something that will save them money, that will get their attention. Or if you are an important group, and important doesn't always mean you're the largest. If you're an important group to them, you have ties to a certain employer group that they want or need, and I'll tell a quick story about that in a second. That can be enough to get them to the table. The tie story is, I had a physician, this was back when I was working for one of the insurance companies, who had a strong connection to a major employer group that we wanted to. That physician had cared for the CEO's wife for years and years. We didn't have that physician in our network, and that became a condition for us to get that employer group, which was worth a lot of money to us. When I went back to try to enter that doctor into the network, he knew exactly why I was there, and that I had to have him. It cost me a lot of money to bring him in, because he knew we had that kind of power. Getting them to negotiate is either, here's what I can do for you, or here's what I can do to you, and understanding what that is. Okay. And then, actually, one more came in really quick. Someone missed the beginning of the webinar, so just wanted to know what services you and your company offer. We basically represent independent practices and hospitals in their negotiations. We get engaged by medical groups, ambulatory surgery centers, and hospitals to be their negotiator. Okay. Awesome. And I'm sure you see Ron's contact information there on the screen, too, so definitely reach out if you've got follow-up questions there, or want to talk through anything. And really, outside of that, oh, you know what? Something came in the chat, too. Sure. Can payers negotiate Medicare Advantage plans? They can. There's nothing in the Medicare laws that say that payers can't pay you more than Medicare. There's also nothing in the Medicare laws that say they can't pay you less than Medicare. There are a lot of people that are under this false impression that nobody can pay less than Medicare on a Medicare Advantage. They absolutely can't. There's nothing there. What gets a payer to negotiate in Medicare is there has to be some real value there. A lot of primary care physicians have contracts that actually pay them more, either through bonus or shared savings, or actual rates that are higher than what Medicare would pay. It's more difficult for specialists, but if that specialist can show some value, either they have to have you or something you can do differently, it can happen. So it's not illegal. It's just harder. Mm-hmm. Okay. We are right at time. If anyone has follow-up questions for Ron, definitely reach out to him, or you can reach out to us and we can facilitate that over to him. And just want to say thank you so much to Ron for putting this presentation together for us. I think it was really great. This will be, again, available in the AOE Learning Center as soon as the recording is ready, and you'll be emailed a notification once you can access that. We look forward to seeing everyone next time around. Our next webinar is coming up June 12th, and it's all about athletic trainers in your practice. So hope to see everyone there. Thanks and have a great afternoon. Thank you.

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