Negotiating payment agreements with commercial and government payors can increase both your market share and your revenue substantially. But it can be challenging for smaller or newer medical device or remote patient monitoring companies and IDTFs to get the attention of large payors. One way to help this is to have a well-articulated, compelling value proposition, such as filling a known gap in the market, and a credible return on investment calculation for your products or services.
Another key factor is understanding whether the service you provide is already considered a covered service under the health plan, meaning it is something the plan already pays for, or whether you need to convince them to start covering (i.e., paying for) a new service.
There are many contracting specifics to keep in mind. Alexandra Shalom, Associate Attorney with Foley & Lardner LLP, presented on this topic at the 2022 American Telemedicine Association conference. According to Shalom, the health plans will want to see the reimbursement flowing through the professional entity that is providing the service. If you have a managed services organization or a non-licensed entity, it may make sense to have them involved in certain elements of the contract, but the primary contracting relationship should be with the professional corporation. If you have state-specific professional corporations, Shalom recommends a Master Services Agreement for the central corporate entity, with state-specific sub-contracts where necessary.
It is also important to discuss with the health plans which of their products (e.g., HMO, high deductible plans, etc.) will cover your services. There may be a better fit for your target patient population with some health plan products versus others. Matching your coverage to the plans your target customers are most likely to have is a smart strategy. Large national payors, such as Aetna, may require that you start in a few regional markets before attaining national coverage.
Contracting with commercial or government payors comes with additional regulatory and compliance obligations as well as new contractual requirements. Be sure to review these laws and requirements thoroughly, including any incentive programs you may have with providers. There are several areas of contractual requirements you can expect, including:
- Timeframe for submitting claims (typically 60 - 120 days)
- Proof of medical necessity (may require changes in the medical records documentation process)
- Right to bind and bill on behalf of independent contractors if you use them
- Credentialing of providers (can take 3 - 6 months)
- Fraud, Waste, and Abuse programs
- Data Privacy program
Another consideration is that while direct-to-consumer pricing is very straightforward (the patient knows the price upfront and makes an informed purchase decision based on that price), this becomes more complicated when contracted with a payor. Once you are contracted, you need to be able to look up each patient’s coverage to determine the patient’s co-payment and/or deductible based on the patient’s health plan. This is especially important now that the No Surprises Act is in effect.
A final consideration is billing out-of-network claims for situations where you are not yet contracted with the health plan the patient uses. The most common approach is for the patient to pay in full upfront; you provide patients with a paid invoice, and they submit the paid invoice with a claim for reimbursement to their health plan. In many cases, patients will receive at least partial reimbursement, which reduces their out-of-pocket cost. Another option, where the patient does not pay in full upfront and you bill them for any unreimbursed balance, but there is clearly some risk of loss on your part, by doing so.
This is a complicated topic with many new obligations on the provider but contracting with payors can be an essential step for the growth and financial success of a medical device or remote patient monitoring company or IDTF.