ADAM: Hey guys, Adam Peebles and Jason Nardella here from Trilliant Health. We'll be bringing you the Prescription for Growth series on an ongoing basis. This series is going to bring together the best strategies and tactics that are data back to help hospitals and health systems grow in today's very turbulent environment. You can simply follow me or Jason, and you'll be signed up for the latest stuff that we're putting out. Thanks.
Jason, how should our clients and how should the industry with the impact of COVID coming out, how should they be thinking about their payer contracts? So, every year, every quarter, people are evaluating how they're being reimbursed, what the volumes are for a specific payer. With COVID impacting both hospitals, ASCs, and social services, how should our providers be thinking about those contracts at an individual level?
JASON: Yeah, it's really important because at the end of the day, getting back to financial strength and improving your margin in a lot of this is going to have to do with maximizing your payer contracts. Things are in flux, so we actually don't know... We haven't necessarily got to the bottom of the barrel here on who is your commercial population and what services they're utilizing. And so, as you go into these contracts, it's going to be tough because you got kind of moving stand underneath you as to who are the patients and how are you going to get them into your facility. A couple of strategies that aren't groundbreaking but things you really need to keep in mind are what is growing from a commercial-needs population? It probably isn't inpatient. It's actually much more likely to be on the outpatient side. You want to put more of your weight and more of the higher reimbursement for those contracts in those growing services. That gets into, what's your capacity? What can you grow? Those are the areas where I think at first blush before we even start negotiating with the pairs themselves. Where do you want to grow? Where do you have capacity to grow, and which populations are you going to identify within your market to help grow those services overall?
ADAM: That's interesting. So, when we're thinking about particularly with the massive amount of unemployment claims that are coming out, the number of people that are leaving the commercial populations, how does that start to impact those payer contracts also, presumably, with there's not going to be a lot of growth in the commercial market, how are we needing to think about prioritizing which facilities, which settings of care, which service lines, are there any tactics that hospitals should be deploying to make sure that they're negotiating for that extra penny or extra dollar on each code. Any thoughts on that in light of what's happening with the unemployment market?
JASON: If that all there's a way for you to understand which employers in your market are still hiring, which employers in your market are laying people off, what types of insurance that those companies typically have? And a lot of intake forms right there are like the little box board employer job description in there. Any data capture you've done there that you can start to isolate and just figure out, here are the businesses that are still hiring, here are the businesses that are still... The employers that still have those commercial-insured patients versus the ones that may have gone through some layoffs, may have gone through some furloughs where their patients might not still be on that commercial plan. That will be important to figure out who those patients are and then you can just start to dig in a little bit more, what are the services they consume, what are the services that they need, what are they going to need in the future, right?
Again, with payer contracts, maximizing your contract is one part of the equation. The other part of the equation is really that volume growth. So the more volume growth you can have in those higher reimbursed services, obviously, the better you're going to make it out in that contract in general.
ADAM: So, what we've all heard the horse stories of the payers calling patients and trying to redirect care to another lower-cost setting or moving patients from one provider to another that is more financially valuable for the payer, especially in those answering services, especially in the gene labs, things like that. Any tactics that they should be thinking about taking to those payer conversations or any way to be able to track, if that's happened to them historically, and by a unique payer level.
JASON: Well, we've noticed here at Trilliant is we started to actually plot within a market where reimbursement rates are falling, either on individual procedure codes or individual CPT codes, or even kind of aggregated more at either the evaluation management level or imaging level or lab level. Understanding where you fit on that continuum is really important. You want to maximize your contract unless you're the most expensive person in the market. At which, you know you are right for payer steerage into patient habits. And that's what you don't want.
I would say: The more care that is actually being commoditized, so let's talk about imaging. Let's talk about labs even, let's talk about some of the retail spaces out there for healthcare. The more commoditization that is, the higher chance I think you have of payer steerage. Because there are more lower-cost options out there, and so the payers have a lot more options to actually just give them the little bit, give your patients a little bit of nug saying, "Well, if you don't want to pay the 50 or $100 co-pay for that MRI, you can go down the street to this facility," which ultimately benefits both people, both the insurance company and the patient. So, staying away from the more commoditized stuff, that is obviously the higher volume stuff, but what is going to grow that isn't being totally drowned out in the market by new entrance and retail commoditization of healthcare in general is really important.
ADAM: Yeah, and I think you hit on there. We're seeing at a unique code level the disparity between the upper hinge and the upper level of a reimbursement rate verse the lower level being three, four, five X in some cases. And so, if you are on that high end making sure that you're evaluating that and seeing how my volumes are compared to the high-end reimbursement verse where I should probably start thinking about, do I need to trade off of those two, bring back the reimbursement of it. Trade those dollars somewhere else, and then slowly start to inch up your volume over time. I think one other scary piece is that we're seeing in some of the data is that if you're taking those market averages, I think a lot of people look at how are we reimbursing at a unique code or at the ENM code level, what are those reimbursement rates for Nashville or for Texas or Austin or whatever that market is. But, I think what we're starting to see is the disparity between unique payers obviously being drastic of that too. So, looking at the difference between how Cigna is reimbursing verse how the Blues are reimbursing, you start to see that that's sometimes a 170, 180, 190% higher or 30, 40, 50% lower than market average. And so, if you're going to those reimbursement conversations or those payer conversations without that type of insight and you're just looking at market blended averages, you can sometimes get in a gunfight with a switchblade or something where you don't have the right ammunition to be able to have that conversation. So, it goes from interesting pieces. Anything else you would leave somebody with as they're thinking about payer conversations, as they're thinking about those negotiations specifically in light of what's coming up with COVID.
JASON: The only other thing I would say is try to understand some of the new payment methodologies out there. And if they're applicable or if they're something that you feel, as an organization, you can handle, you should lean into them. More and more what payers are wanting to do is get into value-based care and really caring for the whole patient based on outcomes, patient experience and other sort of differentiating factors. If we move away from that fee for service type of mentality where I just want the highest rate possible and we start to think about ways of actually creating more upsides for you just by doing the great work that you already do at your organization, your value-based care becomes really important. It's interesting because if we just look back at this COVID-19 outbreak that we had in the spring here where essentially, all medical care stopped unless you had COVID-19. If you had a lot of risk-based contracts there, you have a whole bunch of patients that, more or less, are not costing you anything and you're going to see a big upside on them. And so, understanding your tolerance for risk, understanding your tolerance in where you can differentiate within your market for different value-based care options, patient experience, quality factors that you can kind of build into that contract to give you more upside, could be a good thing at this point in time. But you have to understand what is right for your organization, obviously.
ADAM: Awesome, that's great, thank you. Guys, thank you so much for joining today's Prescription for Growth. If you have any questions, comments, or anything that you're interested in me and Jason talking more about, simply drop us a note in LinkedIn. We'd love to hear from you and we'd love to answer any of your questions. If you want to keep getting our great content, please just follow us also on LinkedIn and we'll make sure that you get that on a weekly basis. Thank you.