Devil is in the details of managed care contracts
March 1, 1998 3 minutes read
Devil is in the details of managed care contracts
Make sure operations side of practice is in line
The "honeymoon" phenomenon so commonly referred to in politics — the period of euphoria and positivity that prevails in the wake of an election — can also be observed in managed care contracting. Unfortunately, honeymoons don’t last forever. Just because you’ve signed the contracts and locked in a good fee schedule doesn’t mean it’s smooth sailing from here on out.
The advice from one health system that’s been there: Have your operational house in order. "It [financial negotiation] is just one small part of the overall impact managed care can have," says S. Patrick Hammond, associate director for managed care at Atlanta-based Emory HealthCare. "In many cases, if you don’t address the operational requirements, you will have a bigger financial impact than the negotiated financial rates. Most health care providers focus in on the back-end collection of dollars, and put better resources there in terms of staffing and salary levels. My recommendation is to focus better resources on the front end. If you mess up on the front end, it can create havoc on your back-end collection of dollars."
Based on Emory’s experience of working with over 130 different managed care contracts, Hammond says there are three major things to get right if you want to get paid on the back end:
1. Tie the patient to the correct health plan immediately when he or she first visits your office. Emory uses an automated payment system as part of its information system. When a staff member inputs the name of the patient’s health plan during the patient’s first visit to an Emory facility, the system assigns the patient a code that appears on all his or her bills, medical records, and other paperwork. "You may have a contract with a managed care company — call it XYZ Health Plan — but they may have 200 different PPO plans. It’s not enough to just write the insurance company name on the chart," Hammond says.
2. Remember your preauthorization requirements. Although there is a lot of buzz about some health plans doing away with gatekeepers (see Physician’s Managed Care Report, November 1997 insert, and December 1997, pp. 169-170), many plans still require a referral from a patient’s primary care physician (PCP) before he or she can visit a specialist. And even in an open access plan, many procedures require preauthorization by a managed care company’s utilization management department before they can be performed. Per payer requirements, Emory inserts preauthorization or referral numbers on all claims it submits to managed care organizations to help ensure claims can go through MCO channels as quickly as possible.
As an integrated delivery system with over 850 physicians in 18 locations, Emory requires each of its clinics to make sure referral and preauthorization requirements are met, Hammond says. The health system’s managed care office has developed and distributed a number of tools to help the operation areas meet these requirements. "Emory’s policy is not to schedule a managed care patient who requires a PCP authorization until we have an authorization number. We took a significant hit in the past for not meeting this requirement," Hammond says.
3. Set up your claims submission process to account for a payer’s single-specialty networks. More and more payers are developing single-specialty networks that delegate claims management to a practice or other organization. (See cover story for more information on the specialty network manager role that many practices are being asked to play.)
"In markets where there are horizontal networks by specialty — say if a payer has 18 [different] specialty networks — Emory would have to send cardiology claims to the cardiology network manager, and gastroenterology claims to that network manager," Hammond explains. For multispecialty clinics like Emory, that can take some finagling. Emory’s solution is to use computer logic and prompts in its billing software system to automatically post the specialty network manager’s name and address on a particular type of claim. Some practice managers say, however, that practice management and billing software traditionally wasn’t developed to handle the challenges of a multiple billing system environment.
The key to communicating the importance of these operational requirements to staff members lies in financial impact, Hammond says. "When it was a small piece of their business, it didn’t get attention. It gets attention once it starts having significant financial repercussions. I would tell anyone who is responsible for both [front and back office] areas that it has a huge financial impact," making an investment in developing processes to meet these requirements worthwhile, he concludes.
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