Managed Care Contracts

Part 3: Identify Opportunities for Improvement

Keep Patient Data Confidential. Ron Levine/Getty Images

An assessment of insurance payer contracts, also known as managed care contracts, gives the medical office the opportunity to determine whether the provider agreement is fair, competitive, and up-to-date. A thorough analysis of your managed care contracts includes contract terms, billing guidelines, payment agreements and other pertinent contract provisions. Knowing the current condition of the managed care contracts allow the medical office to:

  • Make important decisions about modifying, renewing, renegotiating or terminating contracts
  • Audit past claims to determine if payments are being paid according to contract
  • Identify any discrepancies within the language of the contract

The Essentials

Managed care contracts identify and describe a minimum of seven specific areas. Here is what you should look for during your managed care assessment.

  1. Terms and Definitions: Make sure all terms and definitions are clear, precise and exact. Be aware of vagueness and pay special attention especially for terms such as covered services, emergency condition, and medically necessary or medical necessity.
  2. Delivery of Services: Get a clear and complete list of what is defined as "Covered Services". Some contracts do not clearly state or define what is considered by the payer as a covered service and can be difficult to interpret.
  3. Compensation: Once the terms of payer compensation have been agreed upon. Be sure it includes a definite fee schedule, how the UCR (usual, customary and reasonable) is determined, billing and coding guidelines and standards, and a reasonable payment time frame
  1. Medical Office Obligations: Be sure medical office obligations are stated in accordance with state and federal laws.
  2. Managed Care Organization Obligations: There are three pertinent areas to keep in mind when reviewing this section.
    • Make sure the process and criteria for credentialing are specific and clear
    • Identify any quality improvement programs or other initiatives that may affect payment
    • Keep the medical office up-to-date and informed of the organization's contact info including address, phone number. and website.
  1. Confidentiality: The managed care organization must maintain confidential medical records including financial records in accordance with state and federal laws.
  2. Contract Terms and Termination: Terms should be specific and clearly defined with a start date and a termination date. Avoid wording that uses renewal dates, or annual and yearly. Also, the contract should require an agreed upon notice of termination if either party chooses to end the agreement or decide not to renew the terms of the contract.

Carefully read any and all attachments, amendments or clauses to the contract to identify any wording that may limit the services the medical office is allowed to offer or reimbursement for services provided.

The Negotiation

Negotiating managed care contracts requires comprehensive knowledge of the contracting process. This generally includes reimbursement rates, effective and termination dates, claim filing guidelines, payment terms and other contract provisions.

Before you attempt to renegotiate your contract, consider the following:

  • Perform a market assessment to re-evaluate the case mix
  • Compare contracts to determine if any are out of balance with market competition
  • Take a realistic approach regarding payment methods

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