Health Care Plan Contracting A Deliberate Approach Presented by: Association of Washington Public Hospital Districts and Ogden Murphy Wallace, PLLC

Presenters Taya Briley, RN, JD Director Legal Services & Health Policy, AWPHD Doug Albright Ogden Murphy Wallace, PLLC Don Black Ogden Murphy Wallace, PLLC

Overview of Presentation Goals of a Deliberate Approach to Payor Contracts The Negotiating Team Market Dynamics Washington State Statutes and Regulations - Insurance Commissioner (OIC) Highlights of Contract Issues and Language

Related Topics Not Covered Joint Hospital Contracting Physician Contracting Dispute Resolution Tactics Class Action Litigation

Definition of Commonly Used Terms Payor Plan Subscriber/Member Facility Physician Provider Hospital Based Physicians Manual

The Goals of a Deliberate Approach Test negotiation leverage - you can negotiate Avoid the most troublesome contract language proposed by the payor

The Goals of a Deliberate Approach Make the contract manageable Improve the economic terms Avoid surprises - don’t sign what you don’t understand or cannot explain More balanced language in the contract

Key Steps of a Deliberate Approach Is there an existing contract with the payor? Review existing documents - compare to new proposed draft from payor Assess issues and concerns under existing documents Assess performance issues that should be addressed in new contract  Payment issues  Process issues

Key Steps of a Deliberate Approach Clearly understand the compensation issues This is a critical point Analyze past payment issues Determine the proposed payment methodology Assess impact of payor’s proposal on your facility’s:  Revenue  Efficiency of operation, especially in admitting area and the business office

Key Steps of a Deliberate Approach Assess your strengths, weaknesses, opportunities and threats - “SWOT” Realize that the contract cannot be made perfect, but measure it against your “Best Alternative” Using this process, establish your economic goals

Key Steps of a Deliberate Approach Establish priorities The A List: Deal breakers The B List: Important, but negotiable The C List: Nice, but can live without Everything Else: Not worth the effort

Key Steps of a Deliberate Approach Develop a comprehensive, rational written response to the payor’s proposals Insist on a response Drill down to the real issues Identify and prepare options and alternatives

The Negotiations Team - Identify Identify your team - all have important roles to fill in order to achieve a contract that will provide reasonable payment without unnecessary complications and inefficiencies

The Negotiations Team - The Leads Business lead, policy maker Makes the ultimate decision on major issues Determines the deal points  Financial goals  How important is the contract to the facility, and what compromises will be made Lead negotiator May be CFO, Director of Contracting, attorney, or ? Should have good negotiating skills Appropriate level of authority

The Negotiations Team - Support Financial analysts Make sense out of the payment appendices, none of which are alike Operations/Business Office analysts Provide input on the mechanics of administering the contract Utilization Review (UR) analysts Provide input on the mechanics of UR, and coordination with various payors

The Negotiations Team - Attorney Attorney Negotiates legal aspects of contract Interprets the contract to inform client of material issues and to help other team members understand the terms Drafts/reviews language to reflect agreement of parties

The Negotiations Team - Use of Technology Track changes/redlining Word searches (e.g.: “discretion” “sole” “manual”) Form language

Market Dynamics Does the payor control a large portion of the market? Does the payor insure key employers in the facility’s service area? Does the payor need the facility more than the facility needs the payor?

Key Elements of Washington Statutes and OIC Regulations Prompt Pay Minimum Notice of Termination Insolvency Emergency Services Retrospective Denials Unilateral Amendments Subscriber Agreements Paramount

Prompt Pay Provisions: WAC % of clean claims paid within 30 days of receipt 95% of monthly volume of all claims paid within 60 days of receipt What is a “clean claim” Date of receipt Interest required for non-compliance Denials must be communicated with specific reasons! Not applicable in cases of facility fraud

Notice of Termination: WAC (7) Termination without cause By payor or facility Minimum 60 days written notice

Payor Insolvency and Payment: WAC (2) Required contract language Limitation on seeking payment from beneficiary Continued care if payor is insolvent Denials based on facility’s failure to comply Knowing collections from a covered person in violation of the contract is a felony

Emergency Services: RCW " Emergency services" Means otherwise covered health care services medically necessary to evaluate and treat an emergency medical condition, provided in a hospital emergency department. Emergency services are covered Prudent layperson standard No retroactive denial

Retrospective Denials: RCW Not allowed for emergency or non- emergency care if there was prior authorization under the payor’s written policies at the time care was rendered

Payor Policies and Procedures: WAC (4) Payor must provide notice and access to all policies and procedures Payor must give not less than 60 days written notice of changes that affect provider compensation or health care service delivery Facility may terminate contract if it does not agree to changes Changes cannot be retroactive without the agreement of the facility

Subscriber Agreements Paramount: WAC Nothing in a facility contract can modify benefits, terms or conditions in the payor’s subscriber agreements If there are conflicts, the benefits, terms and conditions of the subscriber agreement control with respect to coverage for covered persons Liability for conflicts

Coordination of Regulatory Requirements and the Contract Make a check list of regulatory requirements to ensure the contract contains the necessary provisions in a manner that complies with the regulations: prompt pay dispute resolution termination amendments retroactive denials pre-authorization recovery from covered persons

Contract Issues - Beware of the Short “Simple” Contract Ill defined terms Important issues not covered Undue reliance on payor’s policies and procedures

Contract Issues - Who are the Parties? Normally the parties signing the contract are: The payor The facility A medical group (less often)

Contract Issues - Who is Covered by the Contract? Payor Facility Affiliates of payor? Plans? Physician clinic? Hospital based physicians?

Contract Issues - What is the Contract? Contract Schedules Payor’s policies, procedures, and manuals Subscriber agreements OIC regulations

Contract Issues - How Can the Contract be Amended? Mutual agreement Limitation created by Insurance Commissioner regulations Notice by one party to the other? With right to terminate? Notice with right to object?

Contract Issues - Payor Manual Review before execute contract Reference clearly in the contract Limit right of payor to change the manual Reasonable notice Right to terminate contract if changes not acceptable

Contract Issues - Credentialing Initial credentialing is OK The purpose of payor credentialing is to establish a quality network Avoid language giving payor right to: Unilaterally change criteria Terminate the facility’s credentials Terminate the contract in the payor’s sole discretion

Contract Issues - Credentialing “De-credentialing” should be limited to defined situations Failure to meet the standard of care Termination of licensure or accreditation Define facility’s appeal rights

Contract Issues - Peer Review Avoid intrusive language such as requiring a payor member on Quality Assurance Committee Protect confidentiality of the peer review process and resulting information Make any notice requirement specific to final peer review actions

Contract Issues - Most Favored Nation Facility agrees to accept compensation as provided in the contract or any lower compensation agreed with another payor Issues regarding different mix of pricing, volumes and other distinguishing factors Avoid at almost any cost

Contract Issues - Payor’s Discretion “Discretion” = arbitrary! Do a word search Payor should not have discretion to: Change terms of the contract Change compensation amounts Change its policies and procedures without notice

Contract Issues - Miscellaneous Language of Concern Scope of service requirements/limits on changing services Process - compatible with facility’s? Retrospective denial based on: Incorrect information from payor regarding eligibility Determination that service not medically necessary

Contract Issues - Miscellaneous Language of Concern Non-solicitation of subscribers, especially “indirect” Confidentiality of terms

Contract Issues - Dispute Resolution Arbitration is the norm Privacy, convenience of arbitration, versus the right to appeal Avoid undue limitations on right to demand arbitration Cumbersome internal payor process Short time limitations

Contract Issues - How Long is the Commitment? What term is to the facility’s advantage? Reasonable economic and other terms? Annual adjustments? Right to terminate without cause? Mutual? Reasonable notice period? Avoid “Evergreen Clauses” - automatic renewal unless provide notice before end of current term

Contract Issues - Termination for Cause Causes should be mutual Avoid causes that are likely to occur, e.g.: Failure to abide by all laws and regulations Actions beyond facility’s control, such as physician performance Negotiate a right to cure a breach within a reasonable time, unless the cause impairs the basic purpose of the contract, e.g.: the licensure or operation of the payor or facility

Contract Issues - Compliance with Law Duty to notify other party that contract or actions not in compliance with law Obligation to negotiate in good faith to bring into compliance Right to terminate if unable to reach agreement on revisions Include compliance clause in contract

Contract Issues - Reimbursement Attachment Clearly defined and adequate compensation? Discounted fee for service Per diem Per case Automatic annual adjustment? Pipe dream: reimbursement reverts to full fee for service if payment is not timely

Contract Issues - Reimbursement Attachment Ask individuals not involved in negotiations to review and critique for clarity, issues Coordinate with negotiation of contract to assure consistent use of terms - avoids interpretation issues Review for practicality - can the facility bill as required using its automated system?

Contract Issues - Carve Outs Outliers High cost and unpredictable services New/high cost technology - case by case? High cost drugs/implants Invoice required? Cumbersome and manual. Establish agreed formula?

Conclusion Taya Briley, RN, JD, Director Legal Services and Health Policy Association of Washington Public Hospital Districts awphd.org Presenters

Conclusion Doug Albright, Chair Health Care Practice Team Ogden Murphy Wallace, P.L.L.C Don Black Health Care Practice Team Ogden Murphy Wallace, P.L.L.C Presenters

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