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“A system, of managing and financing health care delivery to ensure that services provided to plan members are necessary, efficiently provided and appropriately priced.”1 This is the accepted definition of managed care. Sounds good, doesn’t it? Unfortunately, the key word that prevents this definition from really ringing true is “ensure.” In spite of all the hype, the legal contracts and the strong recruiting efforts, there is nothing in managed care that can yet “ensure” that this definition is the real definition of managed care as we know it today.
At the heart of the managed care concept is a legal document known as the “preferred provider agreement.” This document should be used to spell out, in exact terms, exactly what is expected of both the managed care entity and the provider. Unfortunately, all too often, this document is poorly written and, therefore, can contain some serious pitfalls.
The reality is, for managed competition, which seems to be the buzzword for managed care these days, to work successfully (and to be “fair” to all involved in the health care delivery system), the provider agreement must work equally well for both parties. However, since it seems to be the provider who is often caught on the wrong side of the contract, the following is provided as a short discussion of the major areas that all should be reviewed carefully.
At the onset, the provider is contacted by a managed care entity via a sales letter or other written vehicle. Some of these letters are evasive and do not give a whole lot of information, except to say that you need to call now!” Regardless of the sales tactics, you need to take the time to critically analyze what it is they are offering, and this can only be done by reading their provider agreement. The provider agreement is still the main vehicle used for defining what services are expected of you, what you will (and won’t) do, and how you will be paid, among other things.
The following are the bare essentials necessary when contemplating a relationship with a managed care group.
1. Dig into the background of the plan. Before even reading a provider agreement, take the time to find out the plan’s background, financial stability and track record, including ownership and audited financial statement. Find out how long the plan has been in business and which employers and health-care providers it has contracted with. Of prime importance: how many subscribers are in your area? This cannot be stressed enough! Traditionally, there is some type of fee to participate. You will be asked to send in “x” number of dollars with your application and may be charged additionally for credentialing, on-site review, etc. Why pay any money at all if there are currently no, or very few, subscribers in your area?
2. Try to determine the goals of the plan. Are you a “token” chiropractor, or do they fully intend to make use of your capabilities? How do your services fit in with the rest of the providers on the panel? A call to the plan’s administrator or executive director will give you needed information here.
3. Call other plan providers! Talk to other providers (regardless of profession) and see what kind of relationship they have with the plan. If the plan has been active only in other geographical areas and is new to your area, take the time to get a provider list from the group soliciting you and call those providers.
4. Consider possible complaints or problems. Call your state insurance agency (i.e. insurance commissioner) or state health department and ask if any complaints have been filed against the plan. With regard to HMO’s and PPO’s, most have to register with the state to do business. Other organizations, like IPA’s are totally unregulated.
5. Caveat: Never, ever assume that the contract is a clone of one you saw before! Read each one as if it were the first one you’ve ever seen.
6. You’ve heard of the old adage, “Location! Location!” Well, now it’s, “Definitions! Definitions! Start with the definitions. Understand that definitions usually are not negotiated, where contract obligations are. They traditionally appear at the very front of the contract. Read them carefully. Go through the contract and make sure that every pertinent word is defined by you or by the plan. Words like, “authorized” and “medically necessary” or “in the opinion of the provider,” etc. are all ephemeral and can come back to haunt you.
Watch out for phrases like, “the highest standard of care.” These are genuine pitfalls and can set a malpractice trap. Unless “highest”, “standard”, and “care” are clearly defined at the beginning of the contract, everyone can have their own definition as to what that means. “In court, the usual standard of care is what’s normal for the community, so agreeing to do more can make you harder to defend. It might even jeopardize your malpractice coverage.”2
7. What care are you agreeing to provide, specifically? If there are procedures included in your contract that you don’t do, cross them out. It is suggested, however, that to be even more specific, write down what you will perform, especially if tied to CPT and ICD codes. But make sure that everyone understands what a “new patient physical exam” or a “reassessment” includes! Make sure you are being fully reimbursed for everything you perform. Besides, it’s good practice management to have a clear fee schedule that everyone in the office understands. This way, the procedures will be the same for all patients and will always be charged appropriately.
On the flip side, make sure not to leave out things that you do perform, otherwise it may be possible for the plan to accept another physician who will do those procedures! Generally, it will be easier to more clearly define the parameters of your treatment, than to continue over and over again to re-negotiate your payment and treatment arrangements.
8. Will you be paid enough? Capitation and discounted fees are the usual payment options. Remember that capitation is a flat fee per plan member. This means that third party payers are paid a flat annual amount per head. Insurer’s, then, are no longer at the mercy of patient’s health, doctor’s decision-making, or even bad luck. In other words, their vulnerability is greatly reduced because with capitation they know what their cost will be as soon as they’ve sold the contract to the plan member!
If you’re dealing with a capitation rate, you need to know the reasonable capitation rate for your area. If managed care has existed for awhile in this area, this rate will be available from other providers. It is a numbers game. In dealing with capitation, taking a few patients may not be worth the effort and taking on too many will be a financial hazard. You need to know what magic number, in terms of subscribers, will work for your particular practice. You can, for example, limit the number of new patients you will accept so that you do not become overwhelmed.
The suggestion has been made that to protect against a limited number of enrollees, you can ask for a cap rate that increases when the number of patients goes below a certain number. This works particularly well for a plan that is eagerly soliciting you. In the alternative, watch out for plans that require only a small co-pay for visits to out-of-network providers. This may not be enough of an incentive for them to remain in the network. Being out of network means that the patient would see a doctor who is not a member of the plan and this can work against both the patient and, possibly, a doctor who refers a patient to an out-of-network provider.
Again, watch out for key phrases like, “reasonable or usual and customary charges.” These are dreaded words for both providers and insures alike. They are ill-defined. Remember, especially in the chiropractic arena where capitation is relatively new, your charges can be significantly higher than what you are paid, so it is really important to know your average charger per CPT code. Even better than this would be to track your actual costs per CPT code. If your fee for this CPT code is too high, then any capitation plan will seem unprofitable to you.
Discounted fees are just that; they are a percentage off your UCR (usual, reasonable and customary fees). The provider agreement clearly will state what the going rate is for the discount. It is recommended, however, to compare CPT/ICD codes across providers, rather than looking specifically at manual manipulation charges, for example. See what is being paid overall for 99211, etc. A good benchmark will always be what the plan is paying the MD or DO for the same CPT code! That way you will know what other providers in other professions are being paid.
9. Who is responsible for the billing? Who will do it? Make sure your contract spells out who’ll coordinate benefits and chase payments due from other insurers who may also cover some enrollees. You may even want to retain the right to sue for reimbursement when a third party doesn’t pay. And watch out for any time limits on claims submission. If the contract spells out, for instance, that claims submission must take place within 14 days of the date of service, you’d better have procedures in place that will ensure this gets done or you won’t get paid!
10. Know what you are signing. Consider such usually unimportant issues as eligibility, which almost never is defined. What to do with a patient you initially determine to be eligible and then later, when updated subscriber lists appear, turns out to be ineligible, can cause you to absorb the charges, even if it is the plan’s fault that you were not notified.
Are you restricted in any way to certain hospitals, labs, MRI units, etc.? What are the rules for credentialing other providers in the plan? Remember, unless liability is clearly spelled out in the contract, you can be accepting liability for another provider’s mistakes. How are utilization reviews and quality assurance reviews conducted?
What standards are used and how often are these completed? What is done with the information from these reviews once it is gathered?
11. Consider risk and how much of it you are willing to accept. The most dangerous risk question may involve a “hold harmless” clause, in which a plan asks you to indemnify it, in case of malpractice liability! Experts say never agree to this, unless you get your malpractice carrier to accept the provision! If you were protecting only your own professional negligence, it would probably not be that much of a problem. But if you indemnify for anything that happens as a result of the plans relationships with other providers, your carrier probably won’t cover you! In other words, by holding the plan harmless, you are actually accepting responsibility for the care and treatment provided by all other providers in the plan!
12. Last, but by no means least, how do you get out of the contract? You may want to specify, for instance, that you can leave it the plan stops paying you –say 30 days after non-payment. But check your state law. Patient abandonment can become a real issue here, so giving proper notice is not only an ethical, but a legal issue as well. Word your notification to patients carefully, so as not to violate any non-competition clauses that may be contained in the contract. In a group practice, one suggestion may be to ask for complementary protection–for example, having the plan agree not to contract with individual doctors in your group for one or two years after a plan relationship ends.
In the alternative, be careful to consider your right to stay if the plan wants you out. Try to eliminate any clause pertaining to the right to terminate without cause. Also, consider how grievances will be solved and how they are dealt with contractually.
In any case, the best position you can possibly place yourself in is to be as prepared as possible as the future changes the way health care is delivered. You can never, ever be too prepared in this case. But the very, very worst thing you can do it to jump into managed care without looking where you are going.
I caution you to go into the managed care setting carefully. Do not feel that because everyone else is jumping on the band wagon, you have to, too. Your bottom line must always be to never, ever let patient care be compromised in the face of cost containment! If it right for you and for your practice and you have thoroughly reviewed the contract, then go ahead and participate. But please remember that not all managed care plans will be right for you. Don’t accept secondary status when you are a first-class provider!s
Jill M. Bjerke, BS, DC is President of Health Choices, Inc., an Iowa corporation that provides primary source credential verification and on-site review services. She is also head of a health care management consulting firm. A l991 Palmer graduate, she represents Iowa chiropractors on the Iowa Community Health Management Information System, is a guest lecturer at Palmer College and a former member of the Board of Directors of the Iowa Chiropractic Society. Dr. Bjerke was recently elected to the Board of Directors of the Child Abuse Council of the Quad Cities and is pursuing dual master’s degrees in business administration and health care administration.
Health Choices, Inc.’s primary focus is on the credentialing of health care providers. The firm also performs on-site review services. Both services can be contracted for by managed care entities or individual doctors for the purpose of determining a provider’s eligibility for participation in health care delivery.
Dr. Bjerke also provides consultant services for network development and drafting of quality assurance, utilization review and credentialing plans. Please contact Dr. Bjerke at 319-323-5580.
l Managed Care Desk Reference, 1994 edition, p. 149.
2 Medical Economics, March l3, 1995, p. 78.