Question

what are some contracting issues in managed care? What do you feel could be done to bypass these issues?       

Answer 1

Managed care is any method of organizing health care providers to achieve the dual goals of controlling health care costs and managing quality of care. In the United States, we have a private and competitive health insurance system which will cause managed care to continue to evolve.

Managed care plans are a type of health insurance. They have contracts with health care providers and medical facilities to provide care for members at reduced costs. These providers make up the plan's network. How much of your care the plan will pay for depends on the network's rules.

The contract between a physician or other health care professional and a managed care organization (MCO) such as a provider-sponsored network, integrated delivery system, health maintenance organization, or other health care plan, is the fundamental document which frames, defines and governs their relationship. Contractual provisions can affect payment, office organization, practices and procedures, and confidential records as well as clinical decision-making.

Traditionally, the relationship between a doctor and his or her patient required no formal, written engagement. Society understood that the doctor was responsible for rendering medical services to the patient according to the community's standards of practice, and in turn, the patient was responsible for paying the physician's usual and customary fees.

The evolution of health care reform, in particular the emergence of third party payors and managed care, has contributed new elements to the intrinsic doctor-patient mix that require increasingly complex, structured agreements which prescribe who renders medical services, and how, when, and what medical services are rendered. Today, providers should carefully examine the provisions of every contract before undertaking the commitment to abide by its terms. A good managed care contract, like any other form of business agreement, is clear, consistent, comprehensive, and concise. It will conform to both the intent of the parties, setting out their respective rights and responsibilities, and the requirements of state and federal law.

Preferred Provider Organization (PPO)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Health Maintenance Organization (HMO)

An individual that needs to secure his or her own health insurance plan may find a variety of health insurance providers with unique features. One type of insurance provider that is popular in the health insurance marketplace is the health maintenance organization (HMO), which includes a network of physicians under its coverage.
A health maintenance organization (HMO) is a network or organization that provides health insurance coverage for a monthly or annual fee. An HMO is made up of a group of medical insurance providers that limit coverage to medical aid provided from doctors that are under the contract of the HMO. These contracts allow for premiums to be lower since the health providers have the advantage of having patients directed to them, but these contracts also add additional restrictions to the HMO's members.

Managed Care Contract Issues

Amendment Language

One of the key problem areas in managed care contracting involves amendment to the agreements. Providers should be diligent in restricting the managed care organization's ability to unilaterally amend the contract. If possible, the provider should negotiate an amendment provision which requires the consent of either party prior to any amendment. At a minimum, the provider should be entitled to advance notice of the effective date of amendment. This should be monitored not only for the actual terms of the agreement but also for terms of program attachments or policies and procedures which deal with the administration of the managed care agreement.

Solution:

Providers should read the Amendment section carefully and reject any language which gives the Payor unilateral amendment rights. If the agreement requires the Payor to provide notice of amendment and states unless the Provider objects within a certain time period (usually 30 days or less) then the Providers should monitor the Payor's conduct carefully and immediately object (in writing) to any proposed amendment which they do not want. Failure to do this could provide the Payor with a de facto unilateral amendment right.

Silent PPOs

A silent PPO arises when a contracting entity negotiates discounts with a Provider and then sells access to discounts to other, non-related parties after the Provider renders services to individuals covered by the non-related parties' insurance policies.

Solution:

• Try to include language in the PPO agreement requiring all parties who have access to the discounts to have a contract with the PPO
• Have PPO guarantee that its logo will be present on the patient's insurance card
• Have PPO require that all of its clients use its network exclusively in a geographic area
• Carefully define who the Payor is
• Specify the required component of the agreement between the PPO and Payor clients
• Limit the network size and build in financial penalties for increasing network size
• Attach Payor client list to the contract and assure that an addition will not be effective unless and until the Provider consents in writing
• Require payment rate confidentiality
• Prohibit any assignments of the agreement (Silent PPO arrangements may be considered partial assignments)

Medical Record Issues

Under South Carolina law, a patient has the right to confidentiality for the information contained in his or her medical records. Providers must protect the confidentiality of their patients' records. A patient's medical record is confidential and providers may be liable for breach of confidentiality if they divulge such confidential information related to a patient without the patient's consent or when required by law. This would include valid and proper subpoenas and court orders.

Dispute Resolution Process

Many managed care contracts contain dispute resolution clauses. Dispute resolution clauses deal with how disputes related to the agreement will be handled by the parties. A dispute resolution process may include the following:

• Mediation - This is an informal process where an independent third party will try to bring the parties together in agreement before the initiation of arbitration or litigation;
• Arbitration - This is a more formal and often binding process in which both sides present their respective position to an independent arbitrator who will decide the outcome of the dispute; and
• Litigation in court - This is a traditional bench trial in front of a judge or a jury trial in front of a jury.

Utilization Management and Quality Assurance Programs and Compliance

One of the key problems in the areas of utilization management and quality assurance is that the managed care organizations will subject providers to utilization management policies and procedures which are inconsistently and unfairly administered. In some cases providers are not even provided copies of these policies. Prior to executing any managed care agreement, providers must review each utilization management or quality assurance policy carefully and determine whether the payor had the right to amend this policy unilaterally or whether the policies are unfair. If the payor does retain a unilateral amendment right then the utilization management requirements can be a "moving target" for the provider which can give the payor more of an opportunity to wrongfully deny providers claims. In addition, providers should negotiate appeals rights for utilization management decisions in order to protect the business arrangement negotiated and arranged for by the providers when the contract is executed.

Co-pay and Deductible Collections

Providers may bill enrollees and HMO only for previously specified payments such as co-payments, deductibles, or for non-covered services. Under these circumstances, the provider may not bill the patient if the HMO fails to pay its share of the bill. In South Carolina, this "hold harmless" law only applies to HMO agreements and other managed care organizations are not required to include this type of "Hold Harmless" language in their non-HMO managed care contracts.

Solution:

The use of the hold harmless provisions usually comes into play for the difference between what the Providers charge and what the health maintenance organization actually pays for a procedure. It is not designed to prevent Providers from seeking co-payments, deductibles, and payment for non-covered services from Enrollees. This type of provision is designed to protect Enrollees from paying more for their health care than bargained for and, in the case of bankruptcy of a health maintenance organization, keeps the patient from being held responsible.

Obligations After the Termination of a Managed Care Agreement

A providers should think in advance about its obligations under the agreement once the contract has been terminated. Oftentimes payors will attempt to obligate a provider to continue to see patients for a certain period of time at a discounted rate. Since the provider will likely continue to see the patient as a matter of continuity of care, the provider should negotiate higher rates or lower discounts once the notice of termination has been provided.

Billing and Claims Issues

In order to protect providers' right to reimbursement, providers should attempt to negotiate "clean claim or uncontested claim" language into the contract. Under this concept, once the provider has issued a clean or uncontested claim, then the payor would have a certain period of time in which to pay that claim. Often times, payors use ambiguous definitions of clean claims as a means of not paying claims. Provider should attempt to negotiate as narrow a language as possible to cover what its obligations are to meet the clean claim.