5. What Can I Do About Costs
Right Now?
• Plan Document stating Plan rules,
conditions & benefits
• Wellness Programs
• Pre-Certification
• In-Patient
• Out-Patient Surgery Reduce
• Scans, Scopes, Expensive Tests Eligible
• Care Management Bills
• Discharge Planning
• Large Case Management
• Chronic Care Management
• Claims Edit System
• Claims Process Based on Plan Design
6. What Can I Do About Costs
Right Now?
• General Medical Network
• Centers of Excellence for Transplants
• Dialysis Programs Discounts
• Specialty Pharmacy
• Out-of-Network Fee Negotiation
7. The Environment
Health Care Reform
Lack of Perceived Success
Due to Continued Cost Increases
& Inability to Afford Costs.
11. Comparison of
Hospital Charges
Hospital % of Cost
Barberton 489%
Akron City 427%
Cleveland Clinic 391%
Akron General 346%
Hospital
Affinity 233% Average 316%
Mercy 231% Lowest to Highest 313%
Aultman 215% Average to Highest 176%
Alliance 185% Lowest to Average 137%
Wooster 176% All hospitals listed are within 25 miles of Hospital #1.
All hospitals listed (except #16) are mid-sized community or general hospitals.
Comparisons based on identical services only.
12. Comparison of
Professional Charges
CPT Code:
Office Visit, Established Patient, 15 minute
99214
1325%
Lowest Average Highest
Charge Amount Charge Amount Charge Amount
$36.00 $86.70 $477.00
127% Medicare 550%
Allowable
$68.18
Difference of Difference of
52.80% 700%
13. Comparison of
Hospital Charges
CPT Code: Sense nerve conduction test MRI joint lower
95904
3657%
Lowest Average Highest
Charge Amount Charge Amount Charge Amount
$70.00 $466.89 $2,560.00
932% Medicare 548%
Allowable
Difference of
$50.08
Difference of
139.78% 5112%
15. The Key
Herzlinger’s Iron Triangle
Congress
Insurers / Hospitals
Networks
Who Killed Health Care?,
Regina Herzlinger
16. Attack On Health Care Costs
1. Federal Trade Commission &
Massachusetts Attorney General
Investigating
Massachusetts General Hospital
and Brigham & Woman’s Hospital
Subject: Network Inability to Effectively
Negotiate Pricing Due to Provider Market
Leverage After Mergers.
17. Attack On Health Care Costs
2. Federal Trade Commission
& Michigan Attorney General
Investigating
Favored Nation Agreements
Between Blue Cross Network
and Hospitals
18. Attack On Health Care Costs
3. Federal Trade Commission &
Texas Attorney General
Settles With United Regional Health Care System
(Wichita Falls, Texas)
Settlement: Prohibits Pricing And Discounts Based On Whether
Networks Contract With Other Area Providers; Also Prohibits
Retaliatory Actions Against Network.
19. Attack On Health Care Costs
The Relationship Of These Cases:
All 3 Look At Inflated
Hospital Pricing
and
The Network
20. Attack On Health Care Costs
Massachusetts is Proposing what is basically
State Controlled Pricing of All Services
Regardless of Network
Objection: Government Control and Lack of Free Market
21. Attack On Health Care Costs
4. State of California versus
Sutter Hospitals and MultiPlan/PHCS
Allegation: Fraudulent Billing Practices and Enabling
& Profiting From Fraudulent Billing Practices
23. What Does the Attack Mean?
Why Is This Important?
These Practices
Are Rampant
and
Involve Most
Types of
Services.
24. Obligations Of Plan
Employer
Plan of Benefits
• Agrees to Advise Patient on
EOB that Unpaid Portion Is
•No Balance Bill To Patient
•Discount Off Billed Charge
• Agrees to Pay Assigned
Patient’s Responsibility
• Gives Up Audit Rights
Patient
Repriced Claim
Within 30 Days
•Remove Possibility of Audit
•Delivers To Patients
PPO Network Provider
•Discount Off Billed Charge
•No Impact on Provider-Patient Relationship
25. Obligations To Patient
Employer
Plan of Benefits
• Billed Charge Not To Exceed Amounts
Patient Agreed To In Exchange For Assignment
• Deductible, Co-Pay, Co-Ins
• Reasonable Value of Services
For Covered Services
PPO Network Provider
26. Obligations To Patient
“(Network), TPA, and/or Payor
does not in any manner
interfere with or participate in
the provider-patient relationship
and all health care decisions
are between the patient and a provider.”
- TPA/Network Contract
28. The Key
Billed Amount is an irrelevant number,
no provider expects to be paid the billed amount.
Reasonable amount is what provider accepts as
payments in full from others.
“[T]he reality is that the rates hospitals
charge for services do not always
accurately reflect the value of the services,
especially when the hospital routinely
accepts much less for them.”
- Court Case Definition
29. The Key
• This includes Medicare & Medicaid
• No Mention of Negotiation or Contracts
• Providers say that
“insurance companies”
determine their payments,
that they have
no say in amounts paid.
30. Provider Reimbursement
What Are Providers
Actually Getting Paid?
According to the
American Hospital Association…
31. Provider Reimbursement
Aggregate Hospital Payment-to-Cost Ratios for
Private Payers, Medicare and Medicaid, 1988 -2008
Source: Avalere Health analysis
of American Hospital Association
Annual Survey data, 2008, for
community hospitals
32. Plan Design
Plan Design
Fee Schedule Based
on 130% of Medicare
Maximum OR
Benefit =
1XX% of Hospital’s Cost
(as determined by cost to charge ratio)
And
1XX% of Medicare Fee Schedule
For Professional Services
33. The Communication Effort
What Effort Is Involved?
• Establish a fee schedule
for payments from the plan based
on lower cost providers
• Communicate thoroughly and
clearly what the plan is doing
and why it is doing it
• Change plan document
to reflect intentions
34. Succeeding:
Approach for Participants
What Plan Sponsors
Need to Have in Place
to Make These Approaches Work.
35. Succeeding:
Approach for Participants
• Process to assist patients with balance billing issues
– Fair Debt Collections Practices Act
• Access to Patient Advocate
• Legal Representation when Necessary
– Assure Participants that if a balance needs to be paid,
employer will pay it
– Enforce Consumer Rights!
36. Succeeding:
Approach for Participants
• Assure Participant that if a
balance needs to be paid,
the plan will pay it
– Billing disputes settle for
30 cents per dollar
– Need to settle rarely occurs,
you are working
from a position of strength
37. Succeeding
Success
$2 Million of Billed Unbundled Charges
50% Discount = $1,000,000 of Allowable Expense
150% of Medicare < $600, 000 of Allowable Expenses
Savings = 40% +
38. Questions
Call J.P. Farley for more details
at 800.634.0173 if you have
additional questions on this concept.
Jim Farley
440.250.4349
Jim.Farley@jpfarley.com
or visit our website at jpfarley.com
39. THANK YOU
for attending today
Please visit JPFarley.com
or more learning opportunities.
