Managed Care Contract Negotiations Morph Under PPACA

Negotiating a managed care contract is not the same as it was even a few years ago. Now all of the power providers have in managed care negotiations is in their ability to prove that they can manage quality and cost more effectively than the next guy, says one expert.

This article appears in the April 2014 issue of Managed Care Contracting and Reimbursement Advisor.

Negotiating a managed care contract is not the same as it was even a few years ago. The changing healthcare landscape has produced a number of new considerations and twists on the familiar issues.

The Patient Protection and Affordable Care Act and the move toward accountable care has put a much greater emphasis on quality measures than in previous years, says Greg Chittim, a senior healthcare IT consultant at Arcadia Healthcare Solutions in Burlington, Mass. All of the power providers have in managed care negotiations is in their ability to prove that they can manage quality and cost more effectively than the next guy, he says.

That proof is best provided with a comprehensive set of quality measures reported directly from the electronic health record. This can be straightforward for a single practice using the basic reporting functionality of its EHR, but a number of factors can make the endeavor more complex. For example, a managed care plan might require nonstandard measures that the EHR vendor can't or doesn't want to develop. Trouble also can arise when the provider has multiple EHR vendors in the network and needs a single, apples-to-apples measurement across the network.

"There is often a layer of distrust and/or misaligned interest between plans and providers. Often providers don't trust plans with all their data, nor do they want to implement improvement programs for just that plan's members," Chittim says. "We have seen these barriers overcome when plans subsidize or provide solutions from an impartial third party that allow for population health management of an entire panel, but also provide the aggregate measure data required by the plan to prove performance."

Real-time, EHR-Generated Data
One positive change in the contracting process is that providers now have a better idea of what issues will concern the managed care plan, Chittim says, rather than having the practice's data analyzed by a largely unknown set of plan standards. The spread of EHRs has empowered physicians to track that data in usable formats, and the desire for certain quality standards is more widely known, he says.

"The innovative practices, and the ones that yield a contract the most attractive for both sides, are utilizing an impartial third party to gather some subset of EHR data and aggregate it into measures that can provide much better insight into quality and health," Chittim says. "This can be almost real-time data, and it provides a look at things that you can never get just from evaluating claims-things like weight and blood pressure."

With the focus on data evaluation, providers should be sure to consider the ramifications of accepting any software system offered with the managed care contract, Chittim says. Will the EHR compile data only for that managed care plan's patients or for your entire population? Data usage rights should be specified, also.

Parity Clauses
Additionally, physicians should expect to see payers pushing for longer contract terms and inserting parity clauses, says Tonda Terrell, a contracts analyst with T-System RevCycle+ in Dallas and a certified physician practice manager.

The latest contracts will try to lock providers into longer terms, partly because the payers need to have enough physicians on board for a period of time in order to sell their products to consumers. Physicians should seek to limit the commitment terms in new contracts, making an affirmative response from the provider mandatory for continuation, Terrell says.

Parity clauses can sneak into contracts because they are rarely called that by the payers, she says. "There will be verbiage that says, 'Provider agrees that the rate offered in this contract is in line with their top contracted payers,' or something like that," Terrell explains. "By signing this you're saying that you're not going to receive any higher payment from another payer you contract with. Payers have access to claims rates from each other, and if you accept a higher rate you can be in breach of contract."

Violating that parity clause is not likely to lead to litigation, Terrell says, but it may form a basis for a payer to leverage any other demands it wants to make.

"With the move to ACO plans, the agreements are saying that the provider agrees to participate in all future plans. That's a disadvantage to the provider because they're not sure what these future plans are going to be," she says. "A practice manager who is not well versed in these trends may be blindsided by that and not realize what they are being attached to for the long run."

Payers 'Desperate to Build Provider Networks'
Payers also are trying to avoid giving manuals to each practice, instead relying on the practice to find the manual online. Terrell says that is a bad policy that creates work for the physician practice and can lead to mistakes if the wrong version of the manual is used. Instead, Terrell advises physicians to include a contract clause requiring the payer to provide a physical copy of the provider manual.

"In this climate, you have to remember that payers are going to be throwing lots of things at you to try to get an advantage, but at the same time, they are desperate to build provider networks and get you to sign the contract," Terrell says. "That can give you an advantage if you remember that you don't have to sign off on whatever they present to you. Get some advice and negotiate the terms to your advantage, or at least so that you're not at a disadvantage."