Getting to Yes: Five Steps to Negotiating Alternative Payment Arrangements

Continued from ACG MAGAZINE. Read Part I of this article in ACG MAGAZINE

Ann M. Bittinger, JD
Ann M. Bittinger, JD

By Ann M. Bittinger, JD
Bittinger Law Firm
Jacksonville, FL

Think: Practical
Propose a solution that a payer can operationalize. The distribution of reimbursement by private payers is achieved through three mechanisms currently: (1) via CPT code; (2) via NPI number, and (3) via the group’s Employer Identification or Group Number. Under fee for service, a physician with a unique NPI who works for one employer group with a certain EIN bills a CPT code, submits a claim, then the employer with that EIN is paid. Under these processes, it is very difficult for a payer to break down a bundled payment for what was formerly a number of CPT codes paid to separate companies, calculate one global fee, and then somehow disseminate it based on some formula to each of the collaborating entities. For example, in theory, if the gastroenterologist, anesthesiologist, facility and pathologist all agreed to $100 for all colonoscopy-related services, how would the payer divvy up that $100 to the four different entities/providers involved?

Although a formula can be implemented (20% to pathology, 20% to the facility, 40% to the gastroenterologist, and 20% to anesthesia), that is often difficult for a payer to implement. In effect, it is not fundamentally different from a fee-for-service rate because it is easy to calculate what each entity would receive per episode or procedure. In this example of the $100 colonoscopy, for example, the pathologist would get $20 per procedure. To avoid this, and to make it easier for the payer to implement, physician groups have been successful keeping the fee-for-service model (X dollars per CPT code) and instead asking for a lump-sum bonus (above the current rates they are paid) every quarter for all collaborating specialists and facilities if the quality and performance measures are met.

To do this, all the specialists and facility would collaborate on the standards and measures to prevent them as a proposal to a payer. This is similar to the process that a CIN develops to implement standards, protocols and outcomes goals. The key to getting the payers to agree is a set of clearly identifiable measures of success (or failure). The key is that the measures should be developed so that they show not only improved outcomes but also the associated savings to the payer.

Utilize Experts
The real trouble is the GI group finding the time and having the sophistication to develop this on its own. I recommend the use of a national or regional health care consulting group or ACG. Depending on the number of collaborators, the number of episodes of care, and the amount of work the practice can do on its own, these engagements can cost from tens of thousands of dollars to more than $100,000. When seeking out a consulting firm, you want one that knows your specialty, is physician-centric rather than hospital-centric, and knows this payer and your service area. It must have experience developing measures for APMs. Typically, the firms show their worth in how they tailor industry-standard measures to the group and develop materials that document savings projections in easily comprehensible deliverables to the payers. Put simply, they boost your marketing plan to the payer with substance. My experience is that consultants are very eager to perform this work and, as such, are willing to cater their engagements to your precise needs and try to fit within reasonable cost allowances.

Most good health care consulting firms consist of CPAs who have worked in the industry for decades. To get to “yes,” a group really needs a CPA with the consulting firm to project, demonstrate and prove cost savings to the payer. For example:

  • Peer-reviewed data shows that implementing “ABC” protocol among collaborating specialists and the facility for “XYZ” episode of care decreases the need for re-do procedures by 10%.
  • Preventable re-do procedures cost the payer $100,000 a year. (The group may need its consultant to calculate this figure based on its current fee schedule with this payer or based on Medicare rates as a reference).
  • If these providers implement the protocol and achieve the measures, then perhaps they should be paid half of the cost savings (half of the 10%) in the form of a quarterly bonus. GIQuIC and ACG clinical guidelines may have potential to demonstrate cost savings.

When presented with this well-reasoned proposal, how could a payer say no?

Ann M. Bittinger, JD, is a health care attorney with physician group clients across the country. Questions? Email

Continued from ACG MAGAZINE. Read Part I of this article in ACG MAGAZINE