Contracts should include non-negotiable points
Here’s a sample list to include in your next contract
Settling on a per diem rate with commercial payers is only part of the process of negotiating a contract with a managed care organization (MCO). Other parts of the process will determine whether a hospice and MCO will operate as partners or whether the hospice will be obligated to indentured servitude for the life of the contract.
MCOs often are reluctant to reword their original documents, preferring instead to use addendums to contracts to cover hospice-specific language and definitions, says managed care expert Lisa Spoden, president of Strategic Healthcare, a Columbus, OH-based consulting firm.
First and foremost, contracts should be amended to include the basic conditions of participation required by Medicare. Anything less — even where commercially insured patients are concerned — can result in your hospice losing its Medicare certification.
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 offers the following attachments to clearly spell out what is expected from both parties. (For information on suggested definitions, see "Define your terms in an MCO contract.")
Spell out eligibility
Once the MCO understands what hospice care is about and how it is delivered, the next step is to make sure you and the MCO understand the details regarding how a patient is referred to hospice care and how you get paid.
The second attachment deals specifically with 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 also 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.
Pay attention to billing details
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. In any case, it should not be a rate below what Medicare pays because that will place a greater burden on community donations to cover costs.
But the nuts-and-bolts details surrounding billing and payment require close attention, as well. Spoden says an attachment to the contract should spell out what the all-inclusive per diem rate includes and when payment is expected.
An example of attached 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, Spoden says. Because an MCO can find the simplest fault in a claim and return it without payment, the MCO can get around the 30-day requirement. To avoid disagreements, Spoden advises that the MCO provide a clean bill as an example and that the sample bill be attached to the contract.
The contract also should:
• Specify the billing form to be used. It would be preferable to use UB-92, which is similar to the HCFA 1500 claim form, because hospices would be more familiar with it.
- Require the MCO to 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.
As you can see, the soundness of a managed care contract depends on whether the hospice pays 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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