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New York State Behavioral Health Medicaid Managed Care Contracting Overview

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Adam Falcone, JD, MPH, Feldesman, Tucker, Leifer & Fidell Andrew Cleek, PsyD, McSilver Institute Meaghan Baier, LMSW, Institute for Community Living Dan Ferris, MPA, McSilver Institute

[email protected] http://www.MCTAC.org

mailto:[email protected]

http://www.mctac.org/



Managed Care Technical Assistance Center Overview

What is MCTAC? MCTAC is a training, consultation, and educational resource center that offers resources to all mental health and substance use disorder providers in New York State. MCTAC’s Goal Provide training and intensive support on quality improvement strategies, including business, organizational and clinical practices to achieve the overall goal of preparing and assisting providers with the transition to Medicaid Managed Care.

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MCTAC • MCTAC is partnering with OASAS and OMH to provide:

– Foundational information to prepare providers for Managed Care

– Support and capacity building for providers • tools • informational training & group consultation • assessment measures

– Information on the critical domain areas necessary for Managed Care readiness

– Aggregate feedback to providers and state authorities

MCTAC Overview (cont.)

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Managed Care Technical Assistance Center

MCTAC Goals • Provide agencies with critical information

necessary to prepare for the transition to Managed Care as early as April 1, 2015.

• Provide content training and support in preparing agencies for the implementation of Managed Care.

• Obtain a thorough assessment of agencies’ existing readiness to transition to Managed Care.

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MCTAC will offer: • Foundational information to prepare for Managed Care

• Support and capacity building for providers o tools o consultation o informational forums o assessment tools

• Critical information along each of the domain areas necessary for Managed Care readiness

• Feedback to providers and state authorities on readiness for Managed Care.

• MCTAC will serve as a clearing house for other Managed Care technical assistance efforts

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• Hold Kick Off events around NY State • Distribute and collect a Managed Care Readiness

Assessment • Offer training series to providers based on two

levels of need: • Informational Training Series: Managed Care

Foundational Concepts Training Series • Intensive Training Series: Intensive

Implementation and Planning Action Learning Community

What will MCTAC do?

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• Designate a project team including: – Executive leadership, Finance & Clinic leadership,

and Evaluation staff when available

• Complete the readiness assessment and participate actively in MCTAC activities

• Commit to investing the time and effort needed to assess, diagnosis, improve, and monitor your organization’s operations, business practices, and financial performance

What Providers Can Do to Make the Most of MCTAC Supports

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• Five in-person T.A. events: – Rochester 11/14 – Long Island 11/25 – New York City 12/9 – Albany 12/10 – Will be recorded and posted on-line – NYC 1/13/15

Web-Based Content Series: – Plan Perspective feat. Harold Iselin & Whitney Phelps (Greenberg

Traurig, LLP) 12/17, 2:30 PM. Recording available at MCTAC.org – Provider & Policy Perspective January/February 2015 – Contracting Forum Summary and “Office Hours” January/Feb 2015

• What’s next: Finance & billing, utilization management, measuring and improving outcomes, and more.

MCTAC Contracting Unit

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Questions or Feedback?

Contact us: [email protected]

Visit MCTAC’s website for more information and access to past webinars

and trainings: http://www.MCTAC.org



© 2014 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

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Sponsored by the New York State Medicaid Managed Care Technical Assistance Center (MCTAC)


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DISCLAIMER: EDUCATIONAL ONLY

This training is provided for general informational and educational purposes only and does not constitute legal advice or opinions. The information is not intended to create, and the receipt does not constitute, an attorney-client relationship between trainer and participant. For legal advice, you should consult an attorney.


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Part 1: Negotiating Basics


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WHO HAS THE ADVANTAGE?


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BOTH.


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LEARNING OBJECTIVES

•After completing the training, participants will be ready to: – Implement a strategy for managed care contracting – Identify ways to promote your value to increase bargaining

strength – Use negotiation skills to reach win-win agreements – Make the strongest arguments to obtain favorable contract

terms. – Establish a team-based approach for reviewing contracts – Understand the meaning of common contract provisions

and terms – Recognize favorable and unfavorable contract language

MANAGED CARE CONTRACTING

Managed Care Organization You

Seller Buyer


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MANAGED CARE CONTRACTING

Managed Care Organization You

Seller Buyer


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MANAGED CARE ARRANGEMENTS

Purchaser Payor Network Provider

Payor Payor Network Provider

Medicaid Managed Care Organization

IPA Provider

Employer Health insurer

ACO Provider

Medicare Medicare Advantage Organization

BHO Provider


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WHAT’S TO NEGOTIATE?

• Scope of Services • Covered Services • Subcontracting

Arrangements • Credentialing • Access/Quality Standards • Utilization Management • Regulatory Penalties • Reimbursement Rates • Waiver of Co-Payments

and Deductibles

• Prompt Payment • Payment Suspension • Overpayment Recoupment • Retroactive Disenrollment • Appeals • Dispute Resolution • “All Products” Clauses • Term and Termination • Breach and Cure • Post-Termination

Responsibilities • Amendments • Governing Law

CONTRACTING STRATEGY


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CONTRACTING PROCESS

Before you sign, use the P.E.N!

Prepare

Evaluate

Negotiate

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PREPARATION PHASE

A party that recognizes its strengths has

an advantage in achieving its objectives.

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IDENTIFYING YOUR STRENGTHS


Assess Leverage

Compete Based on

Value

Increase Leverage or Value

• Is the MCO required to include your provider type or service in its network?

• Is the MCO required to contract with all provider types/service providers?

• Examine:

State insurance laws and regulations Medicaid laws or regulations MCO’s contract with the State Medicaid agency Insurance Exchange regulations and rules

• Key terms to look for: “provider network”, “network adequacy”, “network service”, “network contracting requirements,” and “minimum network standards”.


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ASSESS LEVERAGE


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NYS RFQ FOR BEHAVIORAL HEALTH BENEFIT

Provider/Service Type Contracting Requirement Reference

OMH or OASAS licensed or certified providers

Any provider currently serving 5 or more Medicaid managed care enrollees for a minimum of 24 months; thereafter, higher of 50% of all licensed clinics or minimum of 2 per county

§ 3.6.A; § 3.5.F., Table 3

State operated outpatient programs All § 3.6.B.

Opioid Treatment programs and Buprenorphine prescribers

All § 3.6.C.

OASAS residential programs All §3.6.D.

Crisis service providers for 24/7 coverage All § 3.6.F.

PROS, IPRT, CDT, ACT, Partial Hosp., Inpatient Psych., HCBS, Psych. ERs, Detox

2 per urban county and 2 per rural region

§ 3.5.F., Table 3


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ASSESS LEVERAGE

• Is the MCO required to pay you at a specific rate or level?

• Examine:

Medicaid laws or regulations MCO’s contract with the State Medicaid agency. Insurance Exchange rules

• Key terms to look for include: “minimum payment”, “provider

reimbursement” and “rates”


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NYS RFQ FOR BEHAVIORAL HEALTH BENEFIT

Provider/Service Type Payment Requirement Reference

OMH or OASAS licensed or certified providers

Must pay no less than Medicaid FFS rates for period of 24 months

§ 3.7.B.iii.a.

OASAS residential programs Must pay allied clinical service providers on a single case or contracted basis

§3.6.D.

Clinics holding a state integrated license Must contract for full range of services available under license

§ 3.6.G.


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ASSESS LEVERAGE

• Are there other providers in the same market offering the same services as you? – Define geographic market

• Where do your patients live or work? – Define product market

• What providers can substitute for you? – Conduct market analysis

• Fewer providers = Greater leverage

BUSINESS DAY

F.T.C. Wary of Mergers by Hospitals By ROBERT PEARSEPT. 17, 2014

http://www.nytimes.com/pages/business/index.html



http://topics.nytimes.com/top/reference/timestopics/people/p/robert_pear/index.html

http://topics.nytimes.com/top/reference/timestopics/people/p/robert_pear/index.html


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ASSESS LEVERAGE

• Can the MCO “afford” to leave you out of the network? – Assess breadth and scope of services – Analyze market share – Consider brand and reputation


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ASSESS LEVERAGE

• Is the MCO establishing a new product or provider network?

• Does MCO need regulatory approval of network adequacy? – Medicaid MCO must submit detailed

network plan for review and approval at least 120 days prior to start-up date. (RFQ § 3.7.B.)

• Is MCO facing critical deadlines in

order to enter marketplace by a certain date?

WHAT IS COMPETING ON VALUE?

Competing on value enhances your negotiating position because you offer

something of greater value, as compared to other providers in the marketplace.


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Identify Value Assess Value Communicate Value

COMPETING ON VALUE

What is the “Value Agenda”? – Organize into Integrated Practice

Units Around Patients with Similar Needs

– Measure Outcomes and Costs for Every Patient

– Move to Bundled Payments for Care Cycles

– Integrate Care Delivery Across Separate Facilities

– Expand Excellent Services Across Geography


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Michael Porter and Thomas H. Lee, “The Strategy that Will Fix Health Care”, Harvard Business Review, October 2013. Michael E. Porter, Erika A. Pabo, and Thomas H. Lee, “Redesigning Primary Care: A Strategic Vision To Improve Value By Organizing Around Patients’ Needs”, Health Affairs, March 2013, p. 516-525 Michael Porter and Elizabeth Teisberg, Redefining Health Care (2006).


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COMPETING ON VALUE

• Do you offer potential savings to the MCO? – Adherence to prescription

drug treatment – Reduction in ER visits or

preventable hospitalizations

– Reduction in total expenditures for cost of care

• For any of the above, can you quantify the savings?


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COMPETING ON VALUE

• Do you offer integrated physical and behavioral health care? – What model of integration? – Have you been designated as a health

home?

• Do you have written affiliation arrangements for the referral of patients with significant mental illness or substance use disorders from primary care providers?

• Can you show improvements in quality of care, better health for populations, or reductions in cost of care?


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COMPETING ON VALUE

• Are you willing to incur some downside financial risk that would otherwise fall upon the MCO? – Capitated payment for the provision of services furnished

by your organization – Bundled payments or case rates for specific diagnoses or

conditions – Shared savings and losses for total costs of care


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COMPETING ON VALUE

• Marketing materials that communicates the value you offer to MCOs

• In-person meetings with MCOs to describe cost and clinical outcomes

• Participation at conferences that highlight your achievements

• Informal networking events

• Community events

INCREASE LEVERAGE OR VALUE

Collaborations with other providers through joint ventures or integrated

provider networks may increase leverage in the marketplace, enhance

your value, or both, thereby increasing your power to make demands

of the other.


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TYPES OF JOINT VENTURES

• Referral Arrangement

• Co-location Agreement

• Purchase of Services

• Merger

Primary Care

Provider

Behavioral Health

Provider

Joint Venture

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Joint Venture

• Contractual relationships (e.g., affiliation)

• Joint governance committee

Partial Integration

• Joint ownership or joint control of new legal entity (e.g., IPA, PHO)

Full Integration

• System owns hospitals and employs salaried physicians

LEGAL STRUCTURE

TYPES OF PROVIDER NETWORKS

IPA

Behavioral Health

Provider

Primary Care Provider

Behavioral Health Organization

Behavioral Health

Provider

Behavioral Health

Provider

Behavioral Health

Provider

Management Services

Organization

SUD Provider

SUD Provider

SUD Provider


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CAUTION: ANTITRUST RISKS

In general, providers must make independent,

unilateral decisions on contractual terms and negotiate separately in

order to comply with state and federal antitrust laws.

ANTITRUST “SAFETY ZONE” FOR FINANCIAL INTEGRATION

FTC/DOJ Statements of Antitrust Enforcement in Health Care • “Statement 8” - Creates “safety zone” for provider

networks that allows a network to negotiate and contract with third parties as a single entity on behalf of its participants and to engage in other activities typically considered anti-competitive, if the participants are sufficiently integrated.

• Financial Integration means substantial financial risk-sharing by network participants in providing all the services that are jointly priced through the network

• Caution: Market share limitations


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“RULE OF REASON” TEST FOR CLINICAL INTEGRATION

“Rule of Reason” test applies to determine whether providers’ integration through the network is likely to produce significant efficiencies that benefit consumers and the price agreements by the network physicians are reasonably necessary to realize those efficiencies.

• Clinical Integration: Active and on-going programs to evaluate and modify clinical practice patterns of all network providers

• FTC issues Advisory Opinions to guide

organizations on clinical integration


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MEDICARE SHARED SAVINGS PROGRAM ANTITRUST SAFETY ZONE

• Protects joint negotiation of reimbursement rates with private payors

• Eligibility must be determined under four-step process that requires calculating an ACO’s share of services in the Primary Service Area (PSA) of each participant in that ACO.

• ACOs whose combined common service share in each participant’s PSA is less than 30% or less qualify for the antitrust safety zone, with certain qualifications and exceptions.


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NON-INTEGRATED PROVIDER NETWORKS

• Use if no risk sharing or clinical integration

• Messenger transmits offers between payor and each provider

• Key Requirements: – Each provider

determines its own fees – Each provider

determines whether to accept payor’s offer


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MCO Messenger MCO Messenger

A

B

C

D

E

F

MESSENGER MODEL- CLASSIC


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Messenger MCO Messenger

A

B

C

D

E

F

MESSENGER MODEL- MODIFIED


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Step 1

Step 2

NON-INTEGRATED PROVIDER NETWORKS

PRO

• Transaction cost-efficiencies

• Increased patient volumes

• Educate providers in contracting

• In certain cases not related to market power, higher reimbursement

CON

• No additional leverage

• Long formation periods

• Difficult to maintain over time

• Infrastructure costs

• Risky


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• Managed care contracting Marketing network of

health care providers Facilitating managed

care contracting Negotiating capitated

risk contracts Negotiating shared

savings arrangements

• Shared Support Services IT Support for Electronic

Health Record (EHR) Health Information

Exchange (HIE) Credentialing

practitioners; exclusion/debarment background checks

Third-Party Billing

• Network participants might consider forming a network to engage in any of the following activities:

DEVELOPING PROVIDER NETWORKS

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EVALUATION PHASE

A strategy is simply a plan of action for

accomplishing an objective.

EVALUATING THE CONTRACT

1. Consider timeframe for review

2. Assemble your contract review team – Establish a “point person” and review team lead – Assign areas of contract review to team

members based on their expertise

3. Assemble documents – Obtain entire proposed contract from MCO,

including all referenced and incorporated documents

– Do not assume MCO knows your scope of services!

– Obtain other documents necessary to understand legal obligations (for example, in Medicaid managed care, the MCO’s contract with the State)

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4. Assess the MCO’s Operational Performance Considering past performance of the MCO is crucial. If possible, gather information about past experience of the provider with this MCO:

– Did the MCO meet its payment obligations on time? – Was the basis for denied claims reasonable? – Did the MCO give the provider a role in the development of

policies, such as utilization review? – Was the MCO responsive to the provider’s requests?

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5. Assess the MCO’s Financial Stability Evaluate the MCO’s background and fitness. If possible, the provider should examine the following elements of the MCO’s operation:

– Financial stability and strength – Administrative record – Operational methods – Structural framework

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6. Review the Contract • Do you understand what all provisions mean? • What provisions disadvantage your organization from a

financial, clinical, operational, or legal perspective? • Are responsibilities for each party clearly stated and all

terms defined? • Does the contract include all of the relevant appendices

and exhibits? • Have you reviewed any policies, procedures and

documents referenced in the contract? • Have you reviewed any references to statutes, codes,

regulations to know what they say? • Is the contract consistent with all other applicable

Federal and State legal requirements? • Does the contract reflects sound business judgment?

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7. Identify and Prioritize Issues • Make a list of the issues you identified

during the contract review process. • Categorize each issue as follows:

– Red: Critical issues that without addressing you cannot afford to proceed because the risks (not just financial) are unacceptable for the organization

– Yellow: Significant issues that should be addressed before proceeding because they create undesirable risks for the organization

– Green: Issues that ideally would be addressed prior to proceeding to reduce potential risks

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NEGOTIATION PHASE

Negotiation is discussion

aimed at reaching an agreement.

NEGOTIATING LOGISTICS

•Preliminary questions – Who will be negotiating?

• A team? • An individual?

– How will terms be negotiated? • In writing? • By phone? • In person?

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NEGOTIATING THE CONTRACT

• A common error is bargaining over positions, which – occurs when one or both parties get

stuck in ensuring that they win on their positions, regardless of whether the overall goal is attained

– occurs when parties take extreme positions in the expectation that they will have room to bargain down

– results in a loss of focus on underlying concerns

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• Instead, focus on underlying interests: – Respond with questions, rather than

statements, and respond specifically to the MCO’s concerns

– Develop options for mutual gain and generate a variety of possibilities before deciding what to do

– Look for zones of agreement and areas of overlap, emphasizing the importance of maintaining an ongoing relationship

– Insist that resulting provisions be based on some objective standard

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• Set a “bottom line” based on factors including: – the importance of the MCO contract to the

provider’s operation – the extent to which the contract embodies the

provider’s goals and objectives • It may be best to walk away if the provider does not

trust the MCO or if the two are not a good “fit” • The provider must walk away from any contract that

does not pass legal muster in its final form (for example, it includes provisions that are inconsistent with or contrary to specific legal requirements)


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Part 2: Smart Contracting

FINANCIAL ISSUES


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SCOPE OF SERVICES

MCOs typically contract with a range of providers, each of which furnishes a subset of the full range of services that the MCO is responsible for covering on behalf of the payor.

The scope of services section of the contract specifies which covered plan services the provider is responsible for providing.

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COVERED SERVICES

It is important to distinguish the scope of services included in the provider’s contract with the MCO, from covered services (the services available to the enrollee under the MCO’s plan). Sometimes, groups of enrollees have different benefits plans; not every service falling in the provider’s scope of service under the contract is covered under a particular enrollee’s benefit plan.

The contract should make clear that the provider may treat enrollees as private-pay patients for purposes of providing non-covered services.

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HOW SERVICES ARE PROVIDED

The contract should clearly state any limits on how services can be provided by the provider, including Limitations on which types of

clinicians may provide certain services

Limitations on the provider’s ability to arrange for services through subcontract

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TIMELY CLAIMING RULES

The contract should allow a 90-day window for the provider’s submission of claims to the MCO Providers should check the proposed contract for provisions concerning the consequences of late claim submission The provider should negotiate for a provision that makes MCO denial of late claims discretionary rather than mandatory

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PROMPT PAYMENT RULES

Just as the MCO has an interest in timely claims submission, a provider has an interest in timely payment! The contract should include a prompt payment provision that reflects New York’s Prompt Payment Law: 30 day processing of clean electronic claims Written notice of reason for denied claims Insurer pays 12% interest for late payments

The contract should impose interest on the MCO for late payments to the provider

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CORRECTION OF OVERPAYMENTS & UNDERPAYMENTS

MCO contracts typically allow the MCO to recoup overpayments (excess payment by the MCO to the provider) Contracts commonly permit the MCO to recoup an overpayment by offset; the MCO subtracts the overpayment from any amounts due to the provider

The contract should not allow such an offset until the MCO has given the provider notice of the alleged overpayment and afforded the provider an opportunity to appeal the determination The contract should also permit the provider to dispute underpayments

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DISPUTE RESOLUTION PROCESS

The contract should contain a streamlined, expedited process for claims disputes, and a more elaborate process for other disputes The contract should use a graduated, step-by-step dispute resolution process

Informal negotiation Mediation Arbitration (binding or non-binding)

The contract should not require the provider to exhaust an appeals process within the MCO before resorting to other measures

Enrollees/providers may file a complaint regarding managed care plans to DOH: 1-800-206-8125 or [email protected]. Regional Planning Consortiums (RPCs) will work closely with State agencies to guide behavioral health policy and problem solve service delivery challenges.


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COLLECTING PATIENT COST-SHARING

As in traditional Medicare and Medicaid, the provider is responsible for collecting cost-sharing (copayments, coinsurance, and deductibles) required under the terms of the enrollee’s plan.

Practice Pointer: Cost-sharing should be collected at the time of the visit, either before or after services are rendered.

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WAIVER OR REDUCTION OF COST-SHARING

In general, managed care contracts do not permit a provider to reduce the amount of cost-sharing owed.

Providers should be aware that a routine practice of discounting or waiving these obligations for all patients should be avoided, as it opens the provider up to potential liability on numerous fronts.

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“ALL PRODUCTS” CLAUSES

MCOs have different lines of business (private commercial insurers, Medicare Advantage, Medicaid.)

An “all-products” clause requires the provider to participate in all plans offered by the MCO (currently and prospectively)

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REGULATORY PENALTY PROVISIONS

• Regulatory penalty provisions hold a provider liable for any fines or penalties assessed against the MCO by a state or federal regulatory agency resulting from something under the provider’s control.

• The purpose of such provisions are to incentivize oversight of providers by MCOs.

• Providers do not have authority to appeal or dispute the regulatory agency’s fines or penalties against the MCO.

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DOCUMENTATION OF CLAIM

• MCOs retain right to audit provider’s records to verify that the medical record substantiates the claim.

The provider should ensure that practitioners

rendering the services follow these guidelines: Medical records should be clear, comprehensive,

and legible Entries on the record should be dated and signed

by the practitioner If the practitioner requires supervision, the

supervising practitioner should also date and sign the medical record

#NatCon14

New Mexico Suspends Medicaid Payments to 15 Behavioral Health Providers

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FALSE CLAIMS ACT (FCA)

• The primary mechanism used by the federal government for penalizing fraudulent health care billing and coding practices

• The law prohibits knowingly submitting or causing to be

submitted false claims for payment by the federal government

• FCA penalties apply both to claims made directly to federal

programs and to the billing of MCOs that contract with those programs

• Fraud Enforcement and Recovery Act (“FERA”) of 2009: A

person can be liable under the FCA for knowingly submitting a false claim for payment to a government contractor, if any portion of the money used for the payment comes from the federal government

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FALSE CLAIMS ACT (FCA)

Now You Know it. Now You Don’t. • In general, a false claim or statement under the FCA

requires “knowledge” • However, the FCA broadly defines “knowledge” to include

deliberate ignorance or reckless disregard of the truth • Implication: Repeated submission of claims that contain

billing errors without making any attempt to prevent future errors from re-occurring may be found to have submitted the claims with “reckless disregard” of the truth or falsity of the statement

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FALSE CLAIMS ACT: PENALTIES

• Fines under the FCA may be up to $11,000 per false claim, plus up to three times the amount of damages that the Government sustained as a result of the improper acts

• A provider found to violate the FCA can be excluded

from participating in Federal health care programs (e.g., Medicare and Medicaid)

• The FCA allows private individuals to bring false claims

actions in the name of the Government (qui tam action; the people bringing the actions are known as relators, or whistleblowers)

MEANING OF COMMON PROVISIONS


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PARTIES TO THE CONTRACT

Your contract with the MCO should Specify the parties to the agreement Affirm that the provider and MCO are independent contractors Include a provision stating that the contract is not enforceable by third party beneficiaries

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BREACH AND CURE

Breaches (violating the terms of the contract) sometimes lead to termination of the contract, but not always

The contract should give the breaching party an opportunity to “cure” (fix) most breaches before termination is triggered

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TERM

Contracts generally state how long the contract will be in force (term) and the procedures for renewing or terminating the contract When initially contracting with an MCO, the provider may want to limit the term of the contract to one year without automatic renewal (“evergreen”) provisions

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TERMINATION

Contracts can typically be terminated “for cause” or “without cause” The situations that constitute cause are generally breaches of material terms of the contract Typically either party may terminate with or without cause after providing notice to the other party (e.g., 30 days’ notice in terminations for cause; 60 days’ notice in terminations without cause)

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RENEWAL

Renewal of the agreement usually means renewal of the payment terms for the subsequent term. The contract should specify if renegotiation of payment terms must occur after one party notifies the other party of its desire to renew.

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AMENDMENTS

• Amendment provisions are particularly crucial in MCO contracts, because the clinical, operational, and financial environments in which the parties operate are subject to constant change.

• The contract should guarantee the provider’s right to review any and all changes to the contract.

• The contract should provide that no changes shall take effect until and unless the provider has provided prior written approval

INSURANCE REQUIREMENTS IN MCO CONTRACTS

• MCOs and providers negotiate managed care contracts with the objectives of managing their own risks and transferring as much risk to the other party as possible.

• Much of this transferring of risk is accomplished through insurance requirements.

• MCO contracts typically require both the MCO and the provider to carry professional liability insurance coverage, general liability coverage, and directors and officers (D & O) insurance coverage.

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PROVIDER INSURANCE REQUIREMENTS

• The MCO contract should state clearly the forms and amounts of insurance that the provider must secure.

• Some MCOs require evidence of tail coverage; covers malpractice claims that are filed after a “claims made” policy expires, for alleged injuries that occurred while the “claims made” policy was in force.

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MCO INSURANCE COVERAGE

•The insurance provisions in the MCO contract should be mutual.

•The MCO should be contractually required to obtain reinsurance to cover the cost of continued payment for services provided to enrollees. •The MCO should also be required to maintain appropriate levels of comprehensive liability insurance.

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INDEMNIFICATION

• Indemnification provisions state which party to a contract bears the risk (and liability) for certain events or acts of third parties – A party is “indemnified” if, by virtue

of a contract provision, it avoids assuming responsibility for another party’s acts or omissions arising out of performance of the contract

• Indemnification clauses should apply to both parties

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INDEMNIFICATION (CONTINUED)

• The contract should allocate responsibility – to the MCO for coverage decisions,

selection of providers, utilization management activities, compliance with state and federal insurance laws, and other acts within its control.

– to the provider for professional medical judgment (including malpractice claims), medical record documentation requirements, accurate claims submission, and other acts within the provider’s control

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SOLVENCY

• Solvency is the degree to which an entity’s current assets exceed its current liabilities

• State insurance codes typically impose solvency rules for insurers to ensure that the MCO can pay claims; most payor-MCO contracts include solvency requirements

• Today, because providers are increasingly assuming risk for the cost of services, some MCO contracts impose solvency requirements on providers

• Examples of solvency requirements: – Required disclosure of certain financial information (e.g.

audited financial statements) – a requirement to maintain a specified level of reserves – Ratio of capital to premiums / capitation payments received

Be sure to review any solvency requirements in the contract to determine whether the provider is able to meet them

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REINSURANCE

• Reinsurance (also called stop-loss coverage) protects providers from bearing the full responsibility of extremely costly medical services

• Two main categories of stop-loss coverage: – limiting provider’s responsibility for expenditures exceeding a fixed

dollar amount for each enrollee – aggregate limits of total annual expenditures for health care services

furnished to all enrollees in the provider’s panel

• Some MCO provider contracts require the provider to

procure stop-loss coverage on behalf of providers; others require the provider to purchase coverage

CLINICAL ISSUES

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ACCESS STANDARDS

•These standards define the required level and availability of care from a patient-centered perspective •Access standards in managed care contracts commonly address

– required hours and days of operation and coverage (including evening and weekend business hours)

– after-hours coverage and on-call coverage when a designated health care professional is unavailable

– maximum waiting times for establishing an appointment for various categories of services

– required intervals for providing specific services, such as well child checkups

– maximum waiting-room times

LICENSURE – CONTRACT PROVISIONS

• MCO contracts typically require that provider report any loss of licensure immediately to MCO

– Providers should seek to avoid contract provisions that require that the provider report to the MCO whenever a clinician is in danger of losing license (e.g., under investigation by the provider); divulging information at that stage could be a liability risk for the MCO

• Failure to maintain licensure is in some contracts grounds for immediate termination

– This is a typical provision – Loss of licensure by one clinician should not trigger

immediate termination, so long as provider has continuing capacity to perform

– If the contract contains such a termination provision, it should be mutual (i.e., provider may terminate if MCO loses its license)

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CREDENTIALING

• Credentialing is the process used by MCOs to verify that a practitioner is qualified to provide services

• Includes evaluation of practitioner’s education, license to practice, and certifications issued by boards in areas of specialty

• Most MCO contracts provide for credentialing at the outset of the contract and at regular intervals (e.g., every three years)

• Under Medicare and Medicaid regulations and some state insurance codes, MCOs are required to credential network providers – New York has “provisional deeming” 90 days after

submission of completed application under certain conditions

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CREDENTIALING – TIMING

• Typically, MCO credentialing must have taken effect as of the date of service in order for the provider to receive payment for services to an MCO enrollee

• MCOs typically provide a maximum timeframe for completion of credentialing (usually around 30 days), but only upon the MCO’s receipt of a “complete application”

• Providers should negotiate for a definition of “complete application,” if the term is not clearly defined in the contract or appendices

• Providers should review the credentialing provisions thoroughly, as problems with credentialing often prevent providers from getting paid!

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DELEGATED CREDENTIALING

• Some providers have succeeded in negotiating a “delegated credentialing” relationship (i.e., the provider performs credentialing on behalf of the MCO, under MCO’s oversight) – MCO saves costs; provider gains

control over timing – Delegated credentialing typically

requires provider to use national standards (e.g., National Committee for Quality Assurance)

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UTILIZATION MANAGEMENT

• Utilization management (UM), sometimes called utilization review, is the process by which an MCO decides whether specific health care services are appropriate for coverage under an enrollee’s plan

• Primary purpose of the program is to ensure that services are necessary, appropriate, and cost-effective

• UM can occur at different points in the healthcare delivery cycle: – Prior authorization: provider must request permission from the MCO

before delivering a service in order to receive payment – Concurrent review: occurs during an ongoing course of treatment

(such as inpatient hospital admission) to ensure that such treatment remains appropriate

– Retrospective review: review that takes place, on an individual or aggregate basis, after the service is provided

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UTILIZATION MANAGEMENT – “MEDICAL NECESSITY”

•The core function of the UM program is to ensure that the MCO pays for only those services that are “medically necessary”

– Involves a determination of whether the service is necessary and appropriate for the patient’s symptoms, diagnosis, and treatment

•The definition of “medically necessary” in the MCO contract is of critical importance to the provider and the enrollee •Many MCO contract definitions of “medically necessary” state that services may not be provided primarily for the convenience of the patient or the provider

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UTILIZATION MANAGEMENT – CONTRACT PROVISIONS

• The contract should specify all services that will be subject to UM (including prior authorization, concurrent review, and other forms of coverage determinations).

• Once agreed to by the provider, these procedures should not be subject to unilateral change by the MCO.

• The provider should negotiate for a contract provision providing that no material change in the UM policy shall take effect without the provider’s prior approval.

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UTILIZATION MANAGEMENT – CONTRACT PROVISIONS

MCO contract provisions on prior or concurrent authorization should specify:

– documents the provider must submit to the MCO for the review

– special procedures for obtaining emergency authorization for services

– the grievance / appeal procedure available to contest the denial of prior authorization (by either the enrollee or the provider on the enrollee’s behalf)

– whether under any circumstances the provider may obtain payment when the criteria for prior authorization were met, but the provider failed to timely request prior authorization.

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UTILIZATION MANAGEMENT

•UM applies chiefly to diagnostic and evaluative services, hospital procedures, and certain specialty services; primary care services are not typically subject to prior authorization or concurrent review •However, MCOs’ UM programs are increasingly relevant to providers because:

– MCOs often impose prior authorization or visit limits for behavioral health services

– MCOs often require PCPs to seek authorization before ordering certain laboratory tests such as MRIs or CT scans

– MCOs increasingly require prior authorization before a provider may refer patients for rehabilitative services

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CONCLUDING THOUGHTS

Assess your strengths and weaknesses in the context of a changing marketplace

– What value do you bring to the system? – Who benefits from that value and would pay for it?

Pursue collaborations with local providers and provider networks to integrate primary and behavioral health care

– But carefully analyze: • Potential risks and rewards • Financial incentives for each party

Engage providers, networks, and payors about new payment approaches that support and reward the value of your services


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CONTACT INFORMATION

Adam J. Falcone, JD, MPH

[email protected]

Feldesman Tucker Leifer Fidell LLP

1129 20th Street, N.W.

Suite 401

Washington, DC 20036

(202) 466-8960

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