Ten Key Elements to Successful Contracting with Managed Care Plans

In the last ten years or so I’ve had the opportunity to participate in the negotiation of close to half a billion dollars worth of managed care contracts on behalf of my ED partnership. I’ve learned a thing or three from this experience, and wanted to share some observations and suggestions about managed care contracting with my emergency physician colleagues. in part this is because I believe a rising tide raises all boats. Unfortunately, when it comes to managed care contracting, many emergency physician groups have great difficulty just staying afloat. There are lots of reasons for this: coercive contracting (when your hospital ‘encourages’ you to contract with their health plan network partners), lack of attention to the issue, an inability to understand the managed care market in their communities, lack of contracting experience and lack of resources, inadequate billing and collections data, and so on. The result is that many emergency physician groups leave a lot of money on the table – revenues that may be critical to their ability to recruit and retain qualified physicians in their EDs and fulfill their mission. If you think that as a hospital employed ED physician, this does not impact you….well, all I can say is that if your hospital is giving your services away at bargain rates, chances are this impacts your reimbursement in some way or another.

Assuming for a moment that your ER group’s ability to pay you fair compensation for your services is to some extent dependent on the group being able to get the best possible terms in the managed care contracts the group negotiates with commercial, Medicare and Medicaid managed care, and self-insured indemnity plans: here are some considerations that might be important to you.

1. It is absolutely true that, in a negotiation, if you can’t say ‘no, thank you’ and walk away, you are all but screwed. Coercive contracting is a very real issue, and hospitals are frequently enlisted to get their hospital based physician groups to line up and sign deeply discounted, below market rate contracts with plans. The key to neutralizing coercive contracting is to invest the time and effort into convincing your hospital CEO or CFO that it is in the hospital’s interest, over the long term, to give hospital based physicians the room to negotiate fair market rates for their services.

2. Your group’s billing company and claims management team is critical to managed care contracting. You get what you pay for, and going for the cheapest service is penny wise and pound stupid. In contracting, data is king, and a good billing company should be able to tell you more about the financial impacts of contracting terms, current and future, than even the plan itself may be able to bring to bear. In particular, the ability to line item post payments against each code included on a claim is very useful, and a sophisticated claims management system is a must.

3. Most physician groups think that the only thing that needs to be negotiated in a managed care contract is the rates. WRONG. Every line in the plan’s contract is designed to benefit the plan, not you, and every provision is negotiable, and deserves to be review carefully, and challenged when it is either inappropriate to your practice or too adverse to your interests.

4. Once you agree to a rate with a plan, the plan is likely to try to use every other means at its disposal to pay you as little as it can get away with. They do this by aggressively down-coding your claims, bundling your codes, denying coverage, and dragging out the time it takes them to pay. Thus, these ‘terms’ are just as important to address in negotiations as the rate. If, for example, the plan intends to deny payment for ECG interpretation and report, you should know that up front, and negotiate a better rate for E&M and surgical services to make up for this loss.

5. No matter who negotiates these ontracts for your group, they need to have sufficient support, especially data support, to maximize their results for you. Of course, larger groups have an advantage in terms of contracting resources, but both large and small groups can benefit from the assistance of contracting consultants who can provide both negotiating experience and knowledge of contracting markets and plan behavior and strategy.

6. Direct physician involvement in managed care contracting, whether the plan is local or national in scope, is almost always useful. First, who best to advocate for physician reimbursement than a physician; second, physicians have gravitas; and third, physicians understand the nuances of clinical service that often come up in discussions around EMTALA, prudent layperson, necessity of care, medical record documentation, and other claims payment issues.

7. If your group’s billing company or practice management service is not routinely disputing underpaid claims, and you are not taking advantage of whatever regulatory agency claims dispute processes may be available, then you will not have laid the groundwork for successful managed care contracting. Plus, you will be leaving even more money on the table. Having disputed thousands and thousands of underpaid managed care claims, both contracted and non-contracted, I can assure you that the direct and indirect ROI is considerable.

8. If your group has more than a few managed care contracts, you need to maintain a managed care contracting database. This database should allow you to easily access all your contracting terms and key provisions, and also calendar dates for expiration and renegotiation of these contracts. Many contracts have automatic renewal provisions that extend the contract unless you give notice of intent to renegotiate.

9. There are all sorts of resources on the net covering managed care contracting and negotiation strategies, and state medical societies are often a good source of information about contracting and some even assist with contract language review, or have resource materials covering contract provisions. Even if you don’t negotiate health plan contracts, negotiation is something that happens every date in our lives, and it doesn’t hurt to learn some of the ropes.

10. A contract with a managed care plan need not necessarily be the reflection of a winning and a losing strategy – there are plenty of opportunities to fashion contract provisions that benefit both the plan and the provider, that reduce the plan’s cost for claims processing or claims dispute while it reduces hassles or payment delays or claims submission costs for the provider. Win-win is possible in the health insurance industry (though unfortunately, not all that common).

The Central Line has set up a managed care contracting category. I encourage other bloggers to chime in on this important topic. Hope to hear from you.

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  1. #1 by Jeff - January 9th, 2012 at 10:39

    Such a great article it was unfortunately, when it comes to managed care contracting, many emergency physician groups have great difficulty just staying afloat.In which the result is that many emergency physician groups leave a lot of money on the table – revenues that may be critical to their ability to recruit and retain qualified physicians in their EDs and fulfill their mission. Thanks for sharing this artivle

  2. #2 by aarav khan - April 22nd, 2019 at 02:14

    hello world

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