Coming to Terms: Pitfalls in ED Contracts with Managed Care
Coming to Terms: Pitfalls in ED Contracts with Managed Care
Editor’s Note: In this issue, The Managed Care Emergency Department continues a multi-part series on contracting with managed care. This article is part one of a two-part feature on contract terms.
Scenario one: A local managed health care plan with 20,000 covered lives goes out of business. A clause in its provider contracts obligates your ED group to continue to provide care to the plan’s beneficiaries for 120 days past the date the last premium was paid to the plan. You have no reason to expect payment for these services.
Scenario two: A patient in an automobile accident is treated in the ED. The patient’s condition is clearly an emergency and is recognized as such by both the physicians treating the patient and the patient’s health plan. However, when the bill is sent to the plan, some required information is left off the form. The plan denies payment because the group did not submit a "clean claim."
Though ED groups may negotiate a good reimbursement rate from a particular MCO, they can still come up short if they aren’t careful to include protective language that is very specific in terms of the groups’ responsibilities and rights, say contracting experts.
"Most payers don’t have provider contracts specifically tailored for emergency services, they are geared more toward the primary care providers," says Chris Cartledge, the administrator of Premier Health Care Services, Inc. in Dayton, OH, a multi-specialty physician group with 34 contracts across the state. "The language is broad enough, and we can work with it. But we need to go in and tinker with some of the language."
ED groups may find their reimbursements cut by as much as 20% through unexpected downcodings of claims and retrospective denials of payment for services, says Michael Williams, President of The Abaris Group, an emergency medical consulting firm based in Walnut Creek, CA.
"What sometimes happens is we sign these generic contracts that have liberal definitions and liberal language that favors the payer," Williams says. "We’re now saying be very specific and precise."
Clauses involving scope of service, authorizations, covered and uncovered services, billing, retrospective review and appeals, and credentialing are particular areas ED managers should pay attention to when negotiating with MCOs.
The definition of an emergency
ED groups should be very clear about what the definition of an emergency is for each payer, and, ideally, it should be the prudent layperson standard, according to Williams.
Because the standard allows the health plan beneficiary to determine whether or not their condition warrants emergency medical attention, it essentially eliminates the time-consuming process of calling the health plan representative or the patient’s PCP for authorization when a member presents in the ED seeking care.
It also substantially reduces the number of claims that are retrospectively reviewed and denied and that end up costing the department so much money.
"The million dollar question is, what is the definition of an emergency and who defines it?’" Williams explains. "Clearly, we would like to see it defined prospectively by the member."
There is ample support on a national level for seeking the "prudent layperson" definition, he notes. The American College of Emergency Physicians and the nation’s largest managed health care payer, Kaiser-Permanente, Inc., negotiated a position paper last year in support of the prudent layperson definition, and two federal bills are pending in Congress that would mandate that definition for all health plans nationwide.
The American Association of Health Plans recently adopted the position paper, as well, notes Williams. "There is new substantial leverage on this issue that needs to get back to the payers. They need to be educated about what their own peers are doing."
Premier does not currently have a contract that provides for prior authorization of ED visits, says Cartledge.
By taking the position that they are negotiating in the best interest of the patient, Premier has been able to persuade payers to consider the prudent layperson standard.
"We try to keep it patient-focused in our negotiations, which helps diffuse, in some cases, some rigid positions payers tend to take, particularly with regard to the prudent layperson definition of emergency services."
Auto-authorizations
In many cases, however, managed care payers are unwilling to give up prior control over access to emergency services, Williams points out. In that case, he recommends negotiating a list of conditions that the provider and payer agree are automatically authorized.
"For example, most payers will agree that any patient that comes in by ambulance, that [condition] is authorized, whether the patient had a perception of an emergency or not," he says. "Also, any patient in a coma, any patient with a fractured leg . . . As you walk through a litany of conditions, you start to develop a very broad list of what would be, to both the payer and the ED, a very believable set of clinical conditions that should be paid, no question." (See Table on suggested auto-authorized conditions.)
Another category of possible auto-authorized conditions is any situation in which the PCP is unlikely to be available for obtaining authorization, or that authorization would rarely be denied if it was obtained, says Williams.
"Basically, times of day," he says. "PCPs tend to be very responsive and available during the regular business hours, that is what the plans are paying them for on a capitated basis. But, after about 10 o’clock at night and before seven in the morning, it is pretty apparent that, even if you get in touch with the PCP they are going to let you go to the emergency room."
Those times should also be carved out and included in the contract, says Williams.
Screening exam fees
EDs should be careful when accepting a flat rate screening exam fee, says Williams.
Since federal COBRA/EMTALA regulations require EDs to screen every person presenting to the department to determine whether or not a life-threatening medical condition exits, some health plans have negotiated a screening fee, typically ranging from $25-30, paid to physicians who see the patient, determine there is no serious medical condition, then refer the patient out of the department to their primary care provider.
"Under COBRA, we are obligated to do a screening exam, including all necessary tests," he says. "We can’t just triage them. We have to really examine the patient and conduct tests. In many cases, that’s pretty much the full treatment."
If it turns out the patient doesn’t need treatment in the department, many groups advocate negotiating a screening fee that represents a limited scope of services, continues Williams. But, this may often represent an "out" for the plan, allowing them to classify a wide range of services as "screening exams" because the complaint did not turn out to be an emergent medical condition.
"What we find is that, when you conduct a screening exam, you are conducting a full examination in most cases. "You are minimizing opportunities to be paid under our current coding systems," he explains.
Williams recommends that groups not define specific screening exams, but simply charge for services rendered.
"If you’ve conducted a service and the patient does not need to be in the ED, and if they stayed in the department they would have been a level 3 or level 4, but you only provided services for a level 1 or level 2, you are not charging for screening them, you are charging for the level 1 or level 2 service," Williams says. "You don’t get into these situations where you get paid for a screening exam, but the screening exam doesn’t really represent the work you did."
Reviews and appeals
If there are uncovered services, be sure they are specifically stated in the contract, Williams emphasizes, and be sure it states how the claims will be reviewed. "If there is any sort of denial process related to payment of services, we need to know what the written policy is, who conducts the review, and what are the method of appeals."
In many cases, the reviewer may be a family practitioner or pediatrician unfamiliar with emergency services. "We would advocate for a broad-based policy, and that the person who conducts the review be an emergency physician."
There are a wide variety of areas besides authorization that may merit an appeal of the health plan’s decision on a certain matter, and ED groups should look for a specific, well-defined review process.
"In some cases that would mean making sure there is an appeals process," he notes.
If the plan doesn’t have someone with emergency medicine experience available, Williams advocates a clause stipulating that they will call in a third party to review any appeals.
"For example, if you saw a trend in downcoding certain diagnosis codes, then you could go through the appeals process," Williams explains. "The first level of denial might be the plan, the second might go out to an independent provider, the third level might be arbitrationwe actually have a formal arbitration clause in many contracts."
Some groups have a "AAA arbitration clause," which obligates the plan and group to abide by the rules of the American Arbitration Association.
"Basically you need to be familiar with what the AAA offers, get an arbitration clause, a dispute resolution clause and make sure the clause stipulates what you can dispute."
"Hidden" policies
Many standard contracts include clauses that state that the ED will abide by certain policies and procedures already established by the health plan. In some cases, these policies may conflict with accepted practice standards at the hospital, so it is important to understand exactly what you are agreeing to, say both Williams and Cartledge.
"Wherever you see something like, You will agree to abide by our utilization review process and any future amendments,’ you should say, Wait a minute. I want to see the current plan. I want to have input on and, maybe even sit on, the utilization review board,’" says Williams.
When any portion of the contract obligates the group to abide by a separate policy, that policy should be read and a copy appended to the contract, he adds.
Amendments to the contract can be a particularly tricky area for many groups, says Cartledge.
"Many agreements will say that the payer has the right to amend the contract and we don’t," he says. "I like to balance that. Typically, in order not to make a fuss, we have an agreement that within 30 days of receipt of an amendment we can reject or modify it, pending agreement by both parties."
Cartledge recommends inserting into any contract amendment clause precise language that guarantees the provider a right to accept or reject any amendments to the contract.
Another policy that is seldom heard about, but common in provider contracts is the "continuation of coverage" clause, he says.These clauses obligate the provider to continue to provide care even if the payer ceases operation or becomes insolvent.
"You may wind up being responsible for providing care for a number of beneficiaries for an unreasonable length of time," he cautions.
These clauses often say that the provider is obligated to provide services for 90-120 days after the last day the MCO collected premiums, Cartledge explains.
He typically inserts language that says Premier will provide care to beneficiaries through the end of the month in which their subscription fees were paid.
Prompt payment and clean claims
Make sure that the methodology and necessary form for billing is clearly defined in the contract. If the plan has specific forms that must be used, managers need to know that up front.
"You don’t want any of this nonsense of you sign the contract, then all of a sudden instead of a green form, you’re supposed to use a yellow one," Williams explains. "Then, the contract is no longer an 80% discount, it’s going to cost you 2-3% more to generate a new computerized form. Those are some of the funny little things that happen."
The contract must also define the plan’s definition of a "clean claim," a standard billing term, says Williams.
From a payer’s point of view, if a claim form doesn’t contain enough data to determine whether or not it is a verifiable claim, it is not "clean" and can be rejected or returned.
"An old trick is to have different criteria depending on what bill was being submitted," Williams says. "What we say is, define what a clean claim is, what the five or six components are: patient name, Social Security number, diagnosis, etc. From there on in, that’s it. You can reject a claim because the service wasn’t authorized, but you can’t reject because it wasn’t a clean claim."
Ensuring prompt payment is also a primary concern in ED contracts.
"Time and again I see ED groups and hospitals who are tinkering and agonizing over these claims, getting paid at a 30-40% discount over what they normally would be paid, and they aren’t even getting paid for three or four months," he says.
Inserting a clause that stipulates payment of clean claims within 30 days or the group reverts to either a percentage of charges or full charges will usually take care of the problem.
Payers may be resistant to many of the additions that ED managers and group administrators want to make to their standard contracts, because they are unaccustomed to that much input, say Cartledge and Williams. But, the extra work will be worth it in the long run.
"Typically, payers feel that they can just throw something in front of the provider and say, Sign it or don’t sign it, but don’t ask any questions,’" says Cartledge. "I tend to take a different approach."
In his discussions with both providers and payers, Williams says he has often marveled that both groups are frustrated over the same issues.
"A lot of our frustration with managed care is misplaced," he says. "We don’t have a decent infrastructure of contracts. If we had gotten our contracts together and anticipated some of these issues, there would not be as much frustration."
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