It is important that managed care contracts be closely scrutinized from many angles to assure emergency medicine practices are getting the proper reimbursement. Many savvy practice leaders and physicians understand that complex language within a contract requires strict attention to assure reimbursement is met and follow through in what is stipulated. However, many facets of managed care contracts outside of the language can be overlooked and therefore directly affect a practice's reimbursement.
Pay attention to the language in your contract
While practice leaders may understand the language within each individual payor contract, it is important to dig deep into an existing contract to understand what is or is not included and what can be renegotiated for greater reimbursement opportunity.
Going beyond understanding the contract language, smart, strategy-driven renegotiation tactics can be built into a contract to affect reimbursement on an ongoing basis. Benchmarking an emergency medicine practice’s percentages of its coding acuity levels and procedures and then modeling out the different rates can easily illustrate differing reimbursement levels for the best fit. There are several parts of managed care contracts that emergency medicine practices should be aware of, and while not all can be directly negotiated by the practice, it is important that each piece of the managed care contract is scrutinized, negotiated or modeled to optimize emergency medicine reimbursement.
Sense of renewal
First and foremost is the need for vendors and clients to stay on top of when a contract can be renegotiated, or the evergreen date. The time of contract renewal is one of the most important things to know in an effort to begin negotiations. There are instances when a contract must be renegotiated within a specified time period of the evergreen date. A third-party billing vendor, such as Medical Management Professionals, may begin working with a practice that already has existing managed care contracts. Early identification of contract renewal dates or evergreen date clauses is crucial to ensure re-negotiations occur to increase the per unit reimbursement. Renegotiation tactics include stepped increases and escalators, which can be built upon existing rates in the contracts.
To be or not To be?
Hospital-based practices can elect to participate with the hospital's contracted payors, though sometimes this is not an option. A practice must review the verbiage in its contract with the hospital regarding managed care participation. Some hospital contracts require that practices participate with the same managed care contracts as the hospital. If this is the case, then the ability to negotiate fair reimbursement rates are diminished, and thus practices often must accept poor managed care contracts. However, if the practice works closely with hospital administration and the hospital's managed care department, it may have the opportunity to negotiate a fair-market rate even when it is ultimately required to participate in all the contracts the hospital participates in.
In some cases, a hospital agreement will state that the practice must put best efforts toward participating with all managed care contracts the hospital participates with but ultimately does not force participation. This typically gives the group more leverage in a negotiation. However, even in this case, it is prudent to have a close working relationship and regular communications regarding managed care contracting with the hospital administration and the hospital managed care department. Whether a practice is required to participate with a managed care payor or not, having the hospital in the loop during the negotiations can be the difference between a good contract and a bad contract. Due to the complexities of balance billing when the practice is an out of network provider, the best option for many practices is to participate with those contracts that the hospital is participating in. If a practice is not forced to participate (and is therefore out of network) then theoretically the practice would receive 100 percent payment of charges from the payor and the patient for services rendered, which might seem like the best option. However many payors access a different managed care network with which the practice participates. If those rates are less than the offered contract rates with the payor, the practice actually loses money. Often times when a practice is not participating with a managed care plan, the payor will lease provider participation from another managed care network. The rates paid by the leased network may be less or possibly more than what a practice would receive in a contractual arrangement with the payor. If a practice does not participate with the same plans as the hospital, it is important to evaluate the leased network rates compared to an offer from the payor.
If a practice is contemplating not participating with a particular managed care network, it is important to evaluate the leased network rates that a payor may have access to compared with an offer from the payor. The practice may decide it is more advantageous to participate with the payor than to be subjected to the leased network claims adjudication. For example, a practice can evaluate whether it is beneficial to accept a contract with payor ABC to obtain rates that are better than what leased network XYZ reimburses.
Timely filing
Among reimbursement factors that demand close attention and compliance in a managed care contract is the timely filing deadline. Filing is defined by the length of time agreed upon or required to submit a claim to payors. A physician will not get paid if a claim is not submitted on time and many internal and external factors can contribute as to whether or not a claim is submitted in a timely manner. Timely filing directly relates to front-end billing processes, so it is crucial that the practice's billing office or third-party vendor is also aware of the amount of days needed to file all claims. For example, a practice should avoid agreeing to 90 days timely filling. A smart minimum is 120 days which typically allows enough time, though 180 days is most ideal. An example of timely filing language is as follows:
“XYZ Emergency practice agrees that in the event a claim for service is not received by [private payor] within 180 days after the later of: (i) the date the services are rendered and (ii) the date of XYZ Emergency’s receipt of the Explanation of Benefits from the primary payor, when the [private payor] is the secondary payor, such claim shall be denied and deemed to have been waived by XYZ Emergency practice and XYZ Emergency practice shall not seek payment for such claims from a member.”
Medicare percentages
Managed care networks typically will offer contracts based on a percentage of Medicare. This can be an acceptable contract provided the proposed contract is modeled based on an annual volume to incorporate any seasonal cyclical volume changes (i.e., colds and flu in late fall/early winter, hayfever and allergies in spring) in an ED, thus providing the true acuity curve. Calculating the expected reimbursement for the last 12 months of volume for this specific managed care network or payor and comparing to a projected volume with the proposed rates will identify if the proposed Medicare percentage is acceptable. Another item to carefully weigh is the year the Medicare percentage is proposed. With the many changes to Medicare's resource-based relative value scale system in the last few years, this could heavily impact the practice's reimbursement.
Stepped increases. If a practice determines its ultimate goal is to get to 190 percent of Medicare, realizing that a payor will not immediately agree to the new number in one contract negotiation, then it can be agreed upon that in year one of a contract that currently reimburses at 150 percent of Medicare, the payor can increase to 160 percent of Medicare the first year. Year two might increase to 175 percent and year three can meet the goal of 190 percent of Medicare. Increases can vary, but are stepped to meet the goal. Negotiations might call for a slight increase in year one, with a larger increase in year two and no increase in year three, as another example.
Escalators. If stepped increases are not the desired option, then a practice can ask for an escalator, which is a smaller, set increase that is carried out through the length of a contract. From a strategic standpoint, a practice can determine the length of its contract if it is not taking a stepped increase approach. Escalators provide practices with another tactic to raise reimbursement by using smaller automatic raises year after year. For example, a practice may request an escalator of 2 percent to 2.5 percent each year for the length of its managed care contract. Requesting an escalator does require foresight to minimize risks by looking at factors like the cost of living which could increase more than the percentages being negotiated. Occasionally payors will set the escalator at a percent of the cost of living index or the medical cost of living index.
Inappropriate bundling
Bundling is defined as a payment method that combines minor medical services or surgeries and procedures when performed together or within a specific period of time. Tactically, emergency medicine practices can make sure that all procedures are appropriately paid and that payors do not inappropriately bundle based on what is in the managed care contract. Certain services or procedures can be stipulated as payable within a managed care contract if those procedures are not typically paid by that specific payor.
Additionally, it is important to stipulate any service or procedures with the associated reimbursement if the contract is based on a Medicare percentage and Medicare does not allow for that specific CPT code to be reimbursed. Without understanding the language and closely following the guidelines laid forth in the contract, emergency medicine practices usually lose money from several different pockets without knowing why. As well, knowing the services it provides will help an emergency medicine practice leave nothing out of its contract.
Many times, payors will inappropriately bundle emergency charges that a practice might easily overlook, such as laceration repairs, x-ray interpretations and ultrasound interpretations. Due to these kinds of issues, a practice must sometimes challenge denials. Ensuring each service category is addressed in the managed care contract protects the practice from multiple appeals to obtain the reimbursement it is entitled to receive. Inappropriate bundling, while becoming less prevalent due to class action lawsuits against payors, is still a part of back-end billing processes that a practice must keep in its crosshairs. If a practice does not catch these types of inappropriate bundling, then it may unknowingly lose money which is difficult to recoup if not addressed quickly with the payor.
Therefore, knowing what services may be bundled is extremely important. For many practices, the following procedures, if provided by the emergency practice, are among the most prevalent to list as bundled in a managed care contract:
• Deep sedation
• EMS direction
• Added reimbursement for after hours services
• Ultrasound reimbursement
• Observation services
If certain services are not covered by Medicare, a practice can also ask for a specific amount per the procedure(s). Finding instances of inappropriate bundling per the guidelines or reference manuals set forth in the managed care contract is a main function of denial management, which is an extensive billing process practiced by MMP, which believes it is important that a practice and its billing team know what is detailed within the contract so that instances of inappropriate bundling do not go unnoticed.
Ask and you may receive
Government and some private payors require that non-physician practitioners submit procedures in their names. This can present a revenue challenge, since many payors will only pay 85 percent to 90 percent of the physician's fee, whereas procedures submitted in the physician’s name would receive 100 percent. What many practices may not know is the percentage is negotiable. This is an instance where the old adage of "ask and you shall receive" is useful since many times a practice can ask that all NPP procedures be reimbursed at 100 percent or depending on payor guidelines, can at least negotiate a higher percentage of reimbursement.
Contract modeling
Contracts can be modeled based on frequency of use. Looking at procedure rates in a practice is often essential in determining its financial impact. If a managed care contract offers a different rate for HMO versus PPO plans, a practice can track the number of patients from each plan in the last 12 months and create a reimbursement analysis for each plan. A practice can model which rate is a financial win based on its own historical data. Knowing where the biggest volume lies could abate any negative impact. For example, if the PPO rate is higher than the HMO rate, and practice volume is higher with the HMO, the practice must ask whether it will increase its overall reimbursement by negotiating a higher HMO and a lower PPO. Another item for consideration is a blended rate for both plan types. This may result in overall increased reimbursement.
Example:
A counter proposal might be a blended rate of $67 for a 99283. Combined HMO and PPO annual volume would equal 16,500 (9000 + 7500). The reimbursement calculation would be as follows: $67 * 16,500 = $1,105,500, with a net increase of $12,000. Each Evaluation and Management code should be modeled in the same manner.
In closing, it is clear that not all pieces of managed care contracts can be directly changed and impacted by the practice in its negotiations, though knowing which pieces of a contract can be negotiated by the practice greatly benefits reimbursement strategies. A practice can and should be aware of what can be negotiated so that nothing falls through the cracks or goes unnoticed. Most important is a practice's ability to understand the complex language in its managed care contracts and actively affect its negotiations with language that can be built into a contract to optimize reimbursement.
Carol Mitchell, CPC, is a senior operations manager for the South region of MMP. She has more than 30 years of overall experience specializing in anesthesiology and emergency medicine. Prior to joining MMP, Ms. Mitchell was the Director or Reimbursement for Promina Gwinnett Physicians Group responsible for the Central Billing Office, the Managed Care Department, as well as the Billing System Training and Support Departments. Ms. Mitchell previously worked for a medical software system implementing systems and for various private physicians. Ms. Mitchell obtained her CPC certification in 1999. Ms. Mitchell is a member of the AAPC, NEGAAAPC, GAAA and the LLCMGMA.
Hospital-Payor Contracting: Antitrust Concerns Surround Exclusive Contracts & Most-Favored Nation Clauses
Pay attention to the language in your contract
While practice leaders may understand the language within each individual payor contract, it is important to dig deep into an existing contract to understand what is or is not included and what can be renegotiated for greater reimbursement opportunity.
Going beyond understanding the contract language, smart, strategy-driven renegotiation tactics can be built into a contract to affect reimbursement on an ongoing basis. Benchmarking an emergency medicine practice’s percentages of its coding acuity levels and procedures and then modeling out the different rates can easily illustrate differing reimbursement levels for the best fit. There are several parts of managed care contracts that emergency medicine practices should be aware of, and while not all can be directly negotiated by the practice, it is important that each piece of the managed care contract is scrutinized, negotiated or modeled to optimize emergency medicine reimbursement.
Sense of renewal
First and foremost is the need for vendors and clients to stay on top of when a contract can be renegotiated, or the evergreen date. The time of contract renewal is one of the most important things to know in an effort to begin negotiations. There are instances when a contract must be renegotiated within a specified time period of the evergreen date. A third-party billing vendor, such as Medical Management Professionals, may begin working with a practice that already has existing managed care contracts. Early identification of contract renewal dates or evergreen date clauses is crucial to ensure re-negotiations occur to increase the per unit reimbursement. Renegotiation tactics include stepped increases and escalators, which can be built upon existing rates in the contracts.
To be or not To be?
Hospital-based practices can elect to participate with the hospital's contracted payors, though sometimes this is not an option. A practice must review the verbiage in its contract with the hospital regarding managed care participation. Some hospital contracts require that practices participate with the same managed care contracts as the hospital. If this is the case, then the ability to negotiate fair reimbursement rates are diminished, and thus practices often must accept poor managed care contracts. However, if the practice works closely with hospital administration and the hospital's managed care department, it may have the opportunity to negotiate a fair-market rate even when it is ultimately required to participate in all the contracts the hospital participates in.
In some cases, a hospital agreement will state that the practice must put best efforts toward participating with all managed care contracts the hospital participates with but ultimately does not force participation. This typically gives the group more leverage in a negotiation. However, even in this case, it is prudent to have a close working relationship and regular communications regarding managed care contracting with the hospital administration and the hospital managed care department. Whether a practice is required to participate with a managed care payor or not, having the hospital in the loop during the negotiations can be the difference between a good contract and a bad contract. Due to the complexities of balance billing when the practice is an out of network provider, the best option for many practices is to participate with those contracts that the hospital is participating in. If a practice is not forced to participate (and is therefore out of network) then theoretically the practice would receive 100 percent payment of charges from the payor and the patient for services rendered, which might seem like the best option. However many payors access a different managed care network with which the practice participates. If those rates are less than the offered contract rates with the payor, the practice actually loses money. Often times when a practice is not participating with a managed care plan, the payor will lease provider participation from another managed care network. The rates paid by the leased network may be less or possibly more than what a practice would receive in a contractual arrangement with the payor. If a practice does not participate with the same plans as the hospital, it is important to evaluate the leased network rates compared to an offer from the payor.
If a practice is contemplating not participating with a particular managed care network, it is important to evaluate the leased network rates that a payor may have access to compared with an offer from the payor. The practice may decide it is more advantageous to participate with the payor than to be subjected to the leased network claims adjudication. For example, a practice can evaluate whether it is beneficial to accept a contract with payor ABC to obtain rates that are better than what leased network XYZ reimburses.
Timely filing
Among reimbursement factors that demand close attention and compliance in a managed care contract is the timely filing deadline. Filing is defined by the length of time agreed upon or required to submit a claim to payors. A physician will not get paid if a claim is not submitted on time and many internal and external factors can contribute as to whether or not a claim is submitted in a timely manner. Timely filing directly relates to front-end billing processes, so it is crucial that the practice's billing office or third-party vendor is also aware of the amount of days needed to file all claims. For example, a practice should avoid agreeing to 90 days timely filling. A smart minimum is 120 days which typically allows enough time, though 180 days is most ideal. An example of timely filing language is as follows:
“XYZ Emergency practice agrees that in the event a claim for service is not received by [private payor] within 180 days after the later of: (i) the date the services are rendered and (ii) the date of XYZ Emergency’s receipt of the Explanation of Benefits from the primary payor, when the [private payor] is the secondary payor, such claim shall be denied and deemed to have been waived by XYZ Emergency practice and XYZ Emergency practice shall not seek payment for such claims from a member.”
Medicare percentages
Managed care networks typically will offer contracts based on a percentage of Medicare. This can be an acceptable contract provided the proposed contract is modeled based on an annual volume to incorporate any seasonal cyclical volume changes (i.e., colds and flu in late fall/early winter, hayfever and allergies in spring) in an ED, thus providing the true acuity curve. Calculating the expected reimbursement for the last 12 months of volume for this specific managed care network or payor and comparing to a projected volume with the proposed rates will identify if the proposed Medicare percentage is acceptable. Another item to carefully weigh is the year the Medicare percentage is proposed. With the many changes to Medicare's resource-based relative value scale system in the last few years, this could heavily impact the practice's reimbursement.
Stepped increases. If a practice determines its ultimate goal is to get to 190 percent of Medicare, realizing that a payor will not immediately agree to the new number in one contract negotiation, then it can be agreed upon that in year one of a contract that currently reimburses at 150 percent of Medicare, the payor can increase to 160 percent of Medicare the first year. Year two might increase to 175 percent and year three can meet the goal of 190 percent of Medicare. Increases can vary, but are stepped to meet the goal. Negotiations might call for a slight increase in year one, with a larger increase in year two and no increase in year three, as another example.
Escalators. If stepped increases are not the desired option, then a practice can ask for an escalator, which is a smaller, set increase that is carried out through the length of a contract. From a strategic standpoint, a practice can determine the length of its contract if it is not taking a stepped increase approach. Escalators provide practices with another tactic to raise reimbursement by using smaller automatic raises year after year. For example, a practice may request an escalator of 2 percent to 2.5 percent each year for the length of its managed care contract. Requesting an escalator does require foresight to minimize risks by looking at factors like the cost of living which could increase more than the percentages being negotiated. Occasionally payors will set the escalator at a percent of the cost of living index or the medical cost of living index.
Inappropriate bundling
Bundling is defined as a payment method that combines minor medical services or surgeries and procedures when performed together or within a specific period of time. Tactically, emergency medicine practices can make sure that all procedures are appropriately paid and that payors do not inappropriately bundle based on what is in the managed care contract. Certain services or procedures can be stipulated as payable within a managed care contract if those procedures are not typically paid by that specific payor.
Additionally, it is important to stipulate any service or procedures with the associated reimbursement if the contract is based on a Medicare percentage and Medicare does not allow for that specific CPT code to be reimbursed. Without understanding the language and closely following the guidelines laid forth in the contract, emergency medicine practices usually lose money from several different pockets without knowing why. As well, knowing the services it provides will help an emergency medicine practice leave nothing out of its contract.
Many times, payors will inappropriately bundle emergency charges that a practice might easily overlook, such as laceration repairs, x-ray interpretations and ultrasound interpretations. Due to these kinds of issues, a practice must sometimes challenge denials. Ensuring each service category is addressed in the managed care contract protects the practice from multiple appeals to obtain the reimbursement it is entitled to receive. Inappropriate bundling, while becoming less prevalent due to class action lawsuits against payors, is still a part of back-end billing processes that a practice must keep in its crosshairs. If a practice does not catch these types of inappropriate bundling, then it may unknowingly lose money which is difficult to recoup if not addressed quickly with the payor.
Therefore, knowing what services may be bundled is extremely important. For many practices, the following procedures, if provided by the emergency practice, are among the most prevalent to list as bundled in a managed care contract:
• Deep sedation
• EMS direction
• Added reimbursement for after hours services
• Ultrasound reimbursement
• Observation services
If certain services are not covered by Medicare, a practice can also ask for a specific amount per the procedure(s). Finding instances of inappropriate bundling per the guidelines or reference manuals set forth in the managed care contract is a main function of denial management, which is an extensive billing process practiced by MMP, which believes it is important that a practice and its billing team know what is detailed within the contract so that instances of inappropriate bundling do not go unnoticed.
Ask and you may receive
Government and some private payors require that non-physician practitioners submit procedures in their names. This can present a revenue challenge, since many payors will only pay 85 percent to 90 percent of the physician's fee, whereas procedures submitted in the physician’s name would receive 100 percent. What many practices may not know is the percentage is negotiable. This is an instance where the old adage of "ask and you shall receive" is useful since many times a practice can ask that all NPP procedures be reimbursed at 100 percent or depending on payor guidelines, can at least negotiate a higher percentage of reimbursement.
Contract modeling
Contracts can be modeled based on frequency of use. Looking at procedure rates in a practice is often essential in determining its financial impact. If a managed care contract offers a different rate for HMO versus PPO plans, a practice can track the number of patients from each plan in the last 12 months and create a reimbursement analysis for each plan. A practice can model which rate is a financial win based on its own historical data. Knowing where the biggest volume lies could abate any negative impact. For example, if the PPO rate is higher than the HMO rate, and practice volume is higher with the HMO, the practice must ask whether it will increase its overall reimbursement by negotiating a higher HMO and a lower PPO. Another item for consideration is a blended rate for both plan types. This may result in overall increased reimbursement.
Example:
| HMO Offer: 99283 – $64.00 |
PPO Offer: 99283 - $69.00 |
| Annual Volume = 9,000 | Annual Volume = 7,500 |
| Reimbursement for HMO: $64 * 9,000 = $576,000 | Reimbursement for PPO: $69 * 7,500 = $517,500 |
| Total annual reimbursement = $1,093,500 |
|
A counter proposal might be a blended rate of $67 for a 99283. Combined HMO and PPO annual volume would equal 16,500 (9000 + 7500). The reimbursement calculation would be as follows: $67 * 16,500 = $1,105,500, with a net increase of $12,000. Each Evaluation and Management code should be modeled in the same manner.
In closing, it is clear that not all pieces of managed care contracts can be directly changed and impacted by the practice in its negotiations, though knowing which pieces of a contract can be negotiated by the practice greatly benefits reimbursement strategies. A practice can and should be aware of what can be negotiated so that nothing falls through the cracks or goes unnoticed. Most important is a practice's ability to understand the complex language in its managed care contracts and actively affect its negotiations with language that can be built into a contract to optimize reimbursement.
Carol Mitchell, CPC, is a senior operations manager for the South region of MMP. She has more than 30 years of overall experience specializing in anesthesiology and emergency medicine. Prior to joining MMP, Ms. Mitchell was the Director or Reimbursement for Promina Gwinnett Physicians Group responsible for the Central Billing Office, the Managed Care Department, as well as the Billing System Training and Support Departments. Ms. Mitchell previously worked for a medical software system implementing systems and for various private physicians. Ms. Mitchell obtained her CPC certification in 1999. Ms. Mitchell is a member of the AAPC, NEGAAAPC, GAAA and the LLCMGMA.
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5 Points on Managed Care ContractsHospital-Payor Contracting: Antitrust Concerns Surround Exclusive Contracts & Most-Favored Nation Clauses