Negotiate Favorable Payer Rates with Transparency Data

March 16th, 2023

Meet Your Speakers

Govind Goyal, MS, CRCR

President, Financial and Revenue Integrity Services

Panacea Healthcare Solutions

email: ggoyal@panaceainc.com

Natalee Hall

Senior Financial Analyst, Financial Services

Panacea Healthcare Solutions

email: nhall@panaceainc.com

About Panacea

PANACEA HEALTHCARE SOLUTIONS

A SOLUTION FOR ALL PROBLEMS AND A CURE FOR ALL ILLS

Established 2007 with offices in Minnesota and New Jersey, Panacea is led by a seasoned team of revenue cycle, clinical coding and financial consulting experts.

Our services and software are used by 500+ healthcare organizations, including hospitals, health systems, physician practices, ambulatory surgical centers and ancillary care providers.

Evolution of Pricing Services

2010 - Current

PHARMauditor

Pharmacy level coding, compliance and pricing

2015 - Current

Comparative Health Data

2016 - Current

Comparative Health Data

Added Physician Prices based on 60,000 freestanding providers

2021 – Current

Comparative Health Data

1. Added shoppable list integration and coefficient of variation of calculations.

2. Initiated Development of Negotiated Rate Comparison Feature

5,000 hospital pricing, room rate and charge-tocost benchmarking system

2020 - Current

CMS Price Transparency Suite

Developed 3 new software systems to support clients with transparency requirements:

1. Shoppable Services

2. Machine Readable File

3. Consumer Display / Patient Estimation System

2022 - Current

Good Faith Estimate System

Developing a Client Facing Good Faith Estimate (GFE) System offered at two levels:

1. GFE PDF and elec form for use by hospital staff

2. Client Facing Estimation System with GFE capability

Industry Updates and Recent CMS Actions

CMS Price Transparency

Standard Charges

Public AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

SUMMARY: This final rule establishes requirements for hospitals operating in the United States to establish, update, and make public a list of their standard charges for the items and services that they provide. These actions are necessary to promote price transparency in health care and public access to hospital standard charges.

By disclosing hospital standard charges, we believe the public (including patients, employers, clinicians, and other third parties) will have the information necessary to make more informed decisions about their care. We believe the impact of these final policies will help to increase market competition, and ultimately drive down the cost of health care services, making them more affordable for all patients.

DATES: This final rule is effective on January 1, 2021.

Polling Question

After two years of Price Transparency, have we met the intent of CMS?

a. Yes, market competition has increased, and healthcare is now more affordable

b. Still a work in progress, there is a lack of enforcement and guidance from CMS

c. No, it’s a lost cause and we should throw in the towel or make significant changes

d. Unsure

Increased Enforcement

In a recent article on hospital price transparency published in Health Affairs, CMS officials Meena Seshamani, MD, PHD, and Douglas Jacobs, MD, noted that the agency is exploring how to streamline price transparency enforcement efforts, including expediting the timeframes by which it requires hospitals to come into full compliance upon submitting a corrective action plan. The authors also said that CMS plans to take aggressive additional steps to identify and prioritize action against hospitals that have failed entirely to post files.

Source: Seshamani, M., and Jacobs, D., “Hospital price transparency: Progress and commitment to achieving its potential,” Health Affairs, Feb. 14, 2023.

Industry Statistics

70%

Percentage of sampled hospitals in 2022 meeting website assessment criteria

As of January 2023, CMS issued nearly 500 warning letters to hospitals

As of January 2023, CMS issued over 230 requests for corrective action plans

Two Georgia hospitals fined by CMS for noncompliance with Price Transparency

Source: Health Affairs, February 14, 2023

Key Dates

Jan 1st, 2021

Jan 1st, 2022

Increase in Civil Monetary Penalties

July 1st, 2022

Dec 2nd, 2022

Transparency in Coverage (TiC) rule

Delayed GFE Co-Provider

Enforcement

Jan 1st, 2024

Online Price Compare tool (All Services)

CMS Price

Transparency

Jan 1st, 2022

Good Faith Estimates under NSA

Nov 14th, 2022

Standard Data Format for MachineReadable Files

Jan 1st, 2023

Online Price Compare tool (500 Services)

Hospital vs. Payer MachineReadable Files

Polling Question

What has been your success with the hospital and payer machine-readable files?

a. Zero or minimal success in being able to compare our negotiated rates to our peers

b. Meaningful success with the hospital files but not the payer files

c. Meaningful success with the payer files but not the hospital files

d. Meaningful success with using a combination of both files

Transparency in Coverage vs. CMS Price Transparency

TiC CMS PT

• Effective July 1st, 2022

• Machine- Readable Files Updated Monthly

• Applies to Health Insurers and Group Health Plans

• Three MRFs required (In-network, OON, and Rx)

• Enforcement: States with primary and HHS back-up

• Other Requirements: Price Comparison Tools

• Format: JSON, XML, YAML

• Size: ~1TB

• Effective Jan 1st, 2021

• Machine-Readable Files Updated Annually

• Applies to Licensed Hospitals w// Exceptions

• One MRF required for all services and payer plans

• Enforcement: CMS Warning Letter, Corrective Action Plan, Civil Monetary Penalties to Bed Size

• Format: JSON, XML, CSV

• Size: ~1GB

Attribute Comparison of Machine-Readable Files

Transparency in Coverage Rule

• Negotiated Type (per diem, %, etc.)

• Negotiated Arrangement (e.g., FFS)

• Billing Code Type (MS-DRG, APRDRG, CPT, etc.)

• Plan ID Type (EIN, HIOS)

• Provider Group Type (NPI, TIN)

• Place of Service

• Billing Class (HB vs. PB)

• Billing Code Modifier

• Expiration Date of Negotiated Rate

TiC and CMS PT

• Negotiated Rate or Percentage (TiC only)

• Billing Code

• Description

• Date of Last Update

CMS

Price Transparency

• Gross Charge

• Cash / Self Pay Rate

• Minimum Negotiated Rate

• Maximum Negotiated Rate

• Setting (Inpatient vs. Outpatient)

• Includes Medicare and Medicaid Advantage

TiC - Negotiated Arrangement and Negotiated Type

Fee

The negotiated rate, reflected as a dollar amount, for each covered item / service that the plan has contractually agreed to pay an in-network provider

The negotiated percentage value for a covered item or service from a particular innetwork provider for a ‘percentage of billed charges’ arrangement.

The rate for a covered item that determines a participant’s cost-sharing liability for the item / service, when that rate is different from the negotiated rate or derived amount.

The per diem daily rate, reflected as a dollar amount, for each covered item / service that the plan has contractually agreed to pay an in-network provider

The price that a plan or issuer assigns to an item or service for the purpose of internal accounting, reconciliation with providers or submitting data in accordance with the requirements of 45 CFR 153.710(c)

Size Matters

Payer MRF – Sample Anatomy

File 1 of 1012

Employer Group

(e.g., Eli Lilly)

In-network Negotiated

File 2 of 1012

File 1 of 22

Payer

(e.g., BCBS of MI)

Employer Group

(e.g., Amazon Beauty)

OON Allowed Amounts

File 2 of 22

File 1 of 630

In-network Negotiated

File 2 of 630

OON Allowed Amounts

It is not uncommon for a payer to have over 100K different employer groups and each employer group having thousands of different negotiated rate files.

File 1 of 18

File 2 of 18

Comparison Examples

*The above examples are for illustration to show differences in requirements between payers and hospitals and are not intended to show the full detail of a compliant machine-readable file.

Case Study

Objective: Produce a negotiated rate comparison report for all items and services which compares the negotiated rates for ABC Medical Center (i.e., target Hospital) against five (5) peer hospitals across the USA and include all payer plan levels.

Payer MRF Approach Hospital MRF Approach

Data Needed:

5 Peer Hospitals * Number of Unique Contracted Payer Plans = >100 Payer MRFs!

Approach:

Since the peer group is widespread across the USA it’s likely that the peer hospitals have different types of payers in separate MRFs and require significant research and data aggregation.

Data Needed: 5 Peer Hospitals * Number of MRFs per each Hospital = 5 MRFs

Approach: Each hospital MRF contains all the payers contracted for that hospital making it less cumbersome to acquire all the data necessary for analysis.

Result: While each approach may have its pros / cons in terms of available data, standardization, etc. the hospital MRF approach is the most efficient for this scope.

Challenges with Payer Machine-Readable Files

Gargantuan File

Size in Terabytes

A single payer could have over 100K machine-readable files across all plans with billions of negotiated rates that can add up to almost a Petabyte of data.

Missing Medicare / Medicaid Adv. Plans

Payer MachineReadable Files exclude the negotiated rates for Medicare and Medicaid advantage plans, which is in contrast to the hospital Machine-Readable Files.

Variable Units of Measurement

When a payer is reimbursing a provider on a ‘percent of charge’ basis, only the percentage and not the actual dollar amount is disclosed on the payer Machine-Readable File.

Limited Scope of Analysis

Unless you are performing a narrow comparative study with a single payer and peer / competitor, you will need to access 10x the number of files versus only a handful of hospital files.

Inconsistencies / Missing Data

Payers organize negotiated rates by employer group, making it difficult to identify competitor hospitals and separate rates within the different product types (e.g., PPO vs. HMO).

Polling Question

What are the main challenges you are experiencing when attempting to utilize the Machine-Readable Files?

a. Opening / accessing the files and locating the needed data

b. Data integrity issues, lack of standardization, etc.

c. Insufficient / missing data

d. Aggregation of the data and making it meaningful for operational use

Cleansing the Machine-Readable Files for Data Integrity

Building your Peer Group

DETERMINE IF PEER GROUP IS LOCAL, REGIONAL and/or NATIONAL

IDENTIFY WHICH PEERS ALLOW FOR “LIKE” COMPARISONS

CONSIDER FACTORS LIKE GEOGRAPHY, BED SIZE, TEACHING STATUS, NFP, etc.

PERFORM INITIAL SCREENING TO CONFIRM COMPLIANCE AND USABILITY OF MRFs

Classification of Disparate Payer / Plans to a Standard Payer and Plan

Meaningless Variation in Negotiated Rates between Product Types

Same Payer but Different Product Types

Payers but Same Product Types

*Comparative rates study performed by Panacea in 2023 using available and cleansed hospital machinereadable files from over 15 hospitals in Texas and over 500 hospitals across the united states.

Hospital Analysis - Meaningful Variation in Negotiated Rates within same PPO Product Type

*Comparative rates study performed by Panacea in 2023 using available and cleansed hospital machinereadable files from 7 hospitals in similar size and geography and within PPO based products.

Rate Methodology not required in Hospital MRF

CMS Example - Rate Methodology is embedded in the Service Description

“Preferred” Example - Rate Methodology is in a separate column outside of the Service Description

Disparity by Rate Methodology for Same Service

Average Negotiated Rate $4,651 Average Negotiated Rate $1,593

*Comparative rates study performed by Panacea in 2023 using available and cleansed hospital machinereadable files from over 500 hospitals across the united states.

CPT 99282 – ED Visit

Importance of Removing Outlier Rates – CBC Lab Test

Before Removing Outliers

After Removing Outliers

Polling Question

What do you hope to accomplish with comparative negotiated rates?

a. Exploratory analysis to identify areas (payers, plans, services, etc.) with opportunity and better understand negotiated rate position in the market

b. Build into overall contract negotiation strategy for a specific payer / health plan

c. Leverage for strategic pricing purposes if it can be useful

d. All or combination of the above

Actionable Use of Cleansed MRF Data

Service Line Analysis: Raise Prices or Negotiate Better Rates?

Payer Analysis

Target Hospital: ABC Medical Center

Patient Class: Outpatient (SDS, POP, etc.)

Payers: Big 5, excl. Managed Medicare / Medicaid

Plan Type: PPO only

Outlier Logic Included: Yes

Confidence Level for Rate Methodology:

Primary

Secondary

Tertiary Peer Group

*Negotiated Rate Position is based on a weighted average. 0% is the average.

**Peer Group Rank is based on Negotiated Rates and not Gross Charges (i.e., price)

Demonstration

Selecting Your Reports

Simulated end user experience using a relational database warehouse to pull custom peer negotiated rate reports for comparative purposes.

In this example, user has selected Hospital A and is interested in reviewing negotiated rates or paid data from BCBS and Cigna PPO plans for same-day-surgery (SDS) procedures.

Outlier Logic: On

Query Parameters

Example Comparison Report – Radiology Services

The above outpatient radiology services have a high confidence level of a “per unit” rate methodology and the target Hospital is compared to a local peer group of up to 6 facilities for “PPO” based payers only.

Questions?