Providers need to know that managed care contracts usually suffer from two common problems: 1) very important terms are unclear and 2) the cost control provisions are unfair. In addition to the need for clarity, most managed care agreements lack what many consider to be basic procedural fairness. For instance, most agreements contain provisions that permit the plan to implement any rules, regulations, policies and procedures the plan desires at any time and often without notice or public dissemination. The physician does not necessarily know about these things, and such things can undermine the very language of the contract. To meet these concerns, the following should be helpful: “[Participating Provider’s] agreement to be bound by such [policies, procedures, rules or regulations] shall be contingent upon [Participating Provider] being provided advanced written notice or any proposed adverse decision or event and a reasonable opportunity to respond to such proposal. Moreover, the parties agree that to the extent the foregoing conflict with the terms of this Agreement, the terms of this Agreement shall govern.” Sometimes, however, the payer is not actually responsible for payment, but rather acts as a middleman between the provider and the payer. In those instances, it is essential to create clear lines of accountability. For instance: “In the event a Payor fails to make payment pursuant to the terms of this Agreement, [Plan] shall (a) make such payment on behalf of the Payor, (b) initiate legal action to recover such payment on behalf of [Participating Provider], or (c) assign to the [Participating Provider] the right to initiate such action. In the event of (b) or (c), Payor shall provide [Participating Provider] a copy of the agreement upon which [Participating Provider] may rely in prosecuting such action and shall release [Participating Provider] from any further obligation to provide services to [Members].” It is also fairly common for physicians to be denied payment even for patients who were authorized and treated. In addition to requiring the plan to identify members, the following should be helpful in dealing with those instances: “Verification of coverage at the time of service will be final. Moreover, notwithstanding any provision of this Agreement to the contrary, any preauthorized admission or covered service shall be paid, regardless of any subsequent benefits determination.” Even after a contract is signed by a provider, the managed care company does not always fulfill its contractual obligations to pay according to the contract which results in many practices leaving money on the table and ultimately, remaining in the bottom line (i.e., profit) for the managed care company. The MGMA states that only 35% of providers and healthcare businesses appeal denied claims! The key to mitigating this financial impact is to know the problem before it becomes a trend. For instance, one of the ways to get ahead of a developing trend is to monitor a payer’s denial rate. A denial rate is by definition a percentage of claims denied by the payer. A low denial rate indicates cash flow is healthy. A good benchmark for payer compliance would be a denial rate of 5-10%. Often times, practices and healthcare businesses operate with a much higher rate, and even in the 20- 30% range without even knowing it. The AMA states that a 5% denial rate for an average family practice equates to about $30,000 walking out the door! It makes sense that this perfect storm of poorly negotiated and constructed contracts, increasing denial rates by payers, and unfilled contractual obligations leaves many providers and healthcare businesses feeling like a cartel now runs their practice and their bottom line. However, there are many opportunities throughout the progression of the managed care process for providers and healthcare businesses to take back control. Submit your questions to Healthcare Reimbursement Blog
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managed care contract, value based payment, healthcare reimbursement, ACO, CMS, billing audit, Medicare payment, Medicaid, Out of Network,
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