Services | Leadership and Management Dev.
Managing Your Managed Care Contract
Know how and when you will get paid.
For example, contracts often state that clean claims will be paid within a certain number of days. The debate centers around the essence of clean claims. Typically, it means complete and accurate patient demographic information, coding of procedures and diagnoses, and insurance information.
For capitation arrangements, look for limitations on retroactive adjustments for patients being deleted from the membership rolls, a monthly report that confirms member rolls, and a convenient mechanism for confirming eligibility before providing services.
While all fee-for-service physicians should look for the definition of a clean claim, a payment timetable and a fee schedule, specialists should pay special attention to the referral process and requirements for getting paid.
Most important is dollars—understanding how much, when, and why you’ll get paid. It’s important to be able to equate capitation to your current fee schedule and understand the relationship between timing and cash flow.
Understand and define what will happen if a plan is taken over or merged.
If you contract with one HMO, which is then acquired by another HMO, is the contract assignable? If so, under what conditions?
It’s best to be able to limit assignability. If the contract is assignable, make sure it requires that the terms of the new contract are at least as good, or that you have the option of pulling out of the contract. Of course, the ability to negotiate any of these issues often depends on the clout of the practice.
Evaluate the impact of the contract on operations.
For example, what does the contract require in terms of referrals? And what kinds of operational roadblocks is the HMO likely to create for making referrals?
While some HMOs allow referrals to be generated electronically, others require hard copy or telephone referrals. Not being able to get through on a telephone line could alienate your patient base.
Get copies of all policy and procedures manuals.
Especially important is making sure you have some protection against unilateral changes — meaning the chance to review proposed changes and accept or reject them.
If the changes are onerous to you, you should have the option of continuing to operate under originally agreed-upon policies and procedures or dropping out of the plan.
Other suggested Guidelines:
- Make sure you have the ability to audit charges if you participate in a risk contract.
- Look for the opportunity to use incentives to improve the group’s financial performance.
- Understand why you are contracting with a particular payor.
- Secure protections against inflation by defining capitation or fee schedule increases.
- Be wary of mandatory ancillary referral relationships.
- In summary, focus on these issues in contract management:
- Focus on the dollars.
- Don’t be afraid to use your marketing leverage to push for favorable terms.
- Know which issues you can "give away." Don’t waste time on things you can’t win or that have minimal importance.
- Don’t forget to monitor administration of contract terms once you sign.