1. Managed Care Contracting
April 08, 2011
WSOPP
Presented by:
Carrie Romandine
Chris Duprey

2. Agenda What is Managed Care Contracting Contracting Process
Contract Review
Terms and Conditions to Negotiate
How to Create a Proposal
Differentiate from your Competition
Get Organized

3. What is Managed Care Contracting?
Agreement between health care providers and managed care organizations (MCO’s)
Providers offer discounts off of billed charges to MCO’s to achieve the Allowable Rate
Allowable rate also known as deal, discount, allowable amount
MCO’s steer members toward the provider by including the provider in their network
MCO providers higher-level of benefits to the member for utilizing an in-network provider
Provider must write off the “discount” and cannot charge the patient or another payer for this amount
Contracting

4. Advantages and Disadvantages of Contracting
Increase the number of patients seen in your facility
Patients receive better benefits Provides more flexibility for your key referral sources
Disadvantages
Discounts may be extensive
Requirements of providers by MCO’s may be time consuming or costly Hidden fees may be charged to participate

5. Common Contracting Errors
Contracts may be signed without a good understanding of the impact to the business
Negotiation doesn’t occur prior to signing
Typically contracting responsibilities are assigned to an individual on a part-time or as additional duties basis
Education and communication of the contract terms to the people responsible for AR does not occur
Contracts are agreed upon and then never re-looked at for re-negotiation

6. Basic Contracting Process
Contract terms are negotiated
Credentialing process is completed
Contract is finalized and signed
Contract is loaded into the claim payment system(s)
Claims processed after the effective date of the contract will reflect the negotiated deal
Re-credentialing may occur
Amendments to contracts may be sent after the effective date

7. Pursuing New Contracts
Joining new networks can increase your business
Only join the networks that make financial sense
Determine which networks have the most members in your area
Determine the importance of the network to your business
Evaluate your referring physicians and which networks they are part of
Open communication with your reception staff to know which carriers they see that you are out of network for
Determine if service issues exist with certain carriers that may impact their timely payment

8. Structure of a Contract
All contracts are different and can range from 1 page to several pages
Basic sections are normally:
Definitions
Responsibilities of Provider and MCO
Utilization Management, Quality Assurance and Appeal Info
Claims Submission and Payment Guidelines
Term and Termination of Contract
Signature Page
Payment Schedule
Designated Services

9. Steps to Take Prior to Negotiating
Establish your costs for each CPT code
Understand your “break-even point” or “walk-away” point for each CPT code
Determine your usage of each CPT code
Determine your top codes you are most concerned with (based on volume usage, total dollar amount, and comparison between cost and reimbursement)
Compare costs to existing fee schedules or new proposed fee schedules
Identify items to negotiate

10. Contract Review Read the entire contract thoroughly
Ensure you have a copy of all amendments, exhibits, or attachments to the original contract
Contracts are usually written one sided benefiting the MCO
Don’t assume you can’t negotiate, in most cases you can!
Contracts should be reviewed and negotiated on a yearly basis

11. Payment Terms
Fee Schedule – MCO sets specific fees that they will pay for each procedure code
Percentage of Billed Charge – MCO pays a percentage of your normal billed charge (usually anywhere from 60% - 95% of billed charge)
Percentage of Medicare – MCO pays a percentage of the Medicare allowable amount (can be anywhere from 60% - 130% of Medicare)
Percentage of U&C – MCO pays a percentage of the U&C amount determined by the MCO

12. Terms/Conditions to Negotiate
Pricing and Payment Terms
Fee Schedule Contracts:
Established fees for all HCPC’s codes
Ensure you get the fees for the HCPC’s codes that apply to your business
Must review all your HCPC’s codes
Build in annual increases or renegotiate yearly

13. Terms/Conditions to Negotiate
Percentage of Billed Charge:
Ensure percentage agreed upon is above your “break-even” point
Determine if there are any restrictions or notice requirements for raising your billed charge rates over time
Most attractive contract as you have some control on increasing reimbursement without renegotiating

14. Terms/Conditions to Negotiate
Percentage of Medicare:
Ensure rates are acceptable to you
Held to Medicare’s reimbursement which can change quarterly
Medicare has low reimbursements generally, contracts should be 100+% of Medicare (Prefer 120%-130%).

15. Terms/Conditions to Negotiate
Percentage of U&C:
Be very cautious off these types of contracts as it is very difficult to get the U&C amounts from MCO
The U&C calculations can change at anytime from the MCO
Can be a significant reduction in the reimbursement from billed charges
Recommend not signing these contracts

16. Terms/Conditions to Negotiate
Timely Filing Requirements
Review contract for all timely filing requirements including:
Claim submission
Appeals
Corrected Claims
Clean claim payment
Ensure language exists that supports the provider when the patient does not notify the provider timely with their accurate insurance info
90+ days would be an adequate timely filing requirement

17. Terms/Conditions to Negotiate
Requirements of the Provider
Review reporting requirements
Service hour guarantees
Surveys/Questionnaires
MCO service guarantees
Restrictions of the provider to collect payment up front
Termination requirements and length of contract
Contract term should be one year with auto-renewal

18. Creating a Proposal Understand your competition in the area
Understand your breakeven point prior to discussions
Understand what is most important to your business (price, timely filing terms etc.)
Include the top 25 codes you do business with and the current billed charge amount for each
Include unique things about your company/provider
Include your counter proposal rates, terms, and contract language

19. How do you Compare to your Competition?
How many businesses within 30 miles offer the same services and products that you do?
What do you do to differentiate yourself against the competition?
Why should the network include you even if it is closed?
What can your business offer that similar businesses cannot?
Which insurance companies do the large employers in your area have for coverage?

20. Where are you on the Map?

21. “Niche” Services
Specific high-dollar items that are offered by your facility that may not be available by their existing in-plan providers
Utilize these high-dollar items to negotiate better overall pricing from the carrier
Services or process that have proven to reduces infection, irritation, or re-occurring visits
Area of service that may provide convenience not offered by other providers in your area or within the same network

22. Small Provider Advantage
Small providers can often take advantage of the “we are too small to impact the overall budget the carrier is confined to for contracting”.
Position the “small factor” to gain a higher price point for yourself – not a big impact to the individual carrier

23. Conducting the Final Review
Review the entire contract
Question anything you don’t understand
Do not agree to terms and conditions that will cost you ongoing
Look for annual fees, charges, etc. for belonging to the network – consider these fees in your final negotiations
Review all terms and conditions
Ensure the fee schedule or percent of billed charge has been documented as agreed
Keep all documentation from the contracting discussions

24. Get Organized!
Create files for each carrier you have a current contract with
Ensure you have the most recent copy of the entire agreement with the most up to date fee schedule
Ensure you have any amendments that may have been sent after the original effective date
Review your Explanation of Remittances (EOR’s) to determine if there are contracts you may be missing
Develop a summary of each contract for operational staff to use
Determine which contracts need to be renegotiated
Develop grid to maintain status of each contract

25. Timely Updates
Ensure you are listed in the MCO’s provider directory correctly
Ensure you update the MCO timely each time you have a change to your information (address, phone numbers, hours of operation, new providers, etc.)
Verify your change has been made by the provider

26. Bottom Line Impacts
Contract terms directly affect your bottom line profitability
Small increases in contract terms can add up to thousands of dollars over time
Contract language such as timely filing dates can affect claim write-offs

27. Internal Review – Where the Rubber Hits the Road
Share contract terms with Verification of Benefit and Billing staff to ensure proper payments are received
Conduct an audit of the carrier to ensure the payments are received according to the contract you have negotiated – this is wrong more often than you think
Conduct periodic audits to watch for fee schedule changes that are automated and possibly not announced
Identify payer trend issues – payment denials, incorrect payments, ongoing requests for information delaying the revenue cycle

28. Questions? CARIS Innovation, Inc. 5871 Main St. Abrams, WI 54101
(920)
Carrie Romandine
Chris Duprey