1. Megan Iemma, MBA 317.275.7446 miemma@blueandco.com
Managed Care Contracts: Language Review and Revenue Protection Strategies
Megan Iemma, MBA

2. Agenda The Affordable Care Act’s impact on local managed care
Terminology: Understand how you are getting paid
Contract Provisions: Complete documentation
Contract Definitions and Processes: Understand how to avoid denials and re-work
PPO Networks: Know exactly who is paying you
Ownership of patient data
Eleven current payor initiatives
ICD-10 Reimbursement Impact
ICD-10 and Managed Care Contract Language
Payor Outreach Focus
Managed care contract compliance strategies
Managed care contract language currently in play
Opening stories:
Worked for Indiana’s first HMO
Diabetic cat Felix…ran his Humulin U from March through my flexible spending provided by my employer, and got LOTs of literature from Aetna on diabetes management
Not an attorney

3. The Patient Protection and Affordable Care Act
The Patient Protection and Affordable Care Act (PPACA/ACA) has removed major financial controls on health coverage, forcing payors to offer high deductible or high premium coverage.
Understanding reimbursement methodology and corresponding contract language is crucial in realizing all of your eligible revenue from commercial payors.
These are the facts that will very noticeably impact us.

4. ACA & Managed Care
No coverage limitations, e.g., denials, on pre-existing conditions
No lifetime limitations on benefits, e.g., substance abuse programs
External appeal process on denied tests or treatments
Cost-free preventive services: no deductible or co-insurance
Use of nearest ED with no penalty, no prior authorization, and no out-of-network benefits
Coverage for dependent children until age 26
These are select examples of the ACA the remove financial controls in managed health care.

5. Managed Care Terminology
Indemnity, Fee for Service
Original method of reimbursement for health insurance coverage
Premiums determined by actuaries
All covered claims are paid at 100%
Premiums reflect charges of providers
More services equate to more payment
No incentives to control cost
It’s important to understand the various payment methodologies employed by health insurers, and some history behind each.

6. Managed Care Terminology
Per Diem
“Per Day” equating to a fixed amount per patient per inpatient day
Common in most network arrangements
Initiated in the early 80’s to control costs
Incentives for hospital to manage costs
Capitation
“Per Head”
Prepaid amount per enrolled member per month regardless of utilization
Incentives designed to keep the patient healthy
It’s important to understand the various payment methodologies employed by health insurers, and some history behind each.

7. Managed Care Terminology
Global Case Rates
Fixed payment for an inpatient stay or an outpatient procedure
Initially used by Medicare for DRG reimbursement
Common in PPO contracts for inpatient stays, cardiac caths, and deliveries
No incentive to reduce admissions or procedures
Incentives to reduce length of stay and cost per admission or procedure

8. Managed Care Terminology
Utilization Review, Case Management
Patient Care “Management”
Usually performed by nurses controlling care throughout the course of treatment
Strives for quality care, but only as much as needed
Predecessor to Clinical Pathways and Treatment Protocols
These terms define how payors provide just enough care.

9. Managed Care Terminology
Clinical Pathways
Developed to standardize efficient treatment regimens
Outcomes Research and Measurement
Emphasizes mortality and morbidity rates
Used by patients and payors to grade hospitals and physicians
Example: Infection rates for surgeries
These terms define how payors provide just enough care.
Remember Felix the cat?

10. Initial Managed Care Contract Analysis
Who are the payor’s major accounts/employer groups?
Are the payment provisions compliant with Indiana State requirements?
Do addendums to contracts include Medicaid plans for other states?
Payor overpayments:
Recoupment policy
Recoupment timeframes
Why should you do this?
What does it cover?
How and when will they pay/unpay you?

11. Contract Provision Basics
Use definitive language
This provider Agreement (“Agreement”) is entered into by and between XYZ Payor (“Company”) and 123 Provider, an Indiana nonprofit corporation (“Provider”) and is effective the ____ day of June, 2014.
Define “Provider” and “Company”
Always complete the effective date: no blanks!
Contracting basics: Make sure everything is complete
No blanks
All materials are present
Adequate notice of changes in writing, on paper
Operationally possible
If it makes no sense, or doesn’t sit well; strike it out and make them come back with better language…make a better language suggestion.

12. Contract Provision Basics
Request copies of all documents incorporated by reference
Provider Manuals
Utilization and Authorization Procedural Guidelines
Attach documents incorporated by reference as an Exhibit
Require 30 days written notice of any changes to contract documentation impacting the organization financially, and a corresponding redline copy of proposed changes
Refuse notices; require paper
Language: Any document incorporated by reference in this Agreement must be provided to Provider prior to the execution of the Agreement. The Provider will be notified 30 days in advance prior to any changes made to documents incorporated by reference.
Contracting basics: Make sure everything is complete
No blanks
All materials are present
Adequate notice of changes in writing, on paper
Operationally possible
If it makes no sense, or doesn’t sit well; strike it out and make them come back with better language…make a better language suggestion.

13. Contract Definitions: Medical Necessity
“Medically Necessary” or “Medical Necessity” means services or supplies received from the provider that Plan determines are medically appropriate…
Site criteria, e.g., Interqual, Milliman
Who at the plan is applying the criteria?
How long does payor have to make a medical necessity determination?
Can the patient be billed?
Include in the contract definitions
Most contracts start with a definition of terms; we are going to discuss those immediately impacting the revenue cycle and corresponding reimbursement.
Medical Necessity = Why payors reimburse you
Make sure it’s included in the definitions
Make sure they site criteria so both parties can access the same information
Define med nec determination parameters
Make sure you are allowed bill patients for services that the payor denies for medical necessity as long as you have a singed ABN

14. Contract Definitions: Medical Necessity
Medically Necessary means health care services or supplies that are appropriate with regard to the general standards of medical practice and, as determined by the Medical Director, can reasonably be expected to (i) prevent or diagnose the onset of an illness, injury, condition, primary disability or secondary disability; (ii) cure, correct, reduce or ameliorate the physical, mental, cognitive or developmental effects of an illness, injury, or disability; or (iii) reduce or ameliorate the pain or suffering caused by an illness, injury, condition or disability. However, notwithstanding the above, the services or supplies must not be solely for the convenience of the Covered Person or his or her Provider; and must be the most efficient and least restrictive level of services or supplies that can be safely and effectively provided to the covered person.
ameliorate = to make or become better, more bearable, or more satisfactory

15. Contract Definitions: Non-Covered Services
A clear definition of “Non-Covered Services” needs to be included in the contract
“Non-Covered Services” means health care services that are not Covered Services, as defined in this Agreement.
Billing members for non-covered services requires an advance notification (e.g., ABN)
Make sure this language is included in the contract

16. Contract Definitions: Non-Covered Services
Co-payments and deductibles
Waiving these charges could be a violation of state and/or federal law
Guaranty of Services
Do not guarantee to provide services
Instead, “Make available on the same basis for all other patients of the Provider”
Adding this language will prevent the providers from incurring unintended costs for patient care

17. Contract Definitions: Emergency
“Emergency” means a medical condition manifesting itself by acute symptoms of sufficient severity such that a prudent layperson, with an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in (1) serious jeopardy to the health of the individual (or unborn child); (2) serious impairment to bodily functions; or (3) serious dysfunction of any bodily organ or part. “Emergency Services” means those services necessary to screen for, diagnose or stabilize and Emergency medical condition.
Payors utilize “emergent diagnoses” lists for considering ED claims; and will deny services not on those lists. Getting paid a nominal amount for a screening exam is better than a complete denial.
Some commercial payors won’t recognize urgent care, and will require services to be billed as clinic visits.

18. Contract Definitions: Emergency
Add language stating that if a Covered Person presents to the ED, a “screening exam” under EMTALA will be paid for even if it is later determined that patient did not have an actual emergency.
The Agreement should differentiate between emergent and urgent care.
Payors utilize “emergent diagnoses” lists for considering ED claims; and will deny services not on those lists. Getting paid a nominal amount for a screening exam is better than a complete denial.
Some commercial payors won’t recognize urgent care, and will require services to be billed as clinic visits.

19. Contract Definitions: Termination
The effective date of this Agreement is the date set forth above, unless earlier terminated by either party as set forth below. The parties agree that the financial provisions of this Agreement set forth in Exhibit A shall be in effect for the period _____ through _____. The parties agree that annually, no later than sixty (60) days prior to the end of each year of the Agreement they will meet and agree on the financial terms set forth in Exhibit A. Should the parties fail to agree on revised financial terms then the rates set forth in Exhibit A shall automatically increase by _____%.
One of the top things a CFO wants to know about a managed care agreement:
What does it take to get out of it?
How long are we on the hook to provide services?

20. Contract Definitions: Termination
This language provides for automatic renewal and annual rate negotiations.
Specific termination provisions
How long will you be obligated to provide services after termination?
How much advanced notice is required?
One of the top things a CFO wants to know about a managed care agreement:
What does it take to get out of it?
How long are we on the hook to provide services?

21. Contract Definitions: Termination
Either party may terminate this agreement at any time without cause by giving the other party at least ___ (_) days advance written notice.
AVOID
“Provider shall notify Cover Persons after the Date of Termination that it is no longer participating as a provider of Company.”
Notification of Covered Persons should be the responsibility of the payor
Compromise: Notify all Covered Persons in house of termination

22. Process: Eligibility Verification
Telephonic Eligibility Verification. Company shall maintain a toll- free, twenty four hour seven day per week service to verify the eligibility of the Covered Person. (xxx-xxx-xxxx). Each time the Provider verifies eligibility for a Covered Person, the Provider will be given a unique number which shall serve as the Provider’s documentation that it has confirmed the eligibility of the Covered Person.
Attain a unique number for both eligibility and pre-authorization from the payor
If eligibility is performed electronically, take a screenshot and include in the patient record
Mitigate eligibility denials by including language specific to eligibility verification
Request unique identification for eligibility and pre-auth for reference and tracking
Take screen shots of electronic eligibility verification and scan it into the patient’s record

23. Eligibility Verification: Dual Coverage
Patients will provide insurance information for the plan they think has the best benefit
Correct insurance may be provided after services are performed and charges are billed
Correct Insurance Information. Should the Covered Person fail to give Provider the correct insurance information at the time of admission, Provider’s claim shall not be otherwise denied if at the time of admission the Covered Person was a covered person under the Plan.
Claims cannot be denied for pre-authorization or PFL once the correct payor is determined and billed
Unfortunately, we still get incorrect registration information from the patient.
Protect yourself against PFL denials once the correct insurance information is determined.

24. Process: Authorization/Referral
Clearly define procedures for obtaining an authorization
A procedure authorized by the primary plan may not be honored by a secondary plan, unless it is in the contract language
An authorized procedure can be later denied for medical necessity unless specific language is included in the contract
If a procedure has been prior authorized, charges for these services cannot be denied
Medical policy can change each calendar year, impacting authorization guidance

25. Process: Dispute Resolution
What is the policy?
Arbitration
Use caution with arbitration when money is owed on claims: arbitration administration has associated fees
Is arbitration binding or non-binding?
Is arbitration subject to any confidentiality provisions?
Jury Trials
Jury trials can be waived by contract language
Class Action Lawsuits
Payors are now including language that will include participating providers in class action lawsuits
Make sure you facilities policies on legal action matches provisions laid out in your managed care agreements

26. PPO Networks
“Network” is a provider network accessed by insurance companies and other claims payors; Network is not an insurance company or payor and is not liable for payment.
Network requires payors with whom they have network rental agreements to apply contracted rates contained in this agreement for Provider claims.
Network provides access to the Provider’s rates to applicable payors with whom they have network rental agreements.
Actual contract language
Caution: Incorrectly re-priced claims can lead to large dollars in underpaid claims….look closely at claims from self funded employer groups

27. PPO Networks
Financial Solvency. Network shall, at all times maintain sufficient capital to pay claims of PROVIDER. Network shall cause each Plan whose members utilize PROVIDER pursuant to this Agreement to maintain financial solvency including obtaining adequate reinsurance. In the event such Plan fails to maintain solvency or adequate reinsurance, Network shall be liable for all claims which remain unpaid by Plan. In order to ensure compliance with this section, Network shall provide to PROVIDER a performance bond in the amount of one year’s projected claims of PROVIDER for Covered Individuals seeking care from PROVIDER pursuant to this Agreement.
Performance bonds are inexpensive to attain

28. PPO Networks
No Network Rental. Network covenants, agrees and understands that it is prohibited from renting the Network to Payors on a one time basis in order to obtain a discount from PROVIDER for patients receiving treatment at PROVIDER who are not with a Plan or Payor listed in Exhibit ___.
The PPO with whom the HOSPTIAL is contracted must pay the contracted rate. Benefits managers will try and pay outside of the agreement with the one time rental, especially on high dollar claims involving oncology drugs. The one time rental will only pay AWP plus a dispensing fee.

29. Data Access: Caution
Restrictions on use of data or information and over-reaching confidentiality clauses
Look for language restricting the Provider’s ability to transfer patient information to other providers and/or subsequent insurers
Read this and disseminate with the group
The patient is the owner of the medical record; the Hospital maintains it on their behalf
If the Hospital outsources medical records, the payor must have free and unlimited access
The Hospital cannot disclose any information provided by the payor to anybody….payor doesn’t want hospital sharing rate information

30. Data Access: Caution
Inspection of Records and Data Access. Provider agrees that Company shall have access to all data and information obtained, created, or collected by Provider related to Members (“Information”). Such Information shall be jointly owned by Provider and Company, and Provider shall not enter into any contract or arrangement whereby Company does not have unlimited free and equal access to the Information in electronic or other form or would be required to pay any access, transaction or other fee to obtain such Information in electronic, written or other form. Information shall not be directly or indirectly provided by the Provider to any competitor of Company. Any and all information and data provided to Provider by Company or at Company’s direction shall remain the sole and exclusive property of Company and shall not be disclosed by Provider to any third party.
Read this and disseminate with the group
The patient is the owner of the medical record; the Hospital maintains it on their behalf
If the Hospital outsources medical records, the payor must have free and unlimited access
The Hospital cannot disclose any information provided by the payor to anybody….payor doesn’t want hospital sharing rate information

31. Data Access: Revised
Inspection of Records and Data Access. Provider agrees that Company shall have access to medical records and claim data, including itemized statement of charges, related to Members (“Information”). Provider shall not enter into any contract or arrangement whereby Company does not have unlimited free and equal access to the Information and electronic or other form or would be required to pay any access, transaction or other fee to obtain such information in electronic, written or other form. Any and all Information and data provided to either party by the other, when marked “Confidential” shall remain the sole and exclusive property of the person providing the Information and data and shall not be disclosed by the other party to any third party, without prior written consent of the party providing the Information or data.

32. ICD-10 Reimbursement Impact
Develop and implement an audit process to monitor claims post ICD-10 implementation, testing payment parameters and demonstrating due diligence in commercial managed care payment validation
Review language in all of the facility’s managed care contracts for language specifically addressing ICD-10 that will impact operations or revenue
Develop alternative language suggestions for payer consideration, enabling both parties to conduct operations and adjudicate claims in a timely manner
Reserve 15-20% of annual revenue to provide for delayed claim payment
Add language to existing managed care agreements providing for a 90- day turnaround on pended or appealed claims
Re-direct resources post-implementation to accommodate an accelerated denials management process

33. ICD-10 and Managed Care Contract Language
Payors are integrating very specific contract language addressing ICD-10, and the potential impact on payment differentials
They are very precise in their audit and review processes to “neutralize” reimbursement should new coding guidelines cause claims to pay outside of a 1% threshold
Considering new ICD-10 guidance from the perspective of the claims submission and follow up process will bring clarity to any potential issues, and present opportunities to preserve revenue stream integrity.

34. ICD-10 and Managed Care Contract Language
Clarify that reimbursement terms stated in the contract will remain unchanged post ICD-10 implementation:
Each party agrees that the intent of this Agreement is to keep the economic benefits to each party under the Agreement the same regardless of changes that will occur do to the implementation of ICD-10 coding, or changes to the CMS DRGs, or any other groupers used by the Payor. Payment variances by either party will be refunded as they are determined.
Clean Claims will continue to be adjudicated by the Payor per IC ; within 30 days if the claim is filed electronically; within 45 days if the claim is filed on paper.
Payor will process all appeals to denied claims or additional information to consider pending claims submitted by the Hospital within 90 days of receipt of any additional information needed to re-consider the claims.

35. ICD-10 and Managed Care Contract Language
Address potential financial impacts to ICD-10 coding changes:
Both parties agree, if necessary, to revise any rates impacted as a result of ICD-10 codes to reach a financially neutral position within 90 days.
A formal review of the impact of the ICD-10 coding changes may be initiated if any such ICD-10 coding changes have any financial impact on documented reimbursement rates or rate structures in this Agreement. Rates are to include all amounts paid by Payor to Facility for Inpatient Service and Outpatient Services for all commercial lines of business excluding governmental programs, including but not limited to Medicare and Medicaid.

36. ICD-10 and Managed Care Contract Language
Address potential financial impacts to ICD-10 coding changes (cont’d):
Any analysis resulting from a formal ICD-10 impact review will be based on:
Ninety (90) days of Facility-specific claims billed using ICD-9 codes prior to Payor implementation of ICD-10; and
At least thirty (30) days of Facility-specific claims billed using ICD-10 codes after the Payor’s conversion to ICD-10 coding.
Either party may, at its own expense, initiate such a review of the impact of the initial ICD-10 coding at any time after implementation, up to eighteen (18) months following the implementation.

37. ICD-10 and Managed Care Contract Language
Address post- implementation CMS DRG changes in addition to any ICD-10 coding changes:
With respect to specific changes the CMS DRGs as published in the Federal Register (or such other grouper as used by Payor as published by the applicable source); the parties agree that their intent is to keep the economic benefits to each party under the Agreement the same. 
Notwithstanding any ICD-10 coding changes, if any such CMS DRG change has any financial impact, the parties agree to work together in good faith to reach an agreement on new rates for the Case Rates impacted by the DRG change(s) such that the agreed upon rate adjustments have the effect of neutralizing any change made to the DRGs.

38. ICD-10 and Managed Care Contract Language
Address post- implementation CMS DRG changes in addition to any ICD-10 coding changes:
The Case Rates should be adjusted for any applicable contract year inflator, but the rates should then be neutralized for any additional positive or negative impact of any change in the DRGs. 
If the parties cannot agree that the CMS DRG change(s) have a financial impact, then either party may select a Reviewer to review a statistically valid random sample of records and to determine what rate adjustments, if any, should be made under the process outlined above. The report of the reviewer shall be final and binding upon the parties.

39. ICD-10 Payor Outreach Focus
Testing and Validation
Is a process in place to test claims coded to ICD-10 specificities with all clearinghouses and payors?
Will payor systems support dual coding prior to 10/1/2015?
Will payors accept ICD-9 and ICD-10 on the same bill?
Will payors accept split bills?
When will payors stop accepting ICD-9 codes?
What is the contingency plan if systems are not ready by the compliance date?
Is a payment validation process in place for all commercial payors, determining claim allowances and correct payments?

40. Payor Outreach Focus Medical Policy Updates:
Is appropriate staff monitoring Medical Policy updates specific to ICD-10 issued by commercial payors impacting commercial claims?
Is a process in place to update medical necessity software and the claims scrubber with changes in Medical Policy impacting ICD-10 from commercial carriers?
Are DRG groupings and corresponding reimbursement going to change?

41. Payor Outreach Focus Business Processing Rules:
Confirm what, if any, changes will be made to the following processes:
Attaining authorization for covered services
Utilization Review and Utilization Management
Payor claims audits
Claim editing, e.g., claim bundling
Payment processing

42. Compliance Strategies
Communicate agreement terms to all impacted departments in focused summary sheets
Medical Records: confidentiality, chart review, chart copying, and specific coding provisions
Patient Financial Services: billing, COB, timely filing, clean claims, reimbursement terms, appeals procedures
Finance/Accounting: reimbursement terms
Specialty Departments: Any department where services are carved out
Case Management: utilization review, prior authorization requirements

43. Compliance Strategies
Additional considerations for Finance/Accounting/PFS:
Are claims paid in a timely manner and at the appropriate contracted rate?
How is evidence captured that electronically transmitted claims were received?
What plans continually request multiple copies of medical records and/or itemized statements?
Are system notes accurate when documenting communications with payors on claim status?
Are confirmations of faxes to payors kept?
Do you meet regularly with your payor representative to address payment and compliance issues?

44. Example Contract Terms
Any claim adjustments, e.g., requests for reconsideration to denied claims, must be submitted within 90 days of receipt of the original claim.
Payor will offset claims believed to be paid incorrectly by offsetting future payments.
The Provider may not bill the patient for services that are determined to not be Medically Necessary by Payor.
Actual language from both regional and national contracts
ICD 10 sensitive
P.S. Don’t allow offsets, conduct credit balance reviews and corresponding refunds

45. Example Contract Terms
Payor can deduct payment for services they determine are not executed in a timely manner by the Hospital.
Payor may recoup payment up to two years following the date of payment for services where prior approval or prior notification was not attained by the Hospital.
Payor can withhold reimbursement or terminate this agreement (with 30 days notice) if the Hospital fails to submit chargemaster information or rate increase notifications.
Punitive language if Hospital fails to perform
Who determines “timely manner?”

46. Example Contract Terms
The Hospital is responsible for notifying medical staff that they are required to admit and/or refer Payor patients to Payor Network Providers.
Hospital must make an effort to inform Payor patients they will be subject to lesser benefits should they receive services from a non-Payor provider.
The Hospital is required to verify pre-authorization for all non-emergent admissions and surgeries with the Member’s physician.
The Hospital is required to submit all transactions electronically to Payor within 60 days notice.
Payor will determine and notify the Hospital when inpatient care is no longer required.
Hospital “musts”

47. Example Contract Terms
The Hospital can bill members for non-covered services as long as the Hospital has provided advanced notice/consent to do so.
The Hospital may bill the patient for non-covered services as long as they attain signed consent from the patient on a standard form used with all other commercial payors.
The Hospital is only allowed to collect a deposit from the patient on charges that will apply to the patient’s unmet deductible.
The Hospital may not bill the patient for any additional charges if they determine the patient responsibility with Payor’s real time claim adjudication option and collect monies owed at the time of service.
The Hospital may not waive the patient’s financial responsibility, e.g., deductibles, co-payments, or coinsurance, without Payor’s consent.
Include services determined as not medically necessary in the ABN.
Watch for provisions like bullet #3 in the advent of increased HDHPs
Avoid language containing “best efforts” or other imprecise terms concerning payment terms

48. Indiana Prompt Payment
Prompt Payment of Claims (Source: IC )
Sec. 6. (a) An insurer shall pay or deny each clean claim as follows: (1) If the claim is filed electronically, within thirty (30) days after the date the claim is received by the insurer. (2) If the claim is filed on paper, within forty-five (45) days after the date the claim is received by the insurer.