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

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

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

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

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

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

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

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

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 20-30 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

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

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

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

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

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%).

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

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

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

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

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?

Where are you on the Map?

“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

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

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

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

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

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

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

Questions? CARIS Innovation, Inc. 5871 Main St. Abrams, WI 54101 (920) 826-5300 Carrie Romandine Chris Duprey