Class 4 – Contract Issues

Some Ways Providers Can Protect Themselves If They Enter Into HMO Risk-Sharing Agreement with Capitation and Risk-Sharing Pools:

  • Providers can purchase reinsurance
  • Have stop-loss clauses in their contracts
  • Only enter into contracts in which the contractual terms are acceptable to them

Before Specialists enter into a contract with Managed Care Organizations (MCOs), specialists should make sure they understand the nuances and consequences of the proposed contract before signing it.  There are a variety of legal and business related issues with the provider contracts.  The following is a brief overview, specific to specialists of some issues they should be aware of.  More detail regarding managed care agreements is given under Class 7 under this course.

Payment methods include resource-based relative value scale, per-referral basis, and a point system

According to the article by Jeffrey M. Alexander, J.D., “Managed Care Contracting for Specialists, 1999 HFM Resource Guide, specialists in contracting with MCOs should know their referral sources, costs for providing care, and how to provide care that meets their referral sources needs and the payer’s requirements.  Payment methods include resource-based relative value scale, per-referral basis, and a point system.

Issues for Specialists to Understand in Contracting with Managed Care Organizations Include:

  • Payment, Risk pools, Stop-loss insurance, Expenses
  • Patient panel, Patient eligibility, Verification
  • Coordination of benefits
  • Appeal process
  • Claims submission
  • Utilization review
  • Changes to services
  • Indemnity
  • Amending contract/ Terminating contract
  • Exclusivity
  • Patient confidentiality
  • Carve-outs
  • Out-of-area services

Before signing a managed care contract, specialists should determine how payment, patient eligibility, coordination of benefits, appeal process, claims submission and utilization review, changes to services, indemnity, amending/ terminating the contract, exclusivity and patient confidentiality are handled.

Also, before signing a managed care risk-sharing contract, specialists should determine how issues related to carve-outs, patient panel, verification, payment, risk pools, out-of-area services, expenses, stop-loss insurance, and data are handled.

Specialists should know their referral sources, costs for providing care, and how to provide care that meets their referral sources needs and payer’s requirements

Some ways Providers can protect themselves if they enter into HMO  risk-sharing agreements with capitation and risk-sharing pools is to:  (1)  Consider purchasing reinsurance to cover for catastrophic losses – though this may be a costly option and should be evaluated closely; (2) negotiate stop-loss clauses in their contracts so that the HMO covers losses over a specified dollar amount – consider the likelihood of the Provider getting this such as the negotiating power of the Provider with the HMO; (3) and mostly, and this is key, only enter into contracts in which the contractual terms are acceptable to them.

Key: Only enter into contracts with acceptable contract terms

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