physician contracting 101 kathy mccreary, mpa contract manager exempla healthcare
TRANSCRIPT
Physician Contracting 101Physician Contracting 101
Kathy McCreary, MPAContract Manager
Exempla Healthcare
Definitions
HMO - A corporation financed by insurance premiums whose member physicians and professional staff provide curative and preventive medicine within certain financial, geographic, and professional limits to enrolled volunteer members and their families.
www.dictionary.com
Definitions
HMO - Variation of the phrase, “Hey Moe”. Its roots go back to a concept pioneered by Moe of “The Three Stooges”, who discovered that a patient could be made to forget about the pain in his stomach if he was poked hard enough in the eye.
Contract Management
Organize your contract files Structure to the review process Identify risky areas & common
contracting language Know how to evaluate a fee schedule Use technology to systematically
review all contracts
Technology Creates Tools & Speeds the Process
Microsoft® Word– Contract editing– Speed searches — macros
Microsoft® Excel– Spreadsheet analysis– Cost analyses– Claims Auditing
Microsoft® Access– Relational database– Contract management
Internet– Searches– E-mail
Current Agreements conveniently located
Old/out-of-date agreements archived
Separate file for each contract signed – most recent amendment in the front
Back up file for each contract containing all ancillary documentation including spreadsheets, emails, notes, payer listings, etc.
Provider manuals and directories handy - keep up-to-
date list of web addresses
Organize Contract Files
Facilitate Credentialing
Join CAQH - universal credentialing datasource
Keep credentialing file up-to-date
Caqh3.png
DWPTM
Structure the Review Process
Develop a checklist to assist in the implementation of strategy and contract review
Identify key personnel who will have input (e.g. billing, front office)
Develop a timeline for renegotiating contracts Know the details of your contracts - use
spreadsheets Calendar renewal and term dates
Contract Timing Matrix
PlanFee
ScheduleTerm or
Renew DateTerm
ClauseReview
NLT
Aetna Aetna FeeSchedule
Auto renews4/1/05
90 dayswithout cause
11/1/04
Cigna $42.50Conv. Factor
Auto renews2/20/05
120 daysbefore renewal
date9/1/04
MMA
125% of2001
RBRVS$1950 global
OB
Terms 9/1/04 Terms 9/1/04 7/1/04
SloansLake
120% ofcurrent
90% AWPfor immun.
5.5% autoincrease 12/1/04
60 days beforerenewal date
8/1/04
Ten Parts of a Contract
1. Preamble and Identification of Parties
2. Recitals
3. Definitions
4. Description of Duties
– Provider Obligations
– Payer Obligations
5. Compensation
6. Medical Records
7. Insurance and Liability
8. Term and Termination
9. Miscellaneous
10. Attachments, Exhibits, and Other
Risky Definitions
Health Plan or Affiliate Who are they and how are they identified on the card?
Payer Who is the payer? (It may not be the plan.).
Covered Services What are the benefit levels — in versus out of network
Emergency Prudent lay person Pay to treat and stabilize
Risky Definitions
Participant & Participating Providers Access to participating providers?
Products HMO, PPO, all products, indemnity, open
access
Clean Claim What are the requirements for a clean claim? Are they clearly defined?
Contract Provisions
Credentialing Who is responsible, and how long will it take?
Medical Necessity Who decides?
Referrals Is there a penalty for referring patients outside of the
network?
Contract Provisions
Timely Filing 30 days, 60 days, 90 days Time limit should only go into effect once you
have all of the correct information
Appeals and Denials Grievance committee, no procedure noted
Late Payment Payment of clean claims must be made within
30 days, technical appeals within 90 days No penalty, Statutory penalties, % of claims as
penalty
Provider Responsibilities
UM and Quality Management - Provider (agrees to participate) shall use best efforts to cooperate with and comply with…
Provider credentialing Quality assessment programs Covered person grievance resolution
procedures Utilization management procedures — may
include prospective, concurrent, and retrospective review requirements and claims submission procedures
Provider Manual
UM policies and procedures
grievance procedure/dispute resolution
Always ask to see:
Term and Termination
Length of notice required Continued care provision Cause, no cause, material breach Tied to anniversary date
Calendar in advance of this date
Mediation – facilitated negotiation Cost Effective Solution - use communication to facilitate
agreement & craft options
Doesn’t always produce agreement
Parties do not forfeit legal rights
Arbitration
Binding versus non-binding
Litigation
Dispute Resolution Process
“Upon Termination of this Agreement for any reason, other than termination by the Company, Provider shall remain obligated (at Company’s sole discretion) to render Physician Services to any Member who is eligible to receive Covered Benefits as of effective date of termination for no longer than ninety days after termination or sooner if Member’s discharge or Company’s orderly transition of such Member’s care to another provider occurs. Provider will be paid at billed charges for Covered Services provided to Members after the effective date of termination.
Suggested Language
Term and Termination
Suggested Language
Eligibility Related Language
Payer shall maintain a system to provide accurate eligibility, benefit and authorization information to Provider within 24 hours of request.
Should Payer or affiliated organizations verify to Provider current eligibility for a Covered Person and later determine that the Covered Person was not eligible, Payer shall be responsible for payment of all services provided through the end of the day in which Payer notifies Provider in writing of such determination.
“Provider agrees that recovery of overpayments may be accomplished by offsets against future payments. Payer will provide written or electronic notice to Provider before using an offset as a means to recover an overpayment, and will not implement the offset if, within thirty days after the date of the notice, Provider refunds the overpayment or initiates an appeal”
Suggested Language
Over and Underpayments
Limit the amount!
“In the event of a conflict between the provisions of this Agreement, the Provider Manual, or any other Plan policies, procedures, protocols, etc., the provisions of this Agreement shall prevail.”
Use to give language in agreement priority of if you think there is a conflict between Provider Manual and Agreement
Suggested Language
Controlling Document
“New Risks” in Contracts
Posting Fee Schedule Changes on the Website Propriety fee schedules that can be changed at
any time “Non-soliciation” language Watch for network activities that may violate
Antitrust Laws Higher co-pay, deductibles, co-insurances, non-
covered services to collect – need ability to access Benefit Plans & levels
Compensation Structure
Watch out for “lessor of” language Automatic fee schedule updates Capitation provisions Fee schedule not clearly defined
Try to Include Penalty for late payment of clean claims (e.g. Discount
off Billed Charges if payment not received on time) Chance to term/reject new fee schedules Allowed to collect payment for non-covered services
from patient
Percent of RBRVSConversion factorsProprietary plan fee scheduleGlobal FeesCarve outs% AWPSuppliesMcGraw Hill
Understanding Rates in the Contract
What Year?
Makes a big difference!
Know your costs!
Analyze Each Fee ScheduleAnalyze Each Fee Schedule
RBRVS - Ask and Understand... RVUs - Medicare vs. their own, ask what
year
Conversion Rate - Medicare vs. their own, ask what year
Utilization by code for each payer
Calculate the change in revenue by payer, current agreement vs. proposed, then decide how to negotiate
RBRVSRBRVS –– Decoding Decoding
RBRVS – Resource-based Relative Value System• 1998 $36.6873• 1999 $34.7315 (-2.6%)
• 2000 $36.6137 (5.5%)
• 2001 $38.2581 (4.5%)
• 2002 $36.1992 (-5.4%)
• 2003 $36.7856 (1.45%)
• 2004 $37.3374 (1.50%)
• 120% of 2001 is $45.909 or 123% of 2004• 120% of 2002 is $43.439 or 116% of 2004• 120% of 2003 is $44.142 or 118% of 2004• 120% of 2004 is $44.805
Ok, 2001 is still better than subsequent years, but what about the
RVUs?
Change from 1998 to 2004 (seven years) is a whopping 1.7% increase
CPT Code Analysis – Decoding RVUs
Procedure CodesRelative Value Unit's Colorado GPCI Adjusted
2001 2002 2003 200438.258 36.199 36.786 37.337
HCPCS Mod Description 2001 2002 2003 2004 2001 to 2002 2002 to 2003 2003 to 2004
99212 Office/outpatient visit, est 0.94 1 0.99 1.03 6.38% -1.00% 4.04%
99213 Office/outpatient visit, est 1.32 1.39 1.39 1.42 5.30% 0.00% 2.16%
99214 Office/outpatient visit, est 2.06 2.18 2.17 2.2 5.83% -0.46% 1.38%
99203 Office/outpatient visit, new 2.39 2.54 2.52 2.58 6.28% -0.79% 2.38%
71020 Chest x-ray 0.97 0.93 0.95 0.96 -4.12% 2.15% 1.05%
71020 TC Chest x-ray 0.65 0.62 0.65 0.66 -4.62% 4.84% 1.54%
71020 26 Chest x-ray 0.32 0.31 0.3 0.3 -3.13% -3.23% 0.00%
59400 Obstetrical care 42.23 42.61 43.29 43.62 0.90% 1.60% 0.76%
59510 Cesarean delivery 47.96 48.53 49.13 49.39 1.19% 1.24% 0.53%
97110 Therapeutic exercises 0.66 0.73 0.76 0.77 10.61% 4.11% 1.32%
97140 Manual therapy 0.76 0.68 0.72 0.71 -10.53% 5.88% -1.39%
12002 Repair superficial wound(s) 4.03 4.22 4.24 4.13 4.71% 0.47% -2.59%
Conversion Factors
TOTAL RVU Change
Fee Analysis – Recognizing Utilization
Current Rate
Proposed Rate
HCPCS Volume DescriptionCurrent
Allowable
CurrentTotal
RevenueProposedAllowable
ProposedTotal
Revenue Difference % Change
99212 230 Office/outpatient visit, est 44.05 10131.50 46.78 10759.40 627.90 6.20%99213 250 Office/outpatient visit, est 61.85 15462.50 65.21 16302.50 840.00 5.43%99214 175 Office/outpatient visit, est 96.59 16903.25 101.86 17825.68 922.42 5.46%99203 95 Office/outpatient visit, new 111.81 10621.95 118.69 11275.55 653.60 6.15%71020 80 Chest x-ray 45.25 3620.00 44.13 3530.40 -89.60 -2.48%99386 60 Preventive, New, age 40-64 173.09 10385.40 170.99 10259.40 -126.00 -1.21%Totals 890 67124.60 69952.93 2828.33 4.21%
Procedure Codes by VolumeColorado GPCI Adjusted
125% of 2001 RBRVS
125% of 2004 RBRVS
100% 100%0%
RVU Colorado GPCI RVU Colorado GPCI
1999 34.7315 1999 1999 1999 34.7315 1999 1999
2000 36.6137 2000 2000 2000 36.6137 2000 2000
2001 38.2581 2001 2001 2001 38.2581 2001 2001
2002 36.1992 2002 2002 2002 36.1992 2002 2002
2003 36.7856 2003 2003 2003 36.7856 2003 2003
2004 37.3374 2004 2004 2004 37.3374 2004 2004
Other None Other None
42,814 $2,359,237.24 $1,722,790.02 42,814 $2,359,237.24 $1,789,569.77
Units Charges Reimbursement Units Charges Reimbursement
99214 OFFICE VISIT EST COMPLEX 6103 $532,527.00 $480,179.45 99214 OFFICE VISIT EST COMPLEX 6103 $532,527.00 $497,360.79
99213 OFFICE VISIT EST MODERATE 8822 $541,012.00 $444,475.84 99213 OFFICE VISIT EST MODERATE 8822 $541,012.00 $460,237.64
99397 PREVENTIVE VISIT,EST,65 & OVER 792 $133,737.00 $90,179.37 99397 PREVENTIVE VISIT,EST,65 & OVER 792 $133,737.00 $91,918.59
99232 SUBSEQUENT HOSPITAL CARE,LEVL II 1125 $84,157.00 $59,851.73 99232 SUBSEQUENT HOSPITAL CARE,LEVL II 1125 $84,157.00 $61,321.64
99222 INITIAL HOSPITAL CARE,LEVL II 369 $57,038.00 $39,623.53 99222 INITIAL HOSPITAL CARE,LEVL II 369 $57,038.00 $40,728.77
76075 DEXA BONE DENSITY STUDY,1 OR MORE,AXIAL271 $37,467.00 $35,748.27 76075 DEXA BONE DENSITY STUDY,1 OR MORE,AXIAL271 $37,467.00 $36,751.17
99212 OFFICE/OUTPT VISIT,EST,LEVL II 956 $52,025.00 $34,319.16 99212 OFFICE/OUTPT VISIT,EST,LEVL II 956 $52,025.00 $35,769.51
99238 HOSPITAL DISCHARGE DAY,<30 MIN 415 $39,819.00 $28,240.92 99238 HOSPITAL DISCHARGE DAY,<30 MIN 415 $39,819.00 $28,770.07
99203 OFFICE/OUTPT VISIT,NEW,LEVL III 291 $30,408.00 $26,529.23 99203 OFFICE/OUTPT VISIT,NEW,LEVL III 291 $30,408.00 $27,630.81
99202 OFFICE/OUTPT VISIT,NEW,LEVL II 413 $30,203.00 $25,411.50 99202 OFFICE/OUTPT VISIT,NEW,LEVL II 413 $30,203.00 $26,414.13
99312 NURSING FACILITY CARE,F/U,LEVEL II 350 $44,063.00 $21,563.50 99312 NURSING FACILITY CARE,F/U,LEVEL II 350 $44,063.00 $21,923.55
17000 DESTRUCT BENIGN(NOT SKIN TAG)1ST LESION341 $21,668.00 $20,670.82 17000 DESTRUCT BENIGN(NOT SKIN TAG)1ST LESION341 $21,668.00 $20,434.95
99215 OFFICE/OUTPT VISIT,EST,LEVL V 179 $23,442.00 $20,619.94 99215 OFFICE/OUTPT VISIT,EST,LEVL V 179 $23,442.00 $21,152.68
93000 ELECTROCARDIOGRAM, COMPLETE 753 $23,663.00 $19,350.08 93000 ELECTROCARDIOGRAM, COMPLETE 753 $23,663.00 $19,696.01
99244 OFFICE CONSULTATION, NEW OR ESTABLISHED99 $22,906.00 $16,155.28 99244 OFFICE CONSULTATION, NEW OR ESTABLISHED99 $22,906.00 $16,732.58
99291 CRITICAL CARE, FIRST HOUR 73 $23,433.00 $15,078.34 99291 CRITICAL CARE, FIRST HOUR 73 $23,433.00 $17,582.63
99211 OFFICE/OUTPT VISIT,EST,LEVL I 693 $16,207.00 $14,092.47 99211 OFFICE/OUTPT VISIT,EST,LEVL I 693 $16,207.00 $14,621.60
99223 INITIAL HOSPITAL CARE,LEVL III 94 $21,131.00 $14,041.73 99223 INITIAL HOSPITAL CARE,LEVL III 94 $21,131.00 $14,460.73
99231 SUBSEQUENT HOSPITAL CARE,LEVL I 404 $18,150.00 $13,009.06 99231 SUBSEQUENT HOSPITAL CARE,LEVL I 404 $18,150.00 $13,343.28
TOTAL:
Current Agreement Output: New Agreement Output:
of Medicare RatesCharge Inflatorof Medicare Rates
CPT Code CPT Code
Conversion Factor Conversion Factor
Overall Increase in Reimbursement 3.88%
TOTAL:
EPN and MIDTOWN Traditional Medicarefor dates of service: 1/1/03 - 12/31/03
Current Agreement Input New Agreement Input
Financing Modeling – Physicians
DWPTM
Auditing Your PayerFive Steps to Getting Paid What you Deserve
1. Develop a chart of allowables by common procedure code.
2. Identify other key indicators from the contract
3. Monitor and audit payments and key indicators
4. Track and document discrepancies
5. Denial Management - prepare to resubmit claims and/or change contract language
Allowables by Plan and Procedure Code
Aetna Cigna MMA Sloan’s Lake
99202 $69.72 $72.91 $70.36 $76.75
99213 $57.25 $59.47 $55.01 $62.60
99214 $85.64 $92.90 $87.25 $97.79
99385 $133.31 $132.68 $127.54 $139.66
99386 $144.98 $155.94 $148.97 $164.15
59400 $1850.00 $1800.00 $1950.00 $1908.00
Identify Key Contract Metrics to Track
Operational
Financial
Step 2
Contract Metrics
Operational
Current Term Effective Date
Termination Notice Period
Product Line — HMO, PPO, Indemnity, ERISA Plans
Medical records
Credentialing
Timely filing
Financial Clean claims Timely and late payments Payment rates Penalties Incentives Denials Member benefits - in vs. out of network Third-party administrators
Silent PPO Activity Cherry Picking
Contract Metrics
What are Silent PPOs?Are they still a problem?
Indemnity Discounting– In-network versus out of network — what’s the
benefit level?– Financial Incentives between products
Cherry Picking– TPA uses lower rate contract for claims
adjudication
Stacking
Impact of Silent PPO ActivityImpact of Silent PPO Activity
Provider gives discounts to insurers who should have paid at billed charges or at a higher rate
Providers allows discounts with no value returned (incremental volume)
Patient may pay a higher percentage of their claims than their coinsurance indicates
How to Protect Against Silent PPOs
Be selective about contracts
Define “payer” carefully
Leave no room for broad interpretation of contract
Make the discount contingent on presence of PPO’s logo on the patient ID card that is presented at the time of registration
Protect Against Silent PPOs Cont…
Reserve the right to terminate on a payer-specific contract
Require language in your contract that insures PPO has language with Payer client financial incentives of at least 10% between
in and out of network benefits
Cherry Picking
• Each Payer engaging Plan shall not be, directly or indirectly, a party to any agreement with any other plan or provider network, provider, broker, agent, or other entity to obtain discounted, preferential, or other negotiated fees or charges (“Other Discount”) from Providers in Plan’s Service Area for Members accessing the Plan through this Contract.
Suggested Language
• Notwithstanding the above, in the event that a Payer shall be a party to such an agreement, or otherwise have access to such Other Discount, Payer shall apply only the Fee Schedule of this Contract to claims of Members and shall not apply any Other Discount to such claims. Provider shall be bound by all requirements applicable to such contract and all rules and regulations of Medicare and Medicaid program.
During the term of this Contract,
Monitor and Audit Your Payer Contracts
Step 3
Preparation Negotiation Implementation Auditing
Audit RatesAudit Rates
Know what you should be paid at all times
Summary sheet for each contract
Spreadsheet of allowables for common procedure codes
Auditing RatesAuditing Rates
Load rates into computer system Track payments - top 20 codes for top 10 payers in
computer system plus global rates, immunizations, etc.
Payment Review - identify short or overpayments Review to determine reason
• Discount taken inappropriately• Payer error, downcoding, bundling, etc.• Language in contract permitting fee schedule changes w/o notice• Silent PPO activity
Send problem accounts to payment review Track delinquent payments - interest and penalties due
Denial ManagementDenial Management Take Action — appeal appropriate denials, 70%
chance of getting paid
Outsource to Denial Management Company or build internal structures
Retrospective Review of Claims - track all denials by type, payer, and amount denied in a timely manner
Trend denials and recoveries
improves cash
strengthens contract language
monitors payer games
identifies systematic problems
Business Case for Working DenialsValue Equation
200 denied claims50 Non-appealed150 to WorkInsurance PaymentsPatient PaymentsBad Debt
$10,000 (2,500)
7,500$0
4,0001,250
(2,250)
Total Collected
Amount owed per contract
Amount Received
$5,250
Business Case Cont..Cost of Working Denials
Average Cost to Work Each Denied Claims = $10.00
150 Claims x $10.00 = $1500
Lost Revenue From Not Working Denials = $3,750
……….you get cash plus the knowledge of where to close the loophole if weak contract language allows for denials to occur.
Denial Types — Denial Types — many types and reasonsmany types and reasons
Practice Error Duplicate billing
Modifier not provided
ICD - 9 and CPT mapping
Charge entry — invalid CPT
Credentialing
Registration & insurance verification
Needed authorization
Denial Types — Denial Types — many types and reasonsmany types and reasons
Payer Error Bundling
Non-covered services
Information requested — reconcile with clean claims required data sets
Must meet prompt payment statute
Denial Types — Denial Types — many types and reasonsmany types and reasons
Or are your laws the problem….?
Understand your State Laws State requires insurers to pay clean claims within a specified
period of time (Prompt Pay), rules around eligibility, medical necessity, pre-certification, authorizations, and emergency care
Timely settlement of claims
ERISA Plans or self-funded plans are excluded from having to comply with state laws, so you must
have separate and strong language around arbitrary or capricious denials and timely payment provisions — retain right to terminate payers from the network
As of 2003 in Colorado, all As of 2003 in Colorado, all claims — whether claims — whether
overpayment, underpayment overpayment, underpayment or denials — or denials — mustmust be be
appealed within 12 months appealed within 12 months from date of EOB.from date of EOB.
Note: Appeal Process language Note: Appeal Process language is different and has contractual is different and has contractual
limitations limitations
Denial Management – a better approachDenial Management – a better approach
Refining Front-End Processes
Build an Authorization Algorithm into Registration process
Contract Management – credentialing
Scheduling and Pre-registration
Coordination of Information – authorizations, patient information, medical records
Online eligibility and verification of benefit process - train staff on process
Incentivize staff to collect at Time of Service (TOS)
Charge Entry
– Timely
– Coding ICD - 9 and CPT mapping
– Invalid CPT
Hassle Factor
When All Else fails Consider terminating the contract File complaint with the Department
of Insurance Pursue litigation or arbitration Colorado Medical Society and
specialty trade organizations Use political clout to pass
legislation that protects providers
Sometimes you have to mediate, arbitrate, litigate or terminate
Just say no!
Tools - WebsitesAMA Model Managed Care Contract with extensive discussion of the important features of managed care contracts
http://www.ama-assn.org/ama/pub/category/9876.html
JCMS “What to Consider in a Managed Care Contract” Tutorial
http://www.svmic.com/JCMS/WhatToConsiderInManagedCareContract_files/frame.htm
Managed Care Contract Checklist – American Academy of Otolaryngology
http://www.entlink.net/practice/products/mgdcarechklst.cfm
Checklist for Analysis of Managed of Managed Care Contracts – National Health Law Program
http://www.healthlaw.org/pubs/mc1998contracts_intro.html#checklist
For Nurse Practitioner Contracts
http://www.ispub.com/ostia/index.php?xmlFilePath=journals/ijanp/vol1n2/mcc.xml
Contract Goals from JS Medical Group
http://www.jsmg.com/managedcare5.htm
Tools - Websites Cont...Universal Credentialing DataSource - Council for Affordable Quality Healthcare
http://www.caqh.org/whatwedo_simplify2.html
RBRVS based payment calculations - Centers for Medicare and Medicaid Services (CMS)
http://www.cms.hhs.gov/physicians/mpfsapp/step1.asp
Federal Statutes and Regulations
http://www.harp.org/fedstat.htm
State Statutes and Regulations
http://www.leg.state.co.us
Consumer Price Index Tables - Bureau of Labor Statistics
http://www.bls.gov/cpi/#tables
GO TO www.bls.gov/cpi/
1. Get Detailed Statistics" section of the site
2) Go to "Create Customized Tables (one screen) section
3) Go to "Average Price Data" area
4) Select "Consumer Price Index - All Urban Consumers (current series)"
5) An input screen will appear that allows you to specify the data you want to look at. To get to the Physician only data:
1) Select "View areas within an item"
2) In section #1 select "Medical Care, Hospital Related Services, Hospital Services subcategory
3) In section #2 select "U.S. City Average" (this is the only option available for this index)
4) In section #3 select "Not Seasonally Adjusted"
5) Select the Get Data button
6) Select “More formatting option”
7) Select “12 month percentage Change”
8) Press get data
9) You should get the data on this screen
DWPTM
DWPTM
Example AMA Model Managed Care Contract with extensive discussion of the important features of managed care contracts
http://www.ama-assn.org/ama/pub/category/9876.html
