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EFFECTIVE CONTRACT NEGOTIATIONAdele Allison, Director of Provider Innovation StrategiesSeptember 7, 2016

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© 2016 DST Systems, Inc. All rights reserved.

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• Negotiation 101

• Contracting

• Know Thyself

• Payment Contracting Activity

• Questions

AGENDA

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WHAT IS NEGOTIATION?

I M P O S S I B L E

Getting what you want!

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DAILY NEGOTIATIONS

Boss → Employee Payers → DoctorsHusband → WifeKids → Parents

Puh‐lease?! If I can stay out until 

midnight, I’ll … 

Why don’t I go fishing since your mother is 

coming over?

That would be good!

I need this report by the morning.

Before or after the other 25 things?!

Just think how much more money you’ll 

make!

Truth:  Every day you’re a negotiator

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2 NEGOTIATION TYPES

• Distributive− Involves parties unknown to each other

− Interests typically self-serving

− Example: Buying a new car at the dealership

• Integrative− Value for value concessions AND problem-

solving

− Seeks long-term relationship for mutual gain

− Building a “Win-win”

− Example: Risk-bearing physician and chronic disease patient

Source:  Rikkyo University, All About Negotiation

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TYPICAL NEGOTIATION PROCESS

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Prioritize Your “Asks” – Your Needs

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Understand Your Market Value

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Diagnose Other Party’s Needs

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Offer Solutions and Benefits

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Create theWin-Win

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• Negotiation 101

• Contracting• Know Thyself

• Payment Contracting Activity

• Questions

AGENDA

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CONTRACTING ESSENTIALS

• Your Attorney / Agreement will need to spell-out− Length of contract → Start and end dates, renewal

− Responsibilities

− Indemnity clause → Who pays if something goes wrong

− Dispute resolutions (e.g., arbitration)

− Reimbursement Schedule

Process

Penalties

− Governance

− Termination clause

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ESSENTIALS - SPECIFICS

• Employment Contracts

• Vendor Contracts

Job TitleJob Description(Role, Expectations)

Payment Details(OT, Bonuses, Expenses)

Hours of WorkHoliday / Entitlement 

Payment

Time off for Illness, Grievance, 

Jury Duty

Termination (For Cause, Notice/Warnings, Severance)

Tip:  New hire – highlight 

important parts

Tip:  Harmonize with Written 

Office Policies and Procedures

Business ObjectivesGoods Supplied, 

Performance Controls

Works Carried Out(Quality of Work)

Delivery On Time (Penalties) Regulatory Compliance Service Level Agreement

Payment Procedures Change Controls Progress Meetings

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WHO HAS THE POWER?

Authority

Knowledge

Contacts or connections

Need

Urgency

Personality

Investment

Scarcity

Who signs the contract?

Laws, regs, revenue?

C-Suite? Market leaders?

Who’s needs are greatest?

Creates an inferior position

Likable? Grumpy? Distrusting?

Is someone financially contributing?

E.g., the only game for miles

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LAA, MDO AND BATNA … HUH?

LAA• Least Acceptable

Agreement

• Your floor in a deal

• Beyond this, it’s a “No Deal”

MDO• Most Desired

Outcome

• The contracting fairy visits and waves her wand → what would you get?

BATNA• Best Alternative To

Negotiated Agreement

• If no deal, what?

• The standard against which agreement should be measured

Consider the other sides LAA, MDO and BATNA

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UNDERSTANDING LEVERAGE

Leverage= Counterpart’s

Need Level

- Your Need Level

+ Your BATNA

- Counterpart’s BATNA

“Need” Score

High Need 1

Average Need 0

Low Need -1

BATNA Score

Good Alternative 1

Average Alternative 0

Bad Alternative -1

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ESSENTIAL STRATEGY 1

• Assess: When did you last review your payer agreements?

− List all payers with whom you are contracted

− What category of payment is the agreement?

• Result: You are here

• Establish Ongoing Reassessment

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ESSENTIAL STRATEGY 2

• Recognize:  Which payers constitute majority revenue?

− Identify from Strategy 1 list

− Contact provider relations

− Ascertain PBP strategies and timelines

• Result:  Strategic Roadmap

• Align actions with top revenue sources

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• Negotiation 101

• Contracting

• Know Thyself• Payment Contracting Activity

• Questions

AGENDA

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WHAT GETS MEASURED GETS DONE

• Measurement means tracking …… where we have been… where we are… where we are going

• If the measures don’t change, neither do the results!

MedicareAdvantage

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MEASUREMENT IN HEALTHCARE

• 4 Common Use Cases for Performance Measures− Quality Improvement

− Public Reporting

− Payment

− Accreditation, Certification, Credentialing and Licensure

• 7 Core Measure Domains in Use

• Claims most common data sourceSource: RAND Health, Technical Report, “An Evaluation of the 

Use of Performance Measures in Health Care,” 2011 

Structural Access Process Outcome

Safety Costs Patient Experience

Least Common24%

Most Common93%

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HCPLAN 2016 – PERFORMANCE MEASURES

Meaningful Use, PQRS, HIPQR, HOPQR, HEDIS Data

Workgroup Defining

Triple Aim

Rewards / Penalties

Care Delivery Redesign

MIPS Composite Performance Score (CPS)

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AHIP AND CMS HARMONIZE

• 2014 – CMS and AHIP form the Core Quality Measures Collaborative (CQMC)

• February 2016 – CQMC releases 7 core measure sets for quality improvement and reporting

1. ACO, PCMH and Primary Care

2. Cardiology

3. Gastroenterology

4. HIV and Hepatitis C

5. Medical Oncology

6. Orthopedics

7. Obstetrics and Gynecology

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ESSENTIAL STRATEGY 3

• Identify:  What are the essential data‐points you need?

− Is there overlap between payers/needs?

− Is data being captured consistently?

− How do you “measure up” today?

• Result:  Critical Data Identification

• Position for workflow redesign

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ESSENTIAL STRATEGY 4

• Redesign:  Apply the 5‐Rights

− Right Information

− Right Person Capturing

− Right Data Format

− Right Technology Channel

− Right Time in the Patient Workflow

• Result:  Strong Data → Strong Performance• Train for consistent data capture; report for ongoing improvement

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• Negotiation 101

• Contracting

• Know Thyself

• Payment Contracting Activity• Questions

AGENDA

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RULES AND GOALS

• You are part of a health community

• Assigned role … and personality

Dr. Ryan O’PlastyENT

Mr. Harry PittsHospital CEO

Chris P. BaconENT Administrator

Iona StonehouseVP, Medicaid

Dr. Ophelia PaynePCP

FACILITATOR

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RULES AND GOALS

• You are part of a health community

• Assigned role … and personality

• Forming an ACO‐like entity to assume risk on Medicaid patients in Region V

• 10 Points of Negotiation → Decision Points

− Investments to be made in health IT → $100,000 ACO budget

− ACO and Individual Performance Measures 

− Price to Hospital and Providers

− Bid price to Medicaid, including “carve‐outs”

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RULES AND GOALS

• Mark agreements on your cups and operationalize using Kit

• Kit:  Rubber Band + Ribbon = Building Value Team Tool (BVTT)

• Using BVTT stack marked cups into pyramid:  4 (base), 3 (lower middle), 2 (upper middle), 1 (top)

• NO TOUCHING RUBBER BAND OR CUPS!  Only use  BVTT.

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BUILDING VALUE – THE RULES

Cups must be stacked as shown

Health IT Foundation

Performance Measures

Hospital & Provider Payment

Medicaid Price & Carve‐Outs

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POINTS OF NEGOTIATION

Medicaid Bid Rate

• $100/patient/month• Less Carve-Outs for

which ACO will not be financially at-risk or responsible

• Less amount for each carve-out:

− Oncology (-$15)

− Transplants (-$2)

− Hemophilia (-$3)

− Orphan Rx (-$7)

− Mental Health (-$12)

− LTC (-$15)

− Other (Define)

Percent of Global Payment

• Agree on % Distribution to: Reinvest in ACO, PCP, ENT, Other Spec., Hospital, Home Health, Diagnostics, Rx, Rehab

• Cup1: % to Hospital

• Cup 2: % to PCP and % to ENT, and % to other Specialty Physicians

Performance Measures

1. Tobacco Screening / Intervention

2. Adult Sinusitis Antibiotic Rx Overuse

3. AOE Antimicrobial Therapy Approp. Use

4. Optimal Asthma Control

5. Patient Satisfaction6. ED wait time7. 30-day hosp. readmit8. Spending per

Medicaid Beneficiary9. Asthma Rx Adherence10.No Bronchitis Antibiot.

Foundational Health IT

1. Query-based HIE -$50,000

2. Aggregated Pt. Portal - $25,000

3. Data Warehouse -$30,000

4. Advanced Data Analytics - $40,000

5. Feedback Reporting -$20,000

6. Payment Admin. -$40,000

7. Automated Reporting to State - $20,000

You have $100,000 budget – Choose 4

ENT Quality Focused –Choose 3

2 Cups to be noted –Hospital & Providers

1 Cup to be noted –Final Price + Carve‐Outs

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THANK YOU

Adele AllisonAMAllison@DSTHealthSolutions.com

@Adele_Allison