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Managed Care Contracting and Payment « The Central Line

Archive for category Managed Care Contracting and Payment

Anthem (and others) to Cut Payment for E&M-25 by 50%

Recently, Anthem in Kentucky (and other states), Harvard Pilgrim, and other plans (so I hear), have established policies to reduce by half payment for Evaluation and Management (E&M) services when accompanied by a -25 modifier and billed in combination with some 150 specific (and commonly used) preventative and procedure codes. The -25 modifier is supposed to indicate that these services are ‘separately identifiable’, according to AMA CPT coding rules. The rationale for this 50% reduction is that the plan does not want to pay twice for ‘the overlap of overhead expenses in the RVUs of the code combinations’. Anthem KY also plans to ‘make improvements in (their) primary care fee schedule allowances for office E&M codes’, but it is not clear to me if these improvements are intended to compensate for some or all of these reductions (don’t count on it).

Initially, I was not sure whether this policy would apply to both office based and facility based providers, so I contacted Anthem in KY to see. Though there was some confusion about this at first, the latest response I got from Anthem KY was that “Emergency Room Physicians will NOT be affected by the 50% reduction in payment”. I do not know at this point whether or not this exception also applies to other facility based providers. When I initially saw the policy statement from Anthem, I replied to them that:

I do not believe that ANY portion of the RVUs assigned to the E&M service should be ignored, deleted, modified, or considered duplicative to the RVUs assigned to the additional procedure when separately identifiable services are coded on the same claim. This is what CPT means by ‘separately identifiable': it means ‘distinct from’. The overhead expenses associated with an E&M service are likely to be completely separate and independent of the practice or overhead expenses associated with the procedure: incremental rather than overlapping. For example, the major practice expense for an office-based practitioner associated with the performance of an ultrasound is the cost of the machine and the cost of the training to perform the service. Neither of these are necessarily duplicative of, or overlapping with, the practice expenses associated with the provider’s E&M service.

In the case of facility based providers, like emergency physicians, the practice expense component of the E&M services are likewise separate and distinct from the practice expenses associated with procedural services by these providers, AND IN ADDITION, the practice expense component of the emergency physician’s E&M services represent a very small component of the overall RVUs assigned to the E&M service – certainly far less than 50%.

I indicated that this policy was inappropriate whether or not it was applied to office based or facility based providers. It is my understanding that several plans have initiated or are planning to initiate this same sort of payment policy. The AMA has also responded to this development. The fact that Anthem in KY is apparently not going to apply this strategy to emergency physicians, and perhaps other facility based providers, and the argument above against this practice, is an opening that other providers can use to push back when faced with these payment reductions. The unilateral decision by health plans to re-invent or re-interpret CPT claims coding rules on the fly, using rationales that appear more like rationalizations, begs for adoption of standardized, universally applied coding/payment rules for all payers.

This post also published in The Fickle Finger

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Value Based Purchasing of Emergency Care – Part 1 Recommendations for Payers

Value based purchasing is a strategy for health care financing that attempts to hold the provider accountable for both quality and cost, through a combination of reductions in inappropriate or ineffective care and rewards for those providers that are ‘the best performers’. 1 Unfortunately, most insurance plans, and employer purchasers of health care, are simply looking to reduce payments to providers, and they all but ignoring the issue of quality or even cost-effectiveness. When it comes to the purchase of emergency care, the payers really seem to have taken a wrong turn, predicated on a lot of misconceptions about the role of the emergency department and the value equation for emergency care services.

This blog is aimed at the primary purchasers of health care: the plans, employers, and government programs that purportedly aim to adopt value based purchasing as an adjunct to, or replacement for, fee for service medicine. For every ‘don’t do that’ I will include a ‘consider doing this’, because up until now many emergency care advocates have either advocated some sort of carve-out for emergency medicine, or focused on the defense of the emergency care value proposition (like ACEP’s ‘just 2% campaign‘). Emergency care providers have to become part of the solution to the cost-of-care conundrum if they hope to retain any credibility with insurers and legislators. In Part II, I will outline some do’s and don’ts for providers under value based purchasing. So, I suggest that the purchasers:

• Don”t expect emergency physicians to act as ‘gatekeepers for acute care’. Emergency physicians are trained and motivated to provide care, not deny care. Coercing emergency physicians to ‘defer ER care’ for so-called non-urgent patients by down-coding claims or denying coverage is a low-gain, moderately high risk strategy that is a distraction from pursuing more cost-effective strategies (see:

Do encourage and incent primary care physicians and clinics to provide more after hours and next-day appointments. It is better to pull patients who do not need to go to the ED into other venues than to insist that ED physicians push them out.

• Don’t punish emergency care providers through non-payment and under-payment with the expectation that it will teach patients not to misuse the ED.

Do consider assisting EDs in identifying patients who use the ED repeatedly for acute exacerbations of chronic conditions, and who could benefit from active case management starting in the ED (and compensate providers for this case management – this is a strategy with an excellent ROI).

• Don’t assume that if a patient is admitted from the ED to an observation unit, and then subsequently admitted as an inpatient; this necessarily represents ‘double-dipping’ by the emergency physician. Payment for observation services is a cost-effective way to keep patients out of the hospital, and identify patients who, if discharged inappropriately, might return later for more expensive service.

Do provide feedback to emergency care providers about the population-based financial consequences of their use of chest pain centers and observation units, so that these services can be used more cost-effectively.

• Don’t use coercive contracting of EMTALA-obligated providers as a means of achieving cost-savings: it is abusive, and undermines the financial viability of the emergency care safety net. Commercially insured enrollees and their insurance plans depend on the availability of qualified emergency physicians and on-call specialists to SAVE them from unnecessary disability and higher costs down the road.

Do consider implementing shared-savings, utilization risk-pools, case-limit rates, and other contractual incentives (with appropriate guidelines and benchmarks) to encourage emergency physicians to adopt cost-effective care strategies in the ED, when the hospital is appropriately aligned with such strategies in their financial models.

• Don’t try to undermine, work around, or revoke the prudent layperson standard through the use of ‘non-emergency diagnoses’ lists or high ED visit co-pays. This standard ensures that enrollees will go to the ED when they should, reducing avoidable delays in care that result in unnecessary long-term disability and even greater long term costs to insurers. A single case of a missed opportunity to treat a stroke can cost insurers far more than it costs to treat fifty patients in the ED whose symptoms turn out to be non-serious.

• Do focus on where the ‘real money’ is spent, that is, where the major health care costs, on a population basis, are incurred, and the real opportunities for cost-savings and quality improvement exist. No doubt the ED is one place where such opportunities lie, but at only 3% of the health care dollar, the ED is by no means the target of opportunity that it is made out to be.

• Don’t automatically down-code ED physician claims, especially E&M level 4 and 5 claims, simply because these providers have to care for your enrollees whether they get paid appropriately or not. It is also abusive, and undermines your credibility as an insurer or payer.

Do, if you identify outliers who appear to be overcoding claims, utilize medical records audits by trained coders and recognized standards of coding, to explore these apparent overcoders in depth, and offer to adjudicate these claims in a fair and reasonable process.

If any of you have additional do and don’t suggestions, please reply below.

1. Theory and Reality of Value-Based Purchasing – AHRQ

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Participation by Emergency Physicians in Compensation Driven Cost Containment Strategies

It strikes me that in developing payment reform related, compensation driven cost-containment strategies aimed at constraining the cost of emergency care, policy makers, emergency physicians, and health insurers should adhere to certain principles. ACEP should be at the forefront when it comes to establishing these principles, which I hope will be focused on protecting our patients first, and our specialty second.

The concept and practice of ‘managed care’ has raised some very reasonable concerns about the way some physicians’ commitments to the welfare of their patients has been compromised by the financial incentives inherent in compensation arrangements like capitation and risk-pools. If emergency physicians are going to be engaged, willingly or reluctantly, in cost-containment oriented incentive compensation programs; we need to make sure that the competing interests of patients, providers and insurers (including the government) are balanced properly, and morally.

I thought I would take a shot at formulating a few of these principles, and encourage readers of this blog to suggest changes and propose additions.

1. Cost containment strategies for emergency care should focus first and foremost on cost-effective care, with the emphasis on effective.
2. Shared-savings, pay-for-performance, capitation, risk-pools, and similar payment reform programs designed to incentivize emergency physicians to reduce the cost of providing emergency care must not result in a reduction in necessary care, an unreasonable delay in the provision of care, a significant increase in medical risk to patients, or a significant decrease in patient satisfaction with care; or shift the burden of care to those who are unwilling and/or unable to provide this care.
3. Cost-effective care strategies should be evidence-based where possible, though common sense strategies should also be considered even if evidence in favor of such strategies is not abundant.
4. The proportion of total reimbursement that emergency physicians derive from the successful adoption of cost-containment strategies, relative to the proportion derived from payment for services rendered, should be limited in order to ensure that these cost-containment incentives do not overwhelm service-driven and outcome-driven medical decision-making.
5. Strategies that rely on the deferral of care in the ED should be considered as relatively high-risk, low-reward strategies when compared to others that are focused on cost-effective care and high-cost services.
6. Cost-containment strategies for emergency care should be transparent to patients, providers, insurers, and policy-makers.

Any other ideas out there?

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The Independent and the Employee Models of EM Practice – Where Are We Going?

You will notice that the title of this blog is not ‘independent vs. employee model’: I readily acknowledge that I know little about being an employed emergency physician. Having spent my entire career as, initially, an independent contractor, and then as a partner in a large EM partnership; I am not the guy to be making a comparison between these modes of EM practice. However, I recently heard from one of ACEP’s Board members (Dr. Kivela) that approximately 55% of emergency physicians in this country are now employed by hospitals (or was that employed by someone?). In either case, this fact led me inevitably to reflect on these two modes of practice, and the many variations on these themes, and how this trend towards more EP employees and fewer EPs practicing as independent contractors or partners is likely to impact the practice of EM, our patients, our hospitals, and our specialty.

Of course, this is a topic that could never be covered in a blog, perhaps not even in a textbook, but I hope to generate some discussion of these issues here in The Central Line and elsewhere. I have far more questions than answers to offer, as you will see; but these are questions that we should try to answer before they are answered for us. Health Reform is going to put even more pressure on the independent EP practice model as policy makers and insurers push to consolidate providers into vertically integrated health care systems to foster accountability and coordination of care (euphemisms for risk-sharing and cost-cutting). How our specialty and the house of medicine respond to this pressure will have a major impact on the practice of EM, from the choice of meds we use to the professional affiliations we make.

One of the first questions that come to mind when exploring independent and employee models of practice revolve around the corporate practice of medicine. There are only a handful of states that have a bar against the corporate practice of medicine, and enforcement of these bars vary considerably. The rationale for prohibiting corporations from influencing the practice of medicine is nicely summarized by the CA Medical Board: and the gist is that this bar is “intended to prevent unlicensed persons from interfering with or influencing the physician’s professional judgment”. The Medical Board provides examples of “types of behaviors and subtle controls that the corporate practice doctrine is intended to prevent”. Hospitals are sometimes exempted from such state bars, as hospitals are also licensed, but the concept is premised on an obligation to protect consumers (patients) from profiteers, and hospitals are no strangers to the profit motive. First question: Are EPs who are employed by hospitals more or less subject to controls and subtle pressures impacting medical decision-making than EPs who are employed by a medical group, or EPs who are part of a medical partnership, or EPs that are independent contractors? I know for a fact that EPs who practice in the ‘independent mode’ can be subjected to such pressures, geared towards improving the hospital’s bottom line, especially since EM group–hospital staffing contracts can be, and have been, canceled for ‘no cause’; and I suspect that employed EPs are regularly subjected to subtle (and not so subtle) pressures to adjust their practices to accommodate hospital employer expectations and financial goals. Put another way: if you were a patient in an ED, would you have more trust in an EP who was a hospital employee or an independent contractor or a partner in the EM practice? How about if he or she was an employee of your insurance plan? There probably isn’t any data to support your preference, but perhaps there should be. The rise of managed care, risk-sharing ventures, IT demands on investment capital, and the surge of interest in ACOs is going to put increasing pressure on states to eliminate or modify corporate bars on the practice of medicine. Wouldn’t it be appropriate for legislators to know how ‘corporate influences’ impact the care we provide, and how patients feel about that?

Here are some more questions that deserve to be answered: Which practice mode pays EPs more appropriately? Which contributes more towards enhancing the value of EM practice? Is a hospital CEO more likely or less likely to appreciate excellent EP care and service if the EP is an employee or a member of a contract staffing group? To whom do employed EPs look when seeking support for improved salaries or working conditions? Should ACEP develop into a union for these physicians? I heard a rumor that some hospitals have discouraged their EPs from joining ACEP – is that true?

Which mode of EM practice provides greater encouragement or incentive to document their care appropriately so as to assure appropriate third party reimbursement? Are hospital-employed EP salaries indirectly dependent on the ability of staffing-contract EPs to collect fair payment from health plans? Do independent mode EPs have greater or fewer opportunities to move to new communities and keep their ‘tenured’ pay rate? Are they happier with their practice setting? Which has the better malpractice experience? Which offers more support when the provider is sued?

I could go on, but you get the gist. There may be no good way to really answer many of these questions, but this shouldn’t deter us from discussing the issues. Let me give you just one example of why these considerations need to be aired. ACEP is going to be developing strategies for EP participation in ACO risk-sharing, payment bundling, and shared savings arrangements under health reform. I have no doubt that these strategies may be very different for hospital-employed EPs, for academic group EPs, staffing contract model EPs, and medical group employed EPs. ACEP may not have the resources to address each of these strategies for each of these member groups, so where should the emphasis be made? Here’s another: ACEP is increasing its advocacy role in DC, and reaching out to EPs to financially support this effort separate from ACEP dues. Which EPs are more likely to contribute to this effort? Should some ACEP advocacy resources be expended to support the independent practice of EM, or should ACEP be advocating for the right to represent employed EPs, or both?

If you are worried that discussing these questions exposes the soft underbelly of EM, or somehow might precipitate the deconstruction of the cooperative venture that ACEP represents: get over it. The forces aligned to divide and conquer the practice of emergency medicine, and the practice of medicine in general, have already begun their work, and everything that defines our profession is now in play.

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Some Additional Thoughts on ACOs

ACOs are coming to a health care market near you. About the only real difference I can see between the ACO model and the ‘managed care model’ is that health plans (or Medicare or Medicaid) will be using incentive payments to promote cost-effective care, rather than (or in addition to) capitation payments as a risk sharing (or risk transferring) strategy. These incentive payments will include aggregate payments negotiated between the ACO and the payers, and incentive payments to individual providers within the ACO that are eligible to receive these incentive bonuses. This may seem like a new approach, but it is really not much different than the ‘risk pools’ that plans once used to incentivize medical groups and IPAs to hold down costs. I guess that everyone assumes that this risk-sharing concept has a better chance to work now that all these sophisticated tools like EMRs and chronic disease management advocates are around to help coordinate care.  Some folks might argue that ACO incentives are about promoting effective care, but trust me, the emphasis is likely to be on COST first, and effective, second.

ACOs are not just meant to exist under the Medicare program, so it is likely that many of the payment methodologies and organizational entities (like IPAs, medical groups, PHOs, and integrated health systems like Kaiser) are going to get into the ACO game on the commercial side as well as the government payer side. Consequently, there might be an opportunity here to rewrite, at the federal and especially the state level, the rules under which commercial and government sponsored managed care has been operating for the last few decades. If you have the chance to influence the way ACOs will operate, and the rules they must follow, in your State, or at the federal level, you might consider promoting some of the following suggestions, which are born of many hard lessons learned from the most abusive and inappropriate practices of managed care plans and provider groups around the country (and especially in California, where managed care took root many years ago).

• A managed care model that limits the percent or number of physicians who have equity ownership of the organization is likely to promote both practice and payment policies that preferentially derive benefits for the equity holders rather than for the providers and their patients. Also, it is easier to get physicians ‘on board the bus’ if they all have an equal stake in the success of the organization. ACOs should have broad, and preferably equal, equity participation among all participating physician providers.

• Physician leadership in ACOs should continue to provide clinical services so that they experience the impact of the clinical practice policies they develop and promote.

• When developing payment policies for different physician specialties and roles in the ACO or Foundation model, consideration should be given to whether the physicians are obligated to take on the care of the under- and uninsured as a part of their practice, and these obligations should be considered part of the practice overhead of these physicians, relative to the physicians in the ACO who can and do decline to take on these responsibilities in their practice.

• Foundations and ACOs that are initiated by, or intimately tied to, hospitals have often and particularly used coercive tactics in negotiating contracts with hospital-based providers. Coercive contracting must be countered by strict rules regarding the development of fair market discount and other payment arrangements with hospital based providers, especially those whose ability to decline participation in caring for ACO patients is limited by EMTALA or by virtue of at-risk departmental staffing contracts with hospitals.

• Carve-outs and selective enrollment and dis-enrollment policies must be strictly limited in order to ensure that ACOs and Foundations do not game government sponsored capitation programs.

• Primary care centered ACOs should not be responsible for the payment of the claims of non-contracted non-elective services, as this will encourage these ACOs to inappropriately pay claims rather than manage patient care as a means of reducing costs and increasing profits.

• ACOs that take on claims payment responsibilities for all professional services should be required to contract for non-elective as well as elective specialty care services, so that the ACO does not have to rely on the EMTALA obligation of ED on-call specialists for non-elective and after-hours care.

• ACOs should not be delegated the responsibility by a health plan for paying the commercial claims of non-participating providers: this should be the responsibility of the health plan, with cap deductions or risk pool arrangements to ensure that the ACO does not over-utilize non-par provider services.

• If an ACO becomes financially insolvent, the health plan should be responsible for unpaid commercial ACO-delegated claims, under the concept of negligent delegation.

• ACOs should be accountable to their community, and not just to their assigned patients.

• ACO administrative overhead should be counted against the 85% mandatory health plan medical loss ratio requirements under health reform.

• If an ACO does not have a nurse-advice line or similar mechanism for assisting patients in deciding whether or when to use emergency department services, it should not be allowed to retroactively deny coverage for emergency department services based on the prudent layperson standard.

• Hospitals that participate in, contract with, or develop ACOs should be required to collect data on hospital inpatient and outpatient care services and outcomes that can be accessed and reported by ACO providers in order to meet performance and reporting benchmarks.

Courtesy of a recommendation from a friend, Dr. Joel Stettner, let me also suggest you view the following video, which is very funny, and sadly all too accurate:

YouTube Preview Image

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The Balance Billing / Fair Payment / Hospital-based Physician Conundrum

Efforts to prohibit balance billing by non-contracted hospital based physicians, especially for emergency care patients, continue to confront ACEP state chapters left and right (or should I say North, South, East and West). It is pretty clear that many legislators and insurance regulators see this as a consumer protection issue, predicated on the fact that in an emergency, most patients do not have the ability to shop for providers that are contracted with their health plan; and that when they go to their ‘networked hospital’, it is with the expectation (often built upon misleading health plan assertions) that all of the docs at this hospital will be contracted with their plan. Health plans, regulators, and legislators are also motivated by the desire to contain costs; and for the plans in particular, prohibiting balance billing by hospital-based docs is the camel’s nose under the tent for control of all physician-related outlays.

The simplest solutions equate to fee setting. Fortunately, no one seems quite willing to go there….yet. I think this is because most folks recognize that setting fees at the wrong level could lead to disastrous unintended consequences, especially given physician shortages in this country. The AMA considers the balance billing issue to be a problem with ‘inadequate networks’, but pressure on plans to include more hospital based docs in plan networks often just results in more coercive contracting.  This is where the plan pressures the hospital to leverage the staffing contracts of the hospital-based docs, to force these docs to accept deeply discounted contract rates with the plans. This has unintended consequences, too. Hospital employment of physicians would certainly ensure that these docs were contracted with all of the hospital’s networked plans; but hospitals are notoriously poor at collecting for physician services, and the downsides of the corporate practice of medicine are real. You would think the marketplace would have resolved this issue; but because of EMTALA and coercive contracting and the burden of the uninsured and the lack of good regulatory oversight; the market for emergency care services is really not a fair and free market.

The conundrum is: how do we make sure that emergency care providers and hospital-based physicians subject to EMTALA’s mandate are sufficiently compensated for commercially insured services so that they can meet their mission to provide care to all those uninsured and under-insured patients, and at the same time keep insured patients out of the middle of disputes between plans and providers over the reasonable value of emergency care and hospital-based physician services? One could argue that the patients should not be excluded from the debate, but the plans and legislators easily trump that argument with tales of egregious charges by a few ‘greedy doctors’. Hospitals and plans could be required to include physicians in three-way network contract negotiations, but that is  impractical. Hospitals could be forced to provide subsidies to make up for the losses incurred by hospital-based docs who are forced to sign contracts with plans at deeply discounted rates; but many hospitals are already going bankrupt supporting flagging ER on-call rosters, and really it is the plans who are making most of the profits nowadays. Plans should not be able to say:  ‘the uninsured are not our problem’.  Some legislators (most recently in Illinois, in exchange for honoring assignment of benefits) have proposed fee arbitration as a solution, but the arbitration of millions of underpaid non-par claims is just ridiculous, not to mention hugely expensive. Any so-called solution that does not result in the vast majority of claims being paid appropriately up-front is doomed to failure.  Others have proposed all sorts of inventive solutions to balance billing that would precipitate one or more serious unintended consequences by failing to address charge outliers or relying on fee setting or ignoring claims dispute resolution or relying on impossible claims management procedures. What is a well-meaning regulator or legislator to do?

One alternative is to try to get at the issue by addressing fair contracting rates for hospital-based physicians. Some advocates of what would essentially be ‘forced health plan contracting’ for hospital-based physicians argue that these physicians should accept contracting discounts from their usual and customary charges because their hospital’s networked relationships provide them with patient referrals, and that the only real question is: what is a reasonable contract rate? There are lots of different considerations that are usually exchanged for a fee discount in managed care contracting, referrals being but one of them. Determining a ‘reasonable contract rate’ is no easy matter, especially since contracting rates are supposed to be confidential between plan and provider, so getting at valid ‘usual and customary contracting rates’ would be difficult, if not an outright anti-trust violation. There are so many other terms and conditions negotiated in contracts with plans that establishing fair-market-driven contract rate standards for hospital-based physicians is probably a hopeless cause.

ACEP has addressed the balance billing / fair payment issue by developing a set of fair payment principles and model legislation. The ‘solution’ eliminates the need for balance billing and is predicated on using usual and customary charges to get close to the reasonable market value of non-contracted services and to address charge outliers, and on the establishment of a fair, fast, and cost-effective claims dispute mechanism to address the other causes of claims underpayment for non-contracted (and contracted) services. These and related documents can be found on the ACEP website: http://www.acep.org/advocacy.aspx?id=22188 This is a complicated issue requiring carefully constructed components and backstop measures to ensure a balanced approach to balance billing and fair payment.

Considering the fragile state of the emergency care system in the U.S., and the proclivity of legislators and regulators to ‘fix’ complex problems without really understanding them first; there are no perfect or easy solutions to the balance billing / fair payment issue that can be enacted without the risk of punching great big holes in the safety net, and making it impossible for emergency care providers to fulfill their mission.  ACEP’s solution is neither perfect nor easy, and not everyone will be happy with it, but it is workable, and reasonable.

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Ten Key Elements to Successful Contracting with Managed Care Plans

In the last ten years or so I’ve had the opportunity to participate in the negotiation of close to half a billion dollars worth of managed care contracts on behalf of my ED partnership. I’ve learned a thing or three from this experience, and wanted to share some observations and suggestions about managed care contracting with my emergency physician colleagues. in part this is because I believe a rising tide raises all boats. Unfortunately, when it comes to managed care contracting, many emergency physician groups have great difficulty just staying afloat. There are lots of reasons for this: coercive contracting (when your hospital ‘encourages’ you to contract with their health plan network partners), lack of attention to the issue, an inability to understand the managed care market in their communities, lack of contracting experience and lack of resources, inadequate billing and collections data, and so on. The result is that many emergency physician groups leave a lot of money on the table – revenues that may be critical to their ability to recruit and retain qualified physicians in their EDs and fulfill their mission. If you think that as a hospital employed ED physician, this does not impact you….well, all I can say is that if your hospital is giving your services away at bargain rates, chances are this impacts your reimbursement in some way or another.

Assuming for a moment that your ER group’s ability to pay you fair compensation for your services is to some extent dependent on the group being able to get the best possible terms in the managed care contracts the group negotiates with commercial, Medicare and Medicaid managed care, and self-insured indemnity plans: here are some considerations that might be important to you.

1. It is absolutely true that, in a negotiation, if you can’t say ‘no, thank you’ and walk away, you are all but screwed. Coercive contracting is a very real issue, and hospitals are frequently enlisted to get their hospital based physician groups to line up and sign deeply discounted, below market rate contracts with plans. The key to neutralizing coercive contracting is to invest the time and effort into convincing your hospital CEO or CFO that it is in the hospital’s interest, over the long term, to give hospital based physicians the room to negotiate fair market rates for their services.

2. Your group’s billing company and claims management team is critical to managed care contracting. You get what you pay for, and going for the cheapest service is penny wise and pound stupid. In contracting, data is king, and a good billing company should be able to tell you more about the financial impacts of contracting terms, current and future, than even the plan itself may be able to bring to bear. In particular, the ability to line item post payments against each code included on a claim is very useful, and a sophisticated claims management system is a must.

3. Most physician groups think that the only thing that needs to be negotiated in a managed care contract is the rates. WRONG. Every line in the plan’s contract is designed to benefit the plan, not you, and every provision is negotiable, and deserves to be review carefully, and challenged when it is either inappropriate to your practice or too adverse to your interests.

4. Once you agree to a rate with a plan, the plan is likely to try to use every other means at its disposal to pay you as little as it can get away with. They do this by aggressively down-coding your claims, bundling your codes, denying coverage, and dragging out the time it takes them to pay. Thus, these ‘terms’ are just as important to address in negotiations as the rate. If, for example, the plan intends to deny payment for ECG interpretation and report, you should know that up front, and negotiate a better rate for E&M and surgical services to make up for this loss.

5. No matter who negotiates these ontracts for your group, they need to have sufficient support, especially data support, to maximize their results for you. Of course, larger groups have an advantage in terms of contracting resources, but both large and small groups can benefit from the assistance of contracting consultants who can provide both negotiating experience and knowledge of contracting markets and plan behavior and strategy.

6. Direct physician involvement in managed care contracting, whether the plan is local or national in scope, is almost always useful. First, who best to advocate for physician reimbursement than a physician; second, physicians have gravitas; and third, physicians understand the nuances of clinical service that often come up in discussions around EMTALA, prudent layperson, necessity of care, medical record documentation, and other claims payment issues.

7. If your group’s billing company or practice management service is not routinely disputing underpaid claims, and you are not taking advantage of whatever regulatory agency claims dispute processes may be available, then you will not have laid the groundwork for successful managed care contracting. Plus, you will be leaving even more money on the table. Having disputed thousands and thousands of underpaid managed care claims, both contracted and non-contracted, I can assure you that the direct and indirect ROI is considerable.

8. If your group has more than a few managed care contracts, you need to maintain a managed care contracting database. This database should allow you to easily access all your contracting terms and key provisions, and also calendar dates for expiration and renegotiation of these contracts. Many contracts have automatic renewal provisions that extend the contract unless you give notice of intent to renegotiate.

9. There are all sorts of resources on the net covering managed care contracting and negotiation strategies, and state medical societies are often a good source of information about contracting and some even assist with contract language review, or have resource materials covering contract provisions. Even if you don’t negotiate health plan contracts, negotiation is something that happens every date in our lives, and it doesn’t hurt to learn some of the ropes.

10. A contract with a managed care plan need not necessarily be the reflection of a winning and a losing strategy – there are plenty of opportunities to fashion contract provisions that benefit both the plan and the provider, that reduce the plan’s cost for claims processing or claims dispute while it reduces hassles or payment delays or claims submission costs for the provider. Win-win is possible in the health insurance industry (though unfortunately, not all that common).

The Central Line has set up a managed care contracting category. I encourage other bloggers to chime in on this important topic. Hope to hear from you.

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