ABC’s of Managed Care Contracting
In its most simple form, managed care contracting is a business agreement between insurance companies and other managed care organizations, and healthcare providers where a few items are defined and agreed upon – 1) How providers will get paid for the services provided to their patients by those patients and by their insurance, 2) what services will be covered under insurance and 3) And requirements like prior authorization, referrals, etc.
Some key parts of a managed care contract include:
- How much providers get paid for each service called a fee schedule
- Quality metrics and reporting requirements
- Claims processes
- Termination clauses
For a provider, there are a few key elements to engrain into the process for a successful negotiation.
- Data is king. You must know your data, because the other party on the agreement (the insurance company) will know it as well. Analyzing cost, utilization, rates, etc. are a baseline must. Reviewing a solid 12 months of claims will provide a firm understanding of where you stand to market, payer performance, etc.
- Understand your market position and reputation. Along with having data to highlight recent performance of both parties, knowing your quality, satisfaction by patients, unique services, market share of the services you perform, etc. will further highlight the value you bring to the agreement.
- As you prepare for conversations and negotiations with payers, and after gathering information from the two items above, effectively detail a summary or grid of items you wish to accomplish, clarify, and firmly address.
- Review and fully understand the language of your agreements. Do not skip to the terms and rates, fully understand starting with the definitions and roles at the beginning of your agreement. Do not glance over any ambiguous terms due to a lack of questioning or understanding.
- Be sure all contracts, reports, data, and notes are stored in a manner that is easily accessible and not collecting dust. Such information should be reviewed in a manner that both maintains awareness as well as prompts proactive discussions.
- Ongoing management. Ensure payers are both in compliance and accurate with your terms and reimbursement. Establish a schedule for communication and conversation with each so that a relationship is established and mutual. This includes internal staff to maintain proper education of team members.
- Ask for help. Engaged attorneys and consultants can ensure an advantageous process and contractual terms.
Planning Priorities
Naturally these are higher level best practice type of recommendations for your contracting process. And yes, your setting (Hospital, practice, ASC, etc.) have their own respective nuances. For example, joining an IPA or CIN may be best for some, negotiating bundled payment arrangements, highlighting cost savings versus others, or patient access criteria. These are just a few of the planning priorities that should be part of your overall strategic planning process with contacting needs.
SHP’s Managed Care Contracting Practices
If you have any questions on how to go about or improve your process, reach out to SHP. Our ongoing support is intended to emulate the use of an internal managed care department for the health system. Typically, we maintain payer relationships and initiate any contracting discussions. The client can choose the degree of involvement. We usually conduct payer negotiations directly with the payer, and then inform the client as to outcomes, recommendations, and next steps. After that, SHP typically maintains all current agreements and owns the process of validating contract performance and initiating negotiations/re-negotiations. All this, with fluid and transparent communication as if we were internal staff members.