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Managed Care Contracts Need Scrutiny

Greg Freeman, January 28, 2013

The other option is to build a portfolio of quality measures that is substantial enough to sway a managed care provider that your care is worth more than the other guy's, Shufeldt says. Remember that managed care companies, not just healthcare providers, are being pressured to improve quality measures. Business models are now focused more on the long-term savings from higher-quality care, so you can negotiate better contract terms-if you have the proof.

Denials also will be affected by the contract terms, and poor attention to detail can create a serious problem for the practice far down the road. It is not uncommon for a practice to get fed up with a high rate of denials, for what seem to be unreasonable causes, and decide to terminate the managed care contract at the first opportunity, Shufeldt says.

"The practice says the managed care organization breached the contract by failing to pay on a timely basis, and the company says you didn't submit clean claims. But what is a clean claim?" Shufeldt says. "That is found in the contract and often it is an incredibly loose definition. Basically if they say it's not a clean claim, it's not a clean claim. If there are no useful definitions, no payment term rights, what do they care if they drag it out?"

Moorehead also cautions that a contract loaded with too many requirements can dramatically lessen the financial impact of what seems like a reasonable payment rate.

"Maybe you agreed on a rate that sounded okay, but it can turn out that with all the staffing requirements, the authorization requirements, all the hoops that a carrier makes you go through on the front end, maybe it's really 70% of what you thought it was going to be," he says. "If you don't understand your true costs, it's impossible to know whether the rate is profitable for you or not. You have to have a system in place to analyze those costs and figure them into the contract negotiations."

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1 comments on "Managed Care Contracts Need Scrutiny"


Maria Todd MHA PhD (1/29/2013 at 2:44 PM)
"What's needed is not anything new in terms of strategy, but now you have to get serious about it, says Taylor Moorehead, a partner in billing operations with healthcare billing consultants Zotec Partners and also its corporate compliance officer." amusing take on the matter. Maria Todd @askmariatodd