Tools To Negotiate Managed Care Contracts

Wednesday, November 18th, 2015

Managed care contracts must be negotiated between healthcare providers, such as doctors and hospitals, and a managed care organization (MCO) such as an HMO or a PPO. These organizations are always looking for discounted rates, which presents a challenge to providers who are facing rising costs and more legal requirements.

A common mistake made by many healthcare providers is to only look at the payment rates presented in managed care contracts. While those rates are important, there are other provisions in the contracts that are also important. Contractual provisions that are often overlooked by providers can create significant burdens and obstacles for providers. It is critical to identify each of these troublesome managed care provisions and negotiate terms which mitigate the risk each one presents. Healthcare providers can begin by preparing for negotiations and understanding the statutory and regulatory provisions in the agreements. Providers should also look at the payment rates and terms in managed care contracts.

Managed care contract negotiations

Healthcare providers need to realize that almost all provisions within a managed care contract are negotiable. The managed care organization (MCO) will try to tell the healthcare provider that the provisions are not negotiable, but that is simply not true. It is important the provider gets a copy of the agreement well before meeting with the managed care organization (MCO) representative to negotiate terms.

The healthcare provider should prepare a list of questions to ask the managed care organization (MCO). Some questions to ask include how many years the current agreement form has been used and which agreement provisions are most commonly modified. Providers should also ask about any major changes to the agreement form that were implemented within the past twelve to eighteen months.

Beside federal law, most states have their own statutory and regulatory provisions that govern the content of managed care contracts. The managed care organization (MCO) should have sections within their agreements which address these provisions specific to the state where the healthcare provider works. If a presented agreement does not follow the state’s statutory and regulatory provisions, the MCO should provide an agreement that does.

Payment rates within managed care contracts

Managed care contracts should state the payment rates. Rates may be presented as a fee schedule for products and services outlined in an agreement or as reimbursement based on the Medicare reimbursement percentage.

Managed care contract terms

Providers should review the standard terms of managed care contracts to see if there are any potential problems lurking in the fine print. There are many agreement terms that providers should pay particular attention to.

Does the contract require the provider to furnish services to all of the payer’s plans, even if the provider is not identified as a participant in a particular plan? This agreement term is often found in managed care contracts from some major insurance companies. Another agreement term to look for is the payer’s requirements for documentation. When a payer’s policies are not clear, the insurance company can withhold payment until the provider meets the payer’s unwritten documentation requirements.

Another provision healthcare providers should look for is a provision specifying insurance and indemnification requirements. The provider should not be required to carry insurance and compensate the payer against the payer’s own acts or omissions. Healthcare providers should also look at how managed care contracts define a “clean” claim. These contracts normally state how much time the provider has to submit claims to the insurance company for payment. Managed care contracts should also specify how long the payer has to pay a “clean” claim. The definition of a “clean” claim should also specify what documentation the provider must submit. Managed care contracts should include a method for resolving conflicts.

Healthcare providers should verify that all aspects of the reimbursement clause provide adequate compensation for services rendered. It is critical that the provider examine all the details in the reimbursement clause and schedule of fees. Some of the more common fees may provide adequate compensation. However, there may be some services or products the healthcare provider must offer that are not at an adequate compensation level.

If you are a healthcare provider in contact with a managed care representative, it would be beneficial to have an attorney review the proposed managed care contract before you begin negotiations. Give the healthcare team at Brown & Fortunato a call today at (806) 345-6300. You can also connect with us on our Contact Us page. Our website offers a full review of our other practice areas. Feel free to visit our office at 905 S. Fillmore, Suite 400, in Amarillo, Texas.

This information is subject to change. Please check for updates that are more recent than the published date of this article.