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October 10, 2011. Leslie A. Allen [email protected] 205.250.6655. Managed Care Contracts. I. Background: Managed Care. What do we mean by “managed care”? - PowerPoint PPT Presentation

Text of Managed Care Contracts

Ruth E. Martin, Esq. Senior Vice President Primerus Business Division

Managed Care ContractsOctober 10, 2011Leslie A. [email protected] Background: Managed CareWhat do we mean by managed care?

Refers to health benefit plans that require discounts from the usual and customary charges of providers within their plans.

More restrictive plans cost less; and more flexible plans cost more.

I. Background: Types of MCOsTraditional health insurance companies

Health Maintenance Organizations (HMOs): Provides services to enrollees; usually only pays for care within the network. Selected PCP who coordinates care.

Preferred Provider Organizations (PPO): Pays more if patient gets care within the network; pays portion if the patient goes outside.

Point of Service (POS): Patient chooses between an HMO or a PPO each time need care is needed.

Alabamas definition of HMO encompasses all types of these MCOs.

I. Background: Types of MCOsPPOs and POSs selectively contract with providers as preferred providers. Preferred providers provide a discount from their fees to the insurance plan. Discounts may be:

Percentages of billed charges. Dictated by a certain fee schedule set forth by the insurance plan.

Providers traditionally agree to such discounts - guarantee of set volume of patients thought to overcome discounts.

Reality: discounts more to the insurer's advantage to lower payments.

I. Background: Why Should You Care?MCOs are increasing resource for provider payment for health services. Contracts must be closely scrutinized from many angles to ensure proper and maximum reimbursement.

Expansion of state managed care laws and regulations over past two decades.

Impact of managed care slower to develop within the field of anesthesiology; however, in the last 15 years, this trend is changing.I. Background: Why Should You Care?Anesthesiology has been more insulated historically.

Anesthesiologists do not function as traditional gatekeepers to care, but this is changing secondary to pain management practices.

Anesthesiologists typically did not need to apply frequently for authorization consents.

Evolution of managed care and field of anesthesiology = direct impact presently.

I. Background: Why Should You Care?Every state and D.C. have managed care regulatory regimesThese are comprehensive and highly detailed.

Some aspects vary from state to state.

Some aspects standardized among the states.

Example: every state and D.C. have adopted prompt pay requirements specifying deadlines within which MCOs must process clean claims after receipt and impose penalties for noncompliance.

I. Background: Why Should You Care?MCO agreements presented to providers often do not comply with particular state legal requirements.

In some cases, there is a conflict with state legal requirements.

In other cases, a state may require specific language or provisions to be included in agreements that the MCO fails to incorporate or reference.

Agreements are increasingly supplemented with an addendum, but this is often difficult to reconcile with the provisions of the underlying contract.

Overview of DiscussionExamine practical considerations relating to managed care contracts with anesthesiology practices that can impact the way you practice and reimbursement.

Look at particular provisions in managed care contracts that are potentially problematic from the perspective of providers.

Help you to identify these provisions if they appear in agreements offered to you.Help you to understand the potential ramifications of these provisions and how they impact your practice.Discuss more favorable language from the providers perspective to use with MCOs during negotiation of the contract.

Overview of DiscussionDISCLAIMERA brief overview - not intended to be comprehensive. A VERY high level overview focused on just a few issues.

Call us with questions or if we can assist.

II. Practical ConsiderationsDo you get to choose which MCOs with which to contract?Your contract with the hospital and/or ASC where you perform procedures should include a provision regarding managed care participation.

Some hospital contracts require participation with the same MCO contracts as the hospital.

You may be able to negotiate better terms, even if you are required to participate in all the same contracts as the hospital.

II. Practical ConsiderationsThe hospital agreement may require only best efforts toward participating with its MCO contracts.

This option often gives you more leverage in negotiations.

Good idea to have a close working relationship and communications with hospital administration regarding contracting and its managed care department.

II. Practical ConsiderationsTypically the best option is to participate with those contracts in which the hospital participates.

Contracting with same MCOs as the hospitals and/or ASCs is not always possible if mutually beneficial terms cannot be agreed upon.

II. Practical ConsiderationsThe New Role for Physicians in a Managed Care World

Providers in managed care plans may be encouraged to reduce the number of specialty referrals or lab tests.

Provider assumes the role of patient advocate and intermediary when dispute arises between your medical judgment and the MCO.


II. Practical ConsiderationsExamples where the issue might arise for anesthesiologists:

A managed care plan has authorized only an outpatient procedure, but the patient develops a concerning arrhythmia in the recovery room and needs to be admitted;

A hurried (careless) surgeon refuses your request for a cardiology consultation because he/she dislikes the authorization process;

A managed care payer gives authorization only for a one-day admission to a non-monitored bed.

II. Practical ConsiderationsExercise independent medical judgment in the best interest of the patient, regardless of the influence of third-party payers.

Treatment must meet the same standard of care regardless of the nature of their health plans.

When disagreements occur, DOCUMENT every effort on behalf of the patient.

Keep detailed notes of explanations to patients and discussions with decision-making personnel at the MCO.

Provide optimal medical care and worry about reimbursement later. II. Practical ConsiderationsDue Diligence in Negotiating the Managed Care Contract

Do your research about the MCOs with which you are considering contractingRequest copies of all documents that support or explain terms of the contract. Extra-contractual documents to request and review include:provider policy and procedure manuals;patient/subscriber plan documents; and

utilization and authorization procedures guidelines.

Should be reviewed BEFORE signing the contract.

III. Managed Care Contract ProvisionsAlabama requires HMOs to provide a set of basic services. Alabama also requires provider contracts to include the following provisions, among others:The term, termination and renewal mechanisms;

Provisions for emergency services;

Payment/reimbursement methodologies described in layperson terms; (Good luck with that.)(include specific reference to reimbursement in accordance with the American Society of Anesthesiologists (ASA) guidelines.)

A description of the utilization review program and provisions for provider participation in utilization review; andProvisions for dispute mechanism.

III. Managed Care Contract Provisions1. Know the TERM of your contract.

Term refers to the period of time during which the agreement is effective. Typically, contracts have terms that range from 1-3 years.

For the provider, a contract term of 1 year is considered most favorable.

The contracts actual duration may be longer or shorter than the specified term because of the TERMINATION and RENEWAL provisions.

III. Managed Care Contract Provisions2. Know TERMINATION provisions TWO KINDS: with and without cause:

A. Can the MCO terminate the contract without cause?

Contracts may contain provisions that allow the MCO to terminate for any reason during the term.Prior notice periods typically run from 60-120 days.Some states regulate the use of without cause termination provisions. Some require reciprocity.The preferred termination without cause provision should allow termination by EITHER PARTY with 120 DAYS NOTICE.

III. Managed Care Contract ProvisionsB. Does the contract allow termination with cause in the event of a material breach?

What is the notice period for the with cause termination, and does it allow an opportunity to cure the breach?

How is with cause defined?

The preferred termination with cause provision should allow termination for cause by EITHER PARTY in the event of a MATERIAL BREACH with a 60-DAY PRIOR NOTICE PERIOD that allows the breaching party the OPPORTUNITY TO CURE.

III. Managed Care Contract ProvisionsC. Know what DUE PROCESS, if any, the MCO is obligated to afford.

The contract may not include; ask for any extra-contractual documents that outline due process rights.

State law may require procedural due process. A number of states have specified the due process that must be provided by MCOs prior to termination:

Written notice that describes basis for termination;Allowing access to any MCO documents supporting the termination; andProviding the right to request a hearing to challenge.

III. Managed Care Contract Provisions3. Know the RENEWAL terms Evergreen ProvisionsKnowing when to

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