They sit in your computer’s hard drive, or perhaps even in an old file cabinet in the corner. They can create a lot of unnecessary work, force you to devote valuable staff time just to meet their daily needs, and leech money from your revenue stream without you even being aware of it.
“They” are your Managed Care Contracts that sit, gathering dust, unreviewed year after year after they’re executed.
Hospital executives are often relieved when contract negotiations – sometimes confrontational – are over. They turn their attention to countless other important priorities, while the executed contracts sit idle.
Unfortunately, untouched contracts do not sit “idle”. They age, and often not very well. Terms and conditions that were acceptable five years ago are suddenly very concerning. Recently added services and new locations may not be considered part of the agreement, resulting in claim denials, lost revenue, and unhappy patients. And, of course, contractual rates have frequently failed to keep pace with costs and are no longer sufficient to fund hospital operations.
Managed Care Contract Best Practices
It is best practice for hospitals to have their managed care agreements audited regularly, particularly the top five commercial agreements and the top five Medicare agreements. Hospitals, or their contract auditors, should be looking at:
- Outdated / inadequate rates. Focus should be placed on fixed rates that do not have inflators attached, meaning that the reimbursement has failed to keep pace with inflation, the local market pricing, or with hospital benchmarks.
- Medicare Advantage reimbursement that represents a fraction of Traditional Medicare reimbursement.
- Missing contractual language addressing current market concerns, such as language protecting the hospital through payor performance guarantees.
- Missing products offered by a Payor that the hospital may need to be a part of.
- Contractual protection against cyber issues and privacy concerns.
- Contractual weaknesses pertaining to areas of specific concern to the hospital, such as:
- Prior Authorization requirements and restrictions
- Retroactive denials
- Audit language
- Imprecise Chargemaster language, including the actual chargemaster audit process, and the maximum allowed increase per year
- Medicare Advantage settlements (Bad Debt, Cost)
- Payor Proprietary fee schedules, which may be outdated
- Amendment and Termination language provisions
- One-sided language pertaining to performance guarantees
- Lack of inflator language for fixed reimbursement rates
- Contractual commitments that may put the hospital in a legal bind and potentially lead to breach
- Ability to term individual payors (leased network contracts)
- Downcoding
Regularly reviewing agreements, particularly the major ones, may save your hospital a lot of headaches, heartache, and money.
Contact Us
Blue & Co.’s team of Managed Care Advisory experts can help guide you through the process. Contact our team today.
Nick Ficklin, CPA, FHFMA, Director
