Specialty network manager programs pick up steam with practices, payers

Is your practice ready to go to the next step?

Specialists don’t always get the short end of the stick when it comes to managed care. The specialty network manager, a role United HealthCare Corp., CIGNA Health Care, and other payers employ, gives a specialty physician practice an opportunity to expand its patient base, eliminate preauthorization requirements, and experience the risks and rewards of capitation on an even greater scale than in traditional managed care contracts — if you play your cards right and know what to look for during the request for proposal and contracting phases.

Mobile, AL-based Cardiology Associates has increased its patient volume 5% in the three months since its specialty network manager role with United became effective, says Vance Chunn, FACHE, executive director of the 13-physician practice. And the experience has been so positive that the practice is discussing moving into a global pricing arrangement with United for 10 to 12 DRG procedures. (See related story on p. 35 for how the two practices quoted in this article have implemented the specialty network manager function.)

Huey & Weprin OB/GYN, a two-physician practice in Dayton, OH, has had a similarly positive experience with the specialty network manager role it has held for the past four years, says Physician’s Managed Care Report reader David Astles, MHA, practice administrator. Astles has served in a dual capacity as practice administrator for Huey & Weprin and as executive vice president for a national OB/GYN specialty network management company called OB/GYN Management (OGM). OGM has worked with United HealthCare of Ohio for four years under the specialty network manager concept.

"When we started [with the capitation program] four years ago, some providers and office managers in this market would rather have their heads cut off than work under a capitation contract," Astles says. "To date, the concept is working very well. The key is that providers, office managers, OGM, and United are working collectively to improve care."

By the end of the contract’s second year, OGM’s management responsibility for a 113-physician OB/GYN network in the 15-county Dayton region resulted in a 5% increase in patient satisfaction. In addition, the group achieved a 42% utilization rate reduction for three procedures covered under the contract — D&Cs, laparoscopies, and hysterectomies, Astles says. Likewise, cesarean section rates for the network decreased by 27%. Initially, concerns of underutilization were an issue, he says, but now OGM is slightly below the national average of utilization among OB/GYN physicians — in fact, utilization increased 2.5% in the contract’s fourth year of operations.

Roles and responsibilities of the specialty network manager can vary from contract to contract. Cardiology Associates’ contract with United includes the following responsibilities for its Medicare risk and commercial members:

• overall management of all cardiology costs and services under the contract, including services provided by other cardiology practices in United’s network in nearby Alabama counties;

• quality assurance for physician services;

• utilization review (the practice is in the process of hiring an RN to coordinate this function);

• implementing practice protocols and clinical pathways.

MCOs want providers to bear more risk

Capitation consultant Philip Beard, president of ProStat Resource group of Shawnee Mission, KS, recently told a Medical Group Management Association-sponsored managed care conference in Atlanta that physician practices can expect to see more requests for proposals to bid on this concept, because many national and regional managed care organizations want to shift more risks to providers.

The transition to the specialty network manager concept has been relatively smooth for Cardiology Associates because the practice has worked with United’s Medicare risk patients since 1995, Chunn says. Although the group originally was the only cardiology practice in United’s Medicare risk network, the carrier decided to rebid the contract and expand it to cover developing and running a single-specialty cardiology network for both Medicare risk and commercial members.

Here’s how Cardiology Associates entered into specialty network management:

1. Cardiology Associates and one other practice received an RFP from United in February 1997 to submit separate bids for the Medicare and commercial market in Mobile.

The practice had 30 days to respond to the RFP. "There were a lot of questions on where we were as an organization . . . geographic coverage, whether we had any lawsuits pending, and what level of utilization review, quality assurance, and administration we could provide," Chunn says. "We were asked to quote both a gatekeeper and open access model for the commercial contract."

2. The practice gathered information it needed to respond to the proposal.

The practice relied heavily on actuarial data purchased from Milliman & Robertson, a nationally known actuarial firm based in Seattle. (For more information about the importance of using actuarial data to evaluate and bid on capitation rates, see PMCR, January 1998, pp. 7-10.) Milliman & Robertson provided information on PMPM rates around the Mobile market, and presented three bid options ranging from a highly aggressive pricing option to a minimally aggressive pricing option. Chunn also talked to contacts at other practices to get a feel for the range of PMPM rates United was paying around the country, and combed through information he picked up at professional conferences. The practice decided to submit a moderately aggressive price bid for both contracts, cutting its previous Medicare risk PMPM rates by 8%.

3. The practice completed its proposal, deciding to go the extra mile in presentation.

"We didn’t just type out a report. We put a binder together with the topics they wanted, and made it very polished-looking. If we didn’t know the answer to a question, we explained why," Chunn says. Cardiology Associates also prepared a separate binder with information the proposal didn’t ask for, such as the practice’s image brochure, a list of public speaking events its physicians had participated in, and information on the practice’s marketing and patient education programs.

4. Cardiology Associates requested and got a meeting with United executives to present its proposal.

Although the RFP called for proposals to be submitted by mail, Chunn and other practice leaders felt it was important to walk the United executives through the proposal. "The presentation of that information was extremely important; it demonstrated how well we worked with them," Chunn says. He adds that there was not much back-and-forth negotiation on rates and other contract provisions once the bid was submitted.

5. Four months later, Cardiology Associates was awarded a two-year contract as the specialty network manager for cardiology, effective November 1997.

While following the same process as Cardiology Associates, OB/GYN Management also spent a lot of time during the RFP and contracting phase, Astles says. "You need to put in the time up front to work with the health plan to develop a fair program that is win-win for all parties involved," he says.

Three things OGM paid particularly close attention to: the services covered under the contract, how out-of-network costs would be handled, and risk corridors for obstetric care. Astles stresses that all elements should be specifically defined in the contract language. "The intent is to develop a capitation product that rewards physicians for delivery of the right amount of care, which is a paradigm shift from the overutilizing system of fee-for-service."