Getting what you want out of managed care
Don’t accept unfavorable contract terms
You finally got the managed care company’s attention. They are willing to contract with you. However, as excited as you are, don’t let your enthusiasm over the promised relationship lead you to negotiate a bad contract, sources warn. Consider their suggestions to get the best deal for your organization:
• Understand the contract.
Providers should understand what they are agreeing to above all else, says Robert Stewart, RN, MSN, CHC, CHE, administrator of Durham (NC) Regional Homecare. Contracts are often "couched in subtle legalese, and they’re difficult to understand," he says. Having your attorneys as well as several home care staff members review proposed agreements helps bring clarity, he adds.
Carefully review service definitions, advises Tim Bosse, director of private duty services at Home Care 24 in Baltimore. For example, the managed care organization may define a RN visit as two hours or less. Providers should negotiate an "extended" definition and rate for those situations where visits go longer, he explains.
Providers should also determine what overall services the contract covers, sources advise. For example, general home care agreements may exclude special populations such as maternal/child or congestive heart failure; both are potentially large service opportunities for providers.
It is also important to know where your potential patients are located, Bosse advises. Determine how much the payer’s membership and your service area overlap. If you only serve fringe areas and can’t reasonably expect a large patient volume, then you may have no compelling reason to enter a contract. "Is it a fit? What’s the reason for entering it? Is it just because it’s prestigious?" he asks.
• Know your costs.
Before signing on the dotted line, providers should know how they will fare financially with a contract. Involve the staff responsible for the areas the contract covers, Stewart advises. They should know their cost of care and whether they can deliver the proposed services within the agreement’s reimbursement, he says.
"With straight fee-for-service, they should be able to determine their costs and know whether they can make money," says Elizabeth Hogue, a Burtonsville, MD-based attorney who specializes in home care. She notes, however, that capitated contracts are trickier. The managed care organization should be able to provide current membership and home care utilization figures, but such information is often hard to come by.
• Watch payment terms.
Most providers can relay horror stories about slow payments from managed care organizations. Do what you can contractually to facilitate prompt payment, sources advise. "You should look at your [account receivables] and cash flow situation. If you don’t have the luxury of floating 180 days [account receivables], then you need fixed reimbursement dates [in the contract]," Stewart advises.
Payers often propose paying clean claims within a specified period of time. This exposes the provider to the payer’s interpretation of clean. Hogue suggests requiring payment of all claims within a specified period of time, while withholding a small percentage of overall claim value to cover problem bills. Some states have prompt payment laws that require payment within a certain time period.
Stand behind your contract’s conditions
The best contract language is only good when it is enforced. Providers should do their part to hold payers accountable, sources advise. "You almost have to put them on a program, constantly niggling them about [payment]," says Hogue. One of her clients routinely calls a slow payer and says "We’re coming to pick up a check tomorrow. Please have one ready." The provider’s presence usually springs people into action, and she does not leave the office empty-handed, Hogue reports.
"You have to be very proactive about collecting the money. Tell the company if you don’t pay me on time, I won’t [provide] service,’" Hogue advises. While some providers may feel uncomfortable making such a comment, they really shouldn’t, according to Hogue. "Don’t state it as a threat; just a matter of fact. Explain that this is a labor-intensive [service]; we have to pay people; we don’t have capital [to] float these expenses over and over again,’" she adds.
Providers also have to do their part internally to facilitate prompt payment. "You need [your] front-end process to [meet] the payers’ requirements. A sloppy front end leads to payment problems, and you have an obligation to clean up your internal systems to make your reimbursement as quick as possible," Stewart advises.
Bosse agrees. "Make sure you understand what data are required on claims [so that your billing practices facilitate payment]."
• Avoid evergreen clauses.
Many managed care agreements have automatic renewal or "evergreen" terms. These can cause serious problems for providers who find themselves in unprofitable contracts. Hogue recommends one-year contracts that terminate unless the parties renew the agreement prior to the termination date.
• Terminate without cause.
Many payers propose contracts that may only be terminated with cause. While this protects providers from being dropped for no reason and facing a sudden loss of business, it can also work against them, says Hogue. A provider that wants to terminate a contract for cause may find itself in conflict with a payer that insists there is no cause. For example, after continuing to experience long payment delays, a provider may serve termination notice. The payer may then argue that it has only experienced some temporary difficulties due to a computer glitch and that there is no cause for termination, she explains.
Hogue also advises against language requiring a cure period prior to contract termination. "If a contract is on the verge of termination, you should already be talking about problems. Cure clauses work when you’re ready to terminate but no one is ready to say what the problem is. If you’re passive-aggressive and [don’t] readily discuss problems, [they] may give structure [to facilitate dialogue]," she says.
To prevent payers from immediately transferring patients to another provider once either party gives termination notice, include language that allows you to continue caring for patients on service at the contract’s end, Hogue advises. This not only gives clients important continuity of care, it also enables providers to more smoothly adjust their operations to the loss of business, she says.
• Choose mediation over arbitration.
Providers and payers sometimes become locked in head-to-head battle over payment, service denials and other contractual issues. Carefully evaluate proposed grievance procedures to resolve these disputes, Hogue recommends.
"Grievance procedures [should be] quick, neutral, and require no waiver of other rights by providers and patients," yet most managed care contract language and actions are diametrically opposed to those concepts, she says.
Aim for such goals and seek mediation over arbitration, Hogue advises.
In arbitration, a third-party decision maker hears evidence from both parties and makes a binding decision. "Mediation is more like shuttle diplomacy. [The mediator] finds common ground [between the parties]. A solution should emerge that’s acceptable to all," she explains.
Regardless of your desire to work with a payer, contract negotiations can be difficult and draining. And while you should strive to have the most advantageous language possible, the only real deal-breaker is price, according to Hogue. "Why would anyone need a money-loser?" she asks.
But many providers do enter financially poor contracts. "Home care [companies] usually underestimate the financial impact [of contracts or knowingly enter bad ones] because they are so anxious to spread their Medicare business they will sign anything," says Stewart.
Managed care is not the only game in town
You should not feel compelled to enter a disadvantageous contract, sources advise. "Help your competitors sign as many managed care contracts as possible and don’t sign any yourself," advises H.C. Sonny Covington, of Lafayette, LA-based I CAN! America. Covington helps clients find alternative funding sources. "Managed care [in home care] hasn’t worked, especially in emerging markets. It will guarantee business, but you’ll go broke in the process," he explains.
"There is a myth in the home care world [that you must have managed care contracts]. I don’t know why it was created or who perpetuates it, but [managed care business] is not as essential as many people think it is. There are lots of niche markets that people should consider," says Hogue.
Sidney Melnik, president and chief executive officer of Westmont, NJ-based Medical Homecare Associates agrees. Although his private duty company has a contract with a major insurer in his market, "we don’t do any business with them," he says. Melnik found Medical Homecare Associates’ nurses were often sent for money-losing assessment visits with few subsequent ongoing service authorizations. "I’ll do everything I can to work with other [payer] sources such as waiver programs," he explains. Melnik does provide supplemental staffing to other agencies that work with the payer.
The managed care climate has changed enough in the past year that providers have more negotiation power than before, sources report. "The government is doing more and more intervening with managed care, and there will be more and more," says Melnik.
"There is much more skepticism about entering managed care contracts and a better understanding that [payers and providers] must negotiate not just price, but terms," Hogue notes.
Contentious or unprofessional negotiations may be an important indicator about life after the contract, and a warning sign that providers should not ignore, according to Hogue. "The way contract negotiations proceed [is usually] indicative of the way the relationship will proceed. If you experience autocratic or patronizing behavior, or [find that] a lot of the staff at the managed care provider is misinformed, then your antennae should go up and you should ask yourself if this is so painful, do I really want to go through with it?’ Don’t think you’re dead in the water, and don’t sign unless you negotiate."
Sources
• Tim Bosse, Director, Private Duty Services, Home Care 24, 3825 Greenspring Ave., Second Floor, Pierce Building, Baltimore, MD 21211. Telephone: (410) 523-6929.
• H.C. Sonny Covington, I CAN! America, 427 St. John St., Lafayette, LA 70501. Telephone: (318) 235-7005.
• Elizabeth Hogue, Attorney, 15118 Liberty Grove Dr., Burtonsville, MD 20866. Telephone: (301) 421-0143.
• Sidney Melnik, President and Chief Executive Officer, Medical Homecare Associates, 216 Haddon Ave., Suite 509, Westmont, NJ 08108-2813. Telephone: (609) 854-3400.
• Robert Stewart, RN, MSN, CHC, CHE, Administrator, Durham Regional Homecare, 407 Crutchfield St., Durham, NC 27704-2726. Telephone: (919) 470-6550.
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