The work is just beginning once you sign the contract

Making specialty network management work

Although most queries and medical journal articles on capitation focus on the contracting and request-for-proposal (RFP) process, your practice’s profitability under a capitated contract depends heavily on how you implement the concept. Not surprisingly, the same is true for the specialty network manager function, in which one physician practice assumes all physician risk for the entire range of services provided by network physicians in a particular specialty.

Your work is just beginning if your practice has made it this far in the process, say managers from two practices that serve as specialty network managers in different markets. (See cover story for a description of the specialty network management concept, and tips for handling the contracting and RFP processes.) Here are some tips for making specialty network management work, according to Vance Chunn, FACHE, executive director of Mobile, AL-based Cardiology Associates, and David Astles, MHA, practice administrator for Dayton, OH-based Huey & Weprin OB/GYN and executive vice president for a national OB/GYN specialty network management company called OB/GYN Management (OGM):

1. Be prepared to invest time in educating office managers and physicians in the practices participating in your single-specialty network, particularly if capitation is relatively new to your market.

Astles spent considerable time office managers and physicians to educate them on how to operate under the capitation program, as did Stuart Weprin, MD, OGM’s chief executive officer, and James Huey Jr., MD, OGM’s chief medical officer. OGM conducted group meetings as well as one-on-one meetings with providers and practice managers to get the message out.

"It’s great to see physicians working together to improve health care delivery; everyone wins in the process, especially the patients," Astles adds. "OGM’s education program includes information on how to bill, and on communicating with providers so they understand how they will be reimbursed for services rendered," he says. In fact, OGM developed a comprehensive provider manual to assist with communication of processes and protocols, which complements United’s provider manual. "OGM’s manual is more specialty-specific, with protocols and guidelines approved by the network’s governing board," he adds.

2. Make sure your practice management software is capable of administering capitated contracts.

"From a practice perspective, you may need to adapt your software program or purchase a new one to track reimbursement and utilization, and to help your practice record its accounts receivable dollars correctly under a capitated system," Astles says. If you continue to operate like you did under a fee-for-service system, your accounts receivable dollars would be grossly overstated, he explains.

3. Look for ways to make the contract run more smoothly.

For example, OGM recommended to United that they eliminate preauthorization requirements for two of the three procedures covered under its contract. Under capitation, those physicians who needed to do the procedure did so without interference from the health plan.

Initially, about 25% of the network physicians were exempt from all preauthorization requirements, and currently about 80% of the physicians are exempt. "Our goal in the beginning was to preserve the doctor-patient relationship; removing the insurance company from the bedside achieved this," Astles says.

OB/GYN providers are well-trained to take care of female patients, and don’t need the health plan hanging over their shoulder, he adds. The governing board has helped to develop guidelines, standards and protocols that enhance the providers’ ability to care for the patient and the plan’s ability to monitor the services rendered. "Under fee-for-service, you never see doctors working together within the same specialty to coordinate a team-oriented approach toward patient care," Astles says.

On the cost side of the equation, tracking expenses regularly is essential to seeing how the specialty network manager contract affects your revenue stream. Cardiology Associates conducts a monthly capitation analysis to see how the practice’s reimbursement and expenses with capitated contracts relates to its fee-for-service reimbursement, and how the practice fared by accepting the contract. (See the spreadsheet the practice uses to conduct the analysis on p. 36, and an explanation of how to use the spreadsheet at left.)

4. Get involved in utilization management.

The key to operating effectively in a single- specialty network is to either have delegated utilization management or to participate actively in the payer’s process, says Tom Pedersen, a Newport Beach, CA-based consultant with Phoenix Healthcare. Pedersen has been involved with single-specialty network contracts in imaging and neurology. Cardiology Associates is in the process of hiring a utilization management coordinator, while OGM’s physician leaders work with United in a cooperative fashion to administer this function. In addition, the OGM governing board regularly reviews utilization and subspecialty issues at meetings with United to discuss peer review and utilization specifics.