Make MC contracts hospice-specific
Include attachments before signing an agreement
If managed care is the next frontier for hospices, be warned that it is an environment fraught with challenges. Unsuspecting hospices that are eager to take on managed care payers can find themselves on the wrong side of unfavorable contracts.
Most managed care organizations (MCOs) employ standard contracts for each general segment of health care — hospitals, physicians, and ancillary service providers. Those contracts are typically written to ensure the payer’s bottom line is protected. Further, the language can be intentionally vague to accommodate the contract’s variety of providers. According to some industry leaders, the vague language and ill-defined expectations within a managed care contract will almost assuredly result in little profit, even financial loss.
"Most managed care contracts — if you accept them as is’ — are going to be favorable to the payer," says Lisa Spoden, PhD, MBA, executive vice president of Strategic Healthcare, a hospice consulting firm in Columbus, OH.
It is imperative that hospices include language that allows them to remain compliant with federal and state regulations, is clear on what services the hospice is expected to provide, and calls for prompt payment, says Peter Benjamin, partner with the Huntington Consulting Group in Coconut Grove, FL, and chairman of the National Hospice and Palliative Care Organization in Alexandria, VA.
"It’s much better to take a lot of time negotiating and be frustrated in the front end rather than suffer from a bad contract," says Benjamin.
The key, experts say, is to negotiate a contract that takes into consideration the special type of care hospices provide, leaving little room for interpretation. Consider an MCO’s proposed ancillary services contract. It is the same contract it uses with home health agencies, nursing homes, assisted living facilities, and other post-acute service providers.
Because the contract is intended for a variety of providers, the language is inherently vague. Most likely, the contract will stipulate that the MCO’s case manager will manage the patient. The contract will likely say the all-inclusive per diem rate will pay for care provided during the patient’s hospice stay.
"There’s usually not much language specific to hospices," says Spoden. "You need to remove any room for interpretation."
While the hospice may interpret contract language one way, the MCO might see it in an entirely different light. And in many cases, because the MCO holds the purse strings, it is the hospice that will be left paying for services the MCO refuses to reimburse, or enduring a per diem rate that is inadequate to cover all the services an MCO expects the hospice to perform.
For example, the managed care contract that has had few changes and contains this type of vague language could leave hospices having to pay for care that is not part of the hospice’s treatment plan, but is provided while the patient is under hospice care.
One possibility is that a hospice whose patient is still undergoing interventional chemotherapy treatment could be responsible for the cost of that treatment. Although chemotherapy is often used in palliative care, a hospice should only be responsible for paying for the treatment if it is part of the patient’s treatment plan, says Spoden.
Non-negotiable points
At stake is whether a hospice and MCO will operate as partners or the hospice will be obligated to indentured servitude for the life of the contract. The difference between the two lies in the negotiating process that should transform a standard MCO document into a working hospice-MCO contract. "That’s not a casual conversation," says Benjamin.
Often, MCOs are reluctant to reword their original documents. Instead, hospices can offer addendums to contracts in order to introduce hospice-specific language and definitions, Spoden says. If the MCO balks at that suggestion, negotiations should be ended.
At the top of the hospice’s priority list is a series of regulatory requirements that must be made clear to the MCO and spelled out in the contract. Above all, the hospice must remain compliant with Medicare’s conditions of participation (COPs) and state licensure, both of which set minimum standards for hospices to operate, whether the patient is a Medicare or Medicaid beneficiary.
What hospices fail to recognize is that the way MCOs operate can directly contradict the federal and state regulations that govern hospices. For example, MCOs normally insist that their own case manager manage the patient, but Medicare COPs require hospices to retain medical management of a patient during a hospice stay.
Medicare must-haves’
As Benjamin mentions, hospices should not provide hospice care that deviates from the Medicare standard. In addition, Spoden recommends that hospices use the following points to ensure that the MCO understands the importance of maintaining the Medicare standard for non-Medicare patients:
• COPs require that hospices have responsibility to professionally manage the care and services of their patients for palliation and management of the terminal disease. Limiting care to a commercial plan enrollee could be construed as a violation of federal conditions of participation and result in the hospice’s loss of Medicare certification.
• Federal law requires hospices to make available the full continuum of prescribed services, and deliver the same level of services to all patients regardless of payment source.
• A nursing visit alone cannot be labeled hospice care. An insurer cannot label a benefit "hospice" unless it meets the criteria defined by law.
• State and federal regulations require that the plan of care, interdisciplinary care team, case management, and use of ancillary services be under the direction of hospices.
• Hospice and home care services are separate licensed entities, and their services, functions, and contract language must be kept separate.
Defining hospice
Ideally, the MCO and the hospice should have been sharing information about their organizations long before a contract has been proposed. "It’s the hospice’s job to help the MCO understand the regulatory environment that hospices have to work under," Benjamin says.
In addition, Benjamin says hospices should be wary of proposals that try get around hospice regulations by calling services delivered by hospice something different. For instance, if an MCO wants a hospice to provide care for its end-of-life program, the hospice needs to be aware of what regulations would govern a provider delivering those services. In this instance, the hospice could be required to be a licensed home health provider.
If the MCO is willing to abide by hospice regulations and include hospice definitions in the contract, the next step is to introduce an addendum to the contract. Spoden suggests the following attachments to clearly spell out what is expected from both parties:
1. A list of commonly used hospice terms and their definitions.
• Hospice: An organized program that provides palliative care to terminally patients and supportive service to patients, their families, and significant others in both home and facility-based settings. A 24-hour on-call service is available to evaluate the patient’s changing needs. The range and intensity of services will be consistent with those in the patient’s plan of care and approved by the health plan. Hospice services to be provided by the hospice will be in accordance with the patient’s individualized plan of care and include all equipment, medication, treatment, and care required to manage the terminal illness of each health plan patient admitted to the hospice provider.
• Physician services: Physician services provided by the hospice will be limited to those associated with assisting in the coordination of the hospice program and those associated with the quality assurance and utilization review functions for the hospice program. Direct physician medical care is billed separately from the hospice per diem.
• Unrelated services, equipment, medication, treatment, and supplies: Items not related to the terminal condition and in the patient’s plan of care are not covered under the hospice benefit but may be covered under other benefit categories as stipulated by the plan.
• Palliative vs. curative: It is understood that hospice care is palliative rather than curative in treatment goals and treatment methods, and that the definition of accepted palliative goals and methods is exclusively the province of hospice for all patients.
• Patient residence: A patient’s residence is a private home, nursing facility, intermediate care facility, group home, assisted living facility, licensed hospice facility, or other alternative residence.
• Routine hospice care: Intermittent scheduled care provided to hospice patients in their place of residence. A 24-hour on-call service is provided. As detailed in the patient’s care plan, services may include:
— physician-directed interdisciplinary case management focused on patient symptom control;
— services by licensed nurses, social workers, chaplains, counselors, nursing assistants, and volunteers;
— family counseling services to family members during the time the patient is receiving hospice care;
— bereavement care and counseling for family members for at least one year following the patient’s death;
All interventions related to the terminal condition and necessary for the implementation of the patient’s plan of care, such as therapies, medications, and routine medical supplies.
Spell out eligibility
Once the MCO understands what hospice care is about and how it is delivered, the next step is to make sure the MCO and hospice understand how a patient is referred to hospice care and how the hospice gets paid.
2. Information about hospice service eligibility. According to Spoden, the attachment should include the following four points:
• A patient must be diagnosed as having a terminal condition by a licensed physician and have a limited prognosis, if the disease takes its normal course.
• The patient and physician must consent to hospice care.
• The patient must reside in the service area covered by the hospice.
• There are no restrictions as to age, gender, race, color, residence, marital status, citizenship, ethnic origin and membership, physical or mental disability, religious belief, sexual orientation, or disease.
Again, the attachment should stress that hospice care is palliative rather than curative and that the care and methods used in palliative care are the exclusive domain of the hospice.
The language should stipulate that the responsibility and liability of hospice in the provision of services to health plan members should be limited to the care spelled out in the patient’s plan of care, and that the management of patient care is the responsibility of hospice.
The attachment should also clearly state that the final determination of whether a patient meets admission criteria rests in the hospice’s hands.
3. Billing and reimbursement requirements. Once eligibility language has been agreed to, the next topic is billing and reimbursement. Negotiating a fair per diem rate is a major part of contract talks. The ideal reimbursement rate can vary from one agreement to the next, depending on the types of services a hospice will be required to provide. Without citing a specific rate, Benjamin advises hospices not to accept a rate below what Medicare pays. He reasons that the Medicare rate is already too low to cover costs, and entering into a similar arrangement will place greater burden on community donations to cover costs.
Attention to detail
The nuts and bolts details surrounding billing and payment require close attention, as well. Spoden says a third attachment to the contract should spell out what the all-inclusive per diem rate includes and when payment is expected.
An example of appropriate contract language is: "The health plan agrees to pay within 30 days from receipt of a clean-copy bill for covered hospice services provided to health plan members. In the event that the payment is not made within 30 days, interest will accrue on the amount owed to the hospice at a rate of 5% per day."
The term "clean-copy bill" can cause some trouble. Because an MCO can find the simplest fault in a claim and return it without payment, it can get around the 30-day requirement. To avoid disagreements, both Spoden and Benjamin advise that the MCO provide a clean bill as an example and that the sample bill be attached to the contract.
Other billing details that should be added to the proposed contract require the MCO to:
• specify the billing form to be used. UB-92 is preferable, because it is similar to the HCFA 1500 claim form, and hospices would be more familiar with it;
• provide any additional information needed to bill the health plan or any other third-party payer for services delivered by the hospice;
• specify that the patient’s date of death is considered a day of care and that the health plan will pay the per diem for that day’s care.
The hallmark of a sound managed care contract is the ability of the hospice to pay attention to the details. The more details the hospice is able to insert into the contract, the more it will read like a contract written for a hospice, rather than a contract written for nursing homes and home health agencies.
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