How to Gain a Better Managed Care Contract for your Independent Laboratory

Many labs are struggling to get contracted with payers in their area. These are strong practices and good pathologists who just want to provide a quality outcome for their patients while making a decent living.

Gaining these contracts allows the lab to gain market share and, if done correctly, increase their revenue. If your problem is getting managed care companies to sign contracts, here are some real hard core tactics that work.  This step-by-step process will help you get managed care contracts or renegotiate poor contracts.  

1. Pick the right payer. Review your referring physician list and talk with your billing people. They will tell you which payers you need to work with. Use the 80/20 rule and start with the biggest volume payers.
2. Contact the payer and get a face-to-face meeting.  This will be the most difficult step. Payer Representatives are busy and change jobs often.   Expect to make at least 20 phone calls. Once you get the meeting set, expect them to cancel it several times.
3. Prep for the meeting. 
1. Publications: You should have every article that you and your partners have ever published ready to present.  Have these on the table for the meeting and they should be an item on the agenda.
2. Have all your community projects ready to present.  This means all town or local committees, board memberships, TPA, library, coaching positions etc.  It’s imperative that you show you are part of the local community.
3. Be prepared to show them your quality control plan; note your quality and processes and how you maintain industry standard quality. 
4. If you have a bar code system show them how this works and why it helps prevent errors.
5. Build a graph that shows your lab process and TAT.  Make sure they understand that your referring physicians get a 24 hour TAT on their cases.  Be prepared to explain why this is important.  Have a story about a patient and how your diagnosis solved their case. 
6. Have your CV’s ready. Show them your schooling and your training; make sure they understand any specialty training. Explain how this helps their enrollees get better health care.
7. List all your hospital and university affiliations.  All these should be presented and explained.
8. Have a plan to show them your accessibility.  Note that all your referring physicians have your cell phone numbers, show them your business cards, and explain how this helps your referring physicians.
9. Show them your EMR and how it allows your customers to access their cases and makes the patient process more efficient.
10. List out your use of special stains and compare this to others in the industry.
11. Show them cases where others have used you as a consultant and then tell why.
12. Get some letters of reference. Have some of the big referring physicians write letters noting your quality and their desire to work with you. 
4. Have the meeting at your lab.  Start with a tour of your laboratory; note your technology and how you do what you do.  Explain the entire process and give it a personal touch.  Follow one piece of tissue through the process from excision to final diagnosis. Have a story and use it.
1. Present your case.  List out the details and processes noted above.  Go through this very thoroughly.  A PowerPoint presentation works well. Give them time to ask questions and get a good understanding.  Have a two-headed scope ready, show them what they are paying for, have a story under the scope and let them see what you do every day. 
5. Tell them you want a better contract.  Be sincere and direct and note your terms up front.  Show them where they compare to other payers, without releasing names, and then gently asked to be treated fairly.
6. Follow up after the meeting. This means a face-to-face meeting again talking with the payer representative and asking them for a new contract.  You must ask for the contract or rate increase.
7. Finishing up. Now that you’ve presented your case and asked for the contract you must continue to follow up on this task.  Follow up should take place face-to-face whenever possible.  It’ll take work to gain a new contract or fix an old one.

Quarterly meetings with these reps are a must, you should bring them in and let them see your new equipment and see why you purchased this and how much time and effort it costs to do the testing correctly.

In conclusion remember this process takes time and energy and it may very well happen that over the time it takes to get the contract, the payer representative will change.  This means you have to develop a new relationship with the next payer representative to step into the breach. Above all, remain focused and determined.

Cigna Changes Again

It has come to our attention that major changes are in the works for Cigna providers. Here is a simple list:

1. In several states we have seen Cigna propose a rate that is closer to the Medicare Clinical Fee Schedule versus the Medicare Physician Fee Schedule. This is a huge problem as the clinical fee schedule pays about 50% of the physician fee schedule. The most interesting thing noted here is that they are proposing these rates to PHO's and stating that this is the current CMS fee schedule. It is, but it's the wrong fee schedule! Be aware.
2. In another move, Cigna has lowered the filing limit on some contracts from 180 to 90 days. Again this is just another play by the payers to limit payment for services.

No One Knows

National healthcare is moving forward but no one really knows where it is going or what it will look like. Take Medicaid for example: It is in a pickle! Here is what we know:

• States want more money to run their Medicaid programs
• Medicaid programs are a hassle for both patient and provider
• Medicaid programs continually run out of cash to pay providers 

So what is their answer to this? Put more people in the Medicaid programs. HUH? This makes no sense but it’s exactly what Florida is doing. They are going to make every Medicaid patient go through an HMO. Will this decrease the volume of healthcare treatments? NO! In fact it will increase costs…its simple: If you give everyone access to healthcare, they will …wait for it…use more healthcare. Doesn’t make sense to me, but then not much does when it comes to the government and medicine.

Ready for 5010?

The switch from the old electronic data standard ANSI 4010 to the new ANSI 5010 format is just six months away and National Testing Day has come and gone. Every major carrier has a web post, page, or journal outlining their schedule for testing and when they will be ready.  That sounds great in theory, but the reality is somewhat different. Most billers are ready and waiting on the carriers, and the carriers are not testing with them.

One billing company has a web page that shows testing status for all of their payers, including those under clearinghouses. Approximately 2,275 carriers and Third Party Administrators (TPAs) are listed. A grand total of fifteen non-governmental carriers are tested and approved. This indicates that there is going to be a mad rush to test in the latter half of the year straining IT resources and leaving little time for problem resolution.

Cigna states on its website that it would test from June through August of this year, using post-n-track.com to log progress. Last update: May 4, and nothing is indicated at this time in testing. Aetna is currently testing; many other carriers are not advertising where they are in the process.

Do not expect a delay of the compliance deadline. ANSI 5010 is an important and necessary precursor to the ICD-10 transition in 2013. The Centers for Medicare & Medicaid Services (CMS) have made it clear that there will be no extensions.

Claims may be delayed if your biller and the carriers are not ready. Make sure your practice is ready for the switch. Talk to your biller about their readiness and the carriers they work with and make sure they have a game plan in place.

More Managed Care Contract Restrictions Equals Less Money

If you haven’t heard of House Bill 5085 in Illinois, you will. This is a major change in the way that payers are dealing with hospital based practices who do not participate. In the ever changing war of trying to receive payment for services, the payers have pulled out their nukes. This bill, which was passed at a late hour, states that a hospital based provider cannot balance bill a patient if the provider is non-participating with the payer. 

How does this affect your practice? This means you have no leverage to negotiate and the payer has the freedom to pay you what they deem to be a “usual and customary fee” for services provided. Understand there are some similar laws in Texas, Maryland, Arizona and Florida but most of those have dollar amount caps and are limited to just HMO patients. This law covers most insurance plan types. Several questions abound: What is the usual and customary fee? Who determines this fee?  Why wouldn’t the payers use a low rate, say…the Centers for Medicare & Medicaid Services (CMS) clinical fee schedule?…You can see where this gets really dicey. Also note: In Illinois, it is common for insurance plans to pay for clinical pathology. What happens if the payers determine that clinical pathology is not “usual and customary?” The final outcome of this has not been decided at this time. The law went into effect on June 1^st 2011 but no one really knows what this means at this time. Stay tuned…

Blue Cross Blue Shield Changes Filing Issues

In November of 2010, the Blue Cross Blue Shield Association (BCBSA) made a ruling change that states any ancillary provider, such as an independent lab, must file with Blue Cross Blue Shield (BCBS) in the state in which the specimen was collected.

Prior to this, the claim would be filed with the local BCBS and they would forward the claim to the appropriate state. Now BCBS in Florida is no longer accepting out of state claims. Moreover, Florida states it will not contract with out of state independent labs. This trend will continue as more states follow suit.

The other, and more malevolent change, deems providers must send specimens to labs in the same state the specimen was collected unless the required testing is not available in that state. BCBS states that the change is not recent, but ‘clarification’ has recently been issued to help determine the origination of the specimen and identify the correct local plan.

We are seeing claims denied as ‘out of network’ by BCBS of Florida (BlueOptions). They state the providers in Florida were notified not to use out of state labs.

Speaking with a BCBS Network Manager NOT in the state of Florida revealed that pathology and specialty labs should be exempt from this rule, and that Florida’s denials could be related to a Place of Service 81 designation which is for independent labs. Place of Service tells the carrier the origination of the specimen, such as office, independent lab, ambulatory center, etc.

Although we currently are experiencing this issue only with Florida, BCBS does say this was a national directive. Regardless of whether this is a new ruling or simply a new clarification of a standing ruling, it has the potential to be a large problem. This may affect your business if you have out of state specimens coming into your lab.

We are currently in the process of speaking with the National Association and getting a definitive answer.

How Not to Do It.

My firm is lucky enough to audit medical billing practices across the nation.  We have audited the gamut of billing companies from the small local business to the medium sized regional firm to the large national players; we also audit groups that perform their own billing. 

Often after reviewing the results of our audit with the practice the group will ask me; “is this the worse you’ve seen?”  It never ceases to amaze me what we find.  Here are some examples to help remind us that even though you think “everything is fine” sometimes you are just fooling yourself:

A practice that had a negative account receivable.  Yes you read this correctly, at the end of each month, according to this biller, the group owes money on their receivables!

A practice where their biller does not bill multiples.  Whenever the practice bills a cpt multiple times on a case only one gets billed.

A practice where their collection agency collects 33% of the amount sent to them by the biller. Somebody is not doing their job properly.

A practice where 20% of their outreach work in not being billed.

A practice that is paying 2% more than the going national rate for billing and their AR over 120 is at 23%!

OK, enough of this…I am always astonished when the group is amazed when I find issues like this as a result of our audit process.  The bottom line is simple; There is always someone out there doing it worse then you thought. 

Remember you are a business owner just like me, you have to pay attention to your shop and manage your business, if not then changes in the market and environment will eliminate you from the equation.