This document discusses strategies for structuring contracts between healthcare providers and billing companies in the current healthcare climate. It notes that revenue cycle management has evolved with the rise of high deductible health plans, shifting more financial responsibility to patients. As a result, billing companies can no longer rely on traditional fee structures and must clearly define responsibilities in contracts. It emphasizes that patient collections now requires collaboration between billing companies and provider staff, and that billing companies may need to have "tough love" conversations with providers to ensure practices can remain financially viable.

1. Structuring Your Contracts for the
Current Climate
Presented By Aimee Heckman, CPB, CPPM

2. 2
Agenda
• Evolution of Revenue Cycle
Management
• Changing Fee Structures
• Spelling Out Responsibilities
• Patient Collections is a Team Sport
• Tough Love Conversations

3. 33
Aimee Heckman, CPPM,
CPB
More than 30 years in Healthcare:
• Independent Practice Focused
• Love creating billing “Rock Stars”
• Enjoy boating, diving, and flying with my husband
• In the running for “CrazyCat Lady” award
President, Ease RCM Solutions
About me

4. #01
Evolution of Revenue Cycle
Management

5. 55
Evolution of Revenue Cycle Management
Traditional HMO PPO HDHP
Traditional
Typically paid a % of
billed amount. Early
versions required
patient to pay and be
reimbursed.
HMO
Introduced the
concept of copays and
managed care.
Limited to In Network
providers.
PPO
In and Out of
Network options.
Patients are
“rewarded” for
using In Network
providers.
HDHP
High Deductible
Health Plans have
shifted financial
responsibility back
to patients.
The shift towards HDHPs has created greater challenges for providers and billing
companies as patient responsibility increases and less revenue is derived directly from
payers.

6. 66
Shifting Patient Responsibility Impacts Speed of Payment
• Payment from insurance companies typically takes less than 30 days
• Payment from patients more typically takes 45-60 days
• Cost of collecting from patients is higher
• Net collections rates decrease as patient responsibility increases
Evolution of Revenue Cycle Management

7. 77
Billing companies can no longer afford to operate
on contracts that were written 10 to 15 years ago.
Evolution of Revenue Cycle Management

8. #02
Changing Fee Structures

9. 99
Percent of Net Collections
• Traditionally the most common fee structure
• Positive for providers because cost is tied to their income and encourages billing company to
collect as much as possible
• Has become less attractive for billing companies due to shift in responsibility from payer to patient
and the increased effort required
• Increasing number of Medicaid and commercial insurances are prohibiting percentage fee
structures under “fee splitting” rules
Changing Fee Structures

10. 1010
Percent of Allowed Amount
• Similar to more traditional percent of net collections
• Less risk for billing companies
• Providers may be less open to this model because it puts patient collections risk on the practice
• Can be more challenging to calculate fees due to requirements for proper tracking of allowed
amounts
• Still problematic for payers who disallow “fee splitting”
Changing Fee Structures

11. 1111
Flat Fee
• Hourly or monthly rate depending on estimated workload
• Risk for provider if patient volume drops
• Risk for billing company if provider volume increases significantly or practice fails to provide
adequate billing information
• Historical billing reports can help determine appropriate fee
Changing Fee Structures

12. 1212
Per Claim or Encounter Fee
• Less risky for both provider and billing company if patient volume changes
• Can be challenging if there is a high volume of appeals and rebilled claims
• Providers may be concerned that follow up will not be done as effectively
• Critical to ensure that the necessary reports can be generate to support invoicing client
Changing Fee Structures

13. 1313
Hybrid Model – Percentage and Flat Rate
• May work well in cases where “fee splitting” is prohibited with a single payer
• Can be a good way to transition existing client under percentage agreement if “fee splitting” is an
issue for specific payers
• Ensure that the necessary reports can be generate to support invoicing client
Changing Fee Structures

14. 1414
Consult a Healthcare Attorney
• I am NOT an attorney and am NOT giving legal advice
• Engage a HealthcareAttorney to review your agreements
• Be sure the attorney is familiar with healthcare regulations and payers inYOUR state and states
where your PROVIDER does business
Changing Fee Structures

15. #03
Spelling Out
Responsibilities

16. 1616
Include an Appendix or Exhibit in Contracts Outlining Responsibilities
• Contract should reference Appendix/Exhibit
• Amendable without requiring full contract renegotiation
• Clearly define responsibilities of practice and billing company
Spelling Out Responsibilities

17. 1717
Appendix/Exhibit should clearly define responsibilities related to:
• Eligibility verification
• Collection of past due balances at time of service
• Appointment reminder calls as part of collections process
• Number of statements that will be sent
• Who pays for statements
• Internal/Outside collections policies and procedures
Spelling Out Responsibilities

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Spelling out responsibilities clearly for each party,
including patients, leads to
better communication and better collections.
Spelling Out Responsibilities

19. #04
Patient Collections is a
Team Sport

20. 2020
Your provider and their staff are now part of the collections team.
• Review client financial policies to ensure that it provides backup when you try to collect
• Ensure that practice staff understand how to have the “financial conversation” on the first visit AND
if there is a significant change in financial responsibility
• Offer training to your clients on how to ask for payment on past due balances at the time of service
• Encourage…no, REQUIRE clients to offer payment plans and utilize credit card on file options
We are more reliant on the front desk and checkout staff than ever before!
Patient Collections is a Team Sport

21. #05
Tough Love Conversations

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Be prepared to have tough conversations with providers if they or their staff
are hindering patient collections!
• Are the right people in positions that require asking for money from patients?
• Are they afraid to ask for payment or dismiss a patient for non-payment for fear of losing the
patient?
• Do they routinely waive copays and deductibles because “we’ve been doing it for years”?
Providers often need to be reminded that they can’t help patients if they
can’t afford to keep the doors open. Tough love may save their practice!
Tough Love Conversations

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Providers often need to be reminded that they can’t
help patients if they can’t afford to keep the doors open.
Tough love may save their practice!
Tough Love Conversations

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If you only remember three thing, remember…
• Talk to a Healthcare Attorney
• Spell out responsibilities
• Don’t be afraid of a little tough love
In A Nutshell

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Questions?