Posts Tagged contracting

The Balance Billing / Fair Payment / Hospital-based Physician Conundrum

Efforts to prohibit balance billing by non-contracted hospital based physicians, especially for emergency care patients, continue to confront ACEP state chapters left and right (or should I say North, South, East and West). It is pretty clear that many legislators and insurance regulators see this as a consumer protection issue, predicated on the fact that in an emergency, most patients do not have the ability to shop for providers that are contracted with their health plan; and that when they go to their ‘networked hospital’, it is with the expectation (often built upon misleading health plan assertions) that all of the docs at this hospital will be contracted with their plan. Health plans, regulators, and legislators are also motivated by the desire to contain costs; and for the plans in particular, prohibiting balance billing by hospital-based docs is the camel’s nose under the tent for control of all physician-related outlays.

The simplest solutions equate to fee setting. Fortunately, no one seems quite willing to go there….yet. I think this is because most folks recognize that setting fees at the wrong level could lead to disastrous unintended consequences, especially given physician shortages in this country. The AMA considers the balance billing issue to be a problem with ‘inadequate networks’, but pressure on plans to include more hospital based docs in plan networks often just results in more coercive contracting.  This is where the plan pressures the hospital to leverage the staffing contracts of the hospital-based docs, to force these docs to accept deeply discounted contract rates with the plans. This has unintended consequences, too. Hospital employment of physicians would certainly ensure that these docs were contracted with all of the hospital’s networked plans; but hospitals are notoriously poor at collecting for physician services, and the downsides of the corporate practice of medicine are real. You would think the marketplace would have resolved this issue; but because of EMTALA and coercive contracting and the burden of the uninsured and the lack of good regulatory oversight; the market for emergency care services is really not a fair and free market.

The conundrum is: how do we make sure that emergency care providers and hospital-based physicians subject to EMTALA’s mandate are sufficiently compensated for commercially insured services so that they can meet their mission to provide care to all those uninsured and under-insured patients, and at the same time keep insured patients out of the middle of disputes between plans and providers over the reasonable value of emergency care and hospital-based physician services? One could argue that the patients should not be excluded from the debate, but the plans and legislators easily trump that argument with tales of egregious charges by a few ‘greedy doctors’. Hospitals and plans could be required to include physicians in three-way network contract negotiations, but that is  impractical. Hospitals could be forced to provide subsidies to make up for the losses incurred by hospital-based docs who are forced to sign contracts with plans at deeply discounted rates; but many hospitals are already going bankrupt supporting flagging ER on-call rosters, and really it is the plans who are making most of the profits nowadays. Plans should not be able to say:  ‘the uninsured are not our problem’.  Some legislators (most recently in Illinois, in exchange for honoring assignment of benefits) have proposed fee arbitration as a solution, but the arbitration of millions of underpaid non-par claims is just ridiculous, not to mention hugely expensive. Any so-called solution that does not result in the vast majority of claims being paid appropriately up-front is doomed to failure.  Others have proposed all sorts of inventive solutions to balance billing that would precipitate one or more serious unintended consequences by failing to address charge outliers or relying on fee setting or ignoring claims dispute resolution or relying on impossible claims management procedures. What is a well-meaning regulator or legislator to do?

One alternative is to try to get at the issue by addressing fair contracting rates for hospital-based physicians. Some advocates of what would essentially be ‘forced health plan contracting’ for hospital-based physicians argue that these physicians should accept contracting discounts from their usual and customary charges because their hospital’s networked relationships provide them with patient referrals, and that the only real question is: what is a reasonable contract rate? There are lots of different considerations that are usually exchanged for a fee discount in managed care contracting, referrals being but one of them. Determining a ‘reasonable contract rate’ is no easy matter, especially since contracting rates are supposed to be confidential between plan and provider, so getting at valid ‘usual and customary contracting rates’ would be difficult, if not an outright anti-trust violation. There are so many other terms and conditions negotiated in contracts with plans that establishing fair-market-driven contract rate standards for hospital-based physicians is probably a hopeless cause.

ACEP has addressed the balance billing / fair payment issue by developing a set of fair payment principles and model legislation. The ‘solution’ eliminates the need for balance billing and is predicated on using usual and customary charges to get close to the reasonable market value of non-contracted services and to address charge outliers, and on the establishment of a fair, fast, and cost-effective claims dispute mechanism to address the other causes of claims underpayment for non-contracted (and contracted) services. These and related documents can be found on the ACEP website: This is a complicated issue requiring carefully constructed components and backstop measures to ensure a balanced approach to balance billing and fair payment.

Considering the fragile state of the emergency care system in the U.S., and the proclivity of legislators and regulators to ‘fix’ complex problems without really understanding them first; there are no perfect or easy solutions to the balance billing / fair payment issue that can be enacted without the risk of punching great big holes in the safety net, and making it impossible for emergency care providers to fulfill their mission.  ACEP’s solution is neither perfect nor easy, and not everyone will be happy with it, but it is workable, and reasonable.

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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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