Win that MCO contract
4 steps to successful negotiations
When Lorraine Waters, BSN, CNA, executive director of Southern Home Care in Jeffersonville, IN, approached her first contract negotiations, she didn’t know what to expect. In hindsight, she recommends negotiators follow her four tips:
1. Have your data ready.
Managed care organizations (MCOs) want specific outcomes-, financial-, and cost-per-visit data, says Waters. "For outcomes, it helps if you have a critical pathways program that helps us to compare outcomes among patients," she says. Although Southern Home Care was willing to spend the thousands of dollars for laptop computers and a computerized program, Waters says an "old-fashioned pencil and paper scheme" also will work.
Jean Young, RN, director of home care at Clearfield Home Health in Clearfield, PA, agrees that outcomes data are important. "MCOs want to know how long it will take to treat and discharge a patient," she says. She is currently working on building those data for her organization.
Both Young and Waters are just starting out in the managed care arena, with between 5% and 10% of revenue coming from MCOs. But they told Hospital Home Health they expect that percentage to increase dramatically in the next 12 to 18 months.
Financial data also are important for contract negotiations. Waters says that home care companies have to prove they are strong, not carrying a lot of bad debt. They must have accounts receivable under control. At Southern Home Care, the rule of thumb is for all accounts receivable to be in the department for 45 days or less.
"If you can’t show that, you are on shaky ground," Waters says. She recommends looking to your hospital’s finance department for help collecting that data.
Cost-per-visit data are not widely known, but Waters says you should try to determine this prior to negotiations. "They may not ask for it, but it is an extra piece of the puzzle you can present to them," she says. Being able to show the difference in time required for a congestive heart failure patient vs. a maintenance patient helps an MCO understand why you charge what you charge.
Although it isn’t necessary, having an automated system can cut the time involved in this process. "It helps you to create the information on acuity levels and time spent in the home, broken down by diagnosis."
2. Know your competition.
Young says that being aware of what the competition offers in terms of product and price can help you prove you’re the best company with which to contract. "It’s a little easier in a rural area where maybe the competition isn’t so great," Young says. "But we still have that competition, and it’s important to show you know it."
Although antitrust rules prohibit providers from sharing pricing information, sometimes clients have pricing sheets from other providers. But more important than knowing the cost of others’ services is to know what services they offer and whether their clients are satisfied with those services, she says.
"If you can prove you have a quality product, it makes negotiations easier," Waters says. "Be able to distinguish yourself from others." She adds that if you really want to impress the MCOs, evaluate your market and consider getting into niche areas, such as mental health, mother and baby and prenatal programs, and home rehabilitation.
3. Do a patient survey before negotiations.
This is almost never asked for, but Waters says the results can impress MCO negotiators. "We surveyed our referral sources, physicians, and patients. They appreciated it; we caught some trends and acted on them; and it provided the MCOs with more information about us."
4. Consider certifying your staff.
Again, this is not required, but Waters says making sure that her staff are certified in specialities is another way of differentiating herself from the competition. Almost 70% of her staff is certified in a specialty. "It’s my ace in the hole," Waters says. It’s also good for staff morale. "They feel more competent and . . . they really appreciate it."
Lisa Mitchell, RN, director of home health at Lake of the Ozarks General Hospital Home Health Care in Osage Beach, MO, doesn’t tout her staff certification, but she is quick to point out that her nurses are cross trained. "We don’t have specialists," Mitchell says. "Our nurses keep updated through inservices, and I know I can draw on their cross training. Everyone can handle anything from geriatric down to babies."
Mitchell’s experience with negotiations was preceded by a lot of research and conference attendance so she could approach the situation with knowledge. She recommends that others do their homework first, too. "We were pretty well prepared before we started," Mitchell recalls. "I think that really helped."
She does have one caveat: Managed care Medicaid is very backlogged, she says, and it can cause delays in reimbursement. "I recommend that you get clear information on their responsibility for payment. Make what they say a clause in your contract."
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content