Improvement of commercial-payor contracts can result in significant revenue gains and better contracts for medical groups, with radiology practices among them. Successfully negotiating such deals, however—and optimizing them to include financial dividends—necessitates that actionable business intelligence be brought to the bargaining table.
Douglas G. Smith, managing partner of Barrington Lakes Group, LLC, Barrington, Illinois, says that this rings true no matter what a practice’s size and geographic scope are. He cites as examples the case of two radiology groups, both of which achieved favorable payor-contract–negotiation outcomes powered, in part, by analytics. Practice A is entirely hospital based, employs approximately 60 radiologists, and maintains a broad geographic presence across multiple sites of service. Practice B has a staff of 28 radiologists who provide service at three hospitals, as well as at several freestanding imaging centers. It also operates its own outside read service.
Both practice A and practice B wanted to engage their payors in meaningful dialogue that would lead to favorable contract negotiations. Smith notes, “The first step was to come to an understanding of payors’ main objective—namely, decreasing their imaging outlays by reducing unnecessary and unwarranted utilization of advanced procedures, without compromising the quality of patient care.”
With this in mind, each of the two practices interrogated its RIS and RCM systems for examination and referring physicians’ data. The data were broken down and cross-referenced by patient, referring physician, modality, site of service, and clinical indications noted by referring physicians for each advanced imaging procedure performed. A series of reports that identified which referring physicians were ordering the highest number of studies—using specified individual modalities, the clinical indications noted by each physician for each study, and whether those clinical indications generally warrant a study that incorporates the modality in question—was then produced.
An analysis of the reports demonstrated that in both radiology groups, unnecessary MRI, CT, and PET/CT studies were being ordered in high volumes by emergency-department physicians and other sites of service, and that there existed certain areas where the volume of such referrals could be decreased or even eliminated. For example, some physicians continued to refer patients for CT studies where a chest radiograph with two views would have been ordered in the past (and would still have been sufficient, under the circumstances). Close scrutiny of the reports also brought to light patterns of excessive MRI, CT, and PET/CT utilization by referring practitioners outside the emergency-department setting.
Representatives from the practices then approached their hospitals and payors, asking how provider-contract terms might be optimized based on the content of the reports. Smith explains, “They asked, ‘What if we could point you to suspected inappropriate utilization of advanced imaging services?’ and (employing the data as identifying lynchpins), ‘What if we and our hospitals could collaborate to educate those physicians who require it about appropriate procedure ordering, so as to change their referral behavior over time?’”
Hospitals and payors alike deemed physician education a viable option, but proved unwilling to award their radiology-provider partner a bonus for using it to influence physicians to reduce the volume of referrals for advanced procedures. Practice A, however, forged an equally appealing alternative agreement: If subsequent reports, issued over a one-year period, document a reduction in the inappropriate and/or unnecessary use of advanced imaging, it will receive a fair share of any resulting savings reaped by the payor and maintain their contract payment rates avoiding a severe reduction in payments proposed by the payor. Practice B negotiated an increase in its fees, in line with cost reductions that the payor anticipated would stem from a lower volume of MRI, CT, and PET/CT referrals by a better-educated group of physicians.
Smith emphasizes that the outcome of these negotiations would not have been as positive, had the payors been presented with just raw data culled from separate data silos. “One of the payors said it had the same information, but without any correlation between variables that yielded outcome results, it was of limited value,” he concludes.