Insight can help you tame Medicare/Medicaid HMOs
Insight can help you tame Medicare/Medicaid HMOs
The secret to Medicare and Medicaid managed care lies in the contract.
"Try to negotiate the payment mechanism that works best for you," advises Jennifer S. Eslami, JD, director of health plan services with Little Company of Mary Health Services in Torrance, CA.
But it’s only the beginning of a long series of defensive measures that, when taken together, will place you in a better position to survive the downward price pressures inherent in these health plans. For example:
• Determine during negotiations exactly which services and procedures are covered. "Basically, [establish] what’s in and what’s out," says Frank D. Strickland, MBA, CPA, managing partner of Strickland Consulting in Atlanta, a health care management consulting firm.
Get an actuary’s help in assessing which services will result in losses under your existing cost structure compared with the payment rates offered by the plan, Strickland says. If you face potential losses from these procedures, negotiate a carveout at a higher agreed-upon rate.
A risk corridor, which triggers a rate change to a higher level if utilization rises above a projected level, also will protect your bottom line.
• Insist on a beneficial payment mechanism. Managed care organizations (MCOs) like to set discounted rates at levels a percentage above the Medicare rate. On a per-visit basis, capitated programs usually fall below the Medicare benchmark, Strickland says.
But these rates tell you nothing positive unless you’re making money from conventional Medicare. A percentage of usual charges typically offers you more dollars if you can negotiate that, Eslami remarks.
• Consider the Medicare/Medicaid demographics. These will be generally sicker patients who often have multiple chronic disorders that require long-term medical attention, says Strickland. Determine what it will cost you over the long-run to service this population.
• Inventory your services. Take stock of which services are likely to be money-losers, says Charlotte L. Kohler, RN, CPA, CPAM, vice president of diversified services with HelixHealth, a five-hospital system in Lutherville, MD.
Also, consider contracting out some of these high-cost, money-losing services such as imaging or low-volume surgeries. Doing so can save you money.
• Insist on regular review periods. These are times when the MCO reviews your performance in terms of financial viability. Asking for more frequent reviews at closer intervals allows you to alter payment levels or carveout provisions. It can also fuel a more favorable contract renegotiation, says Strickland.
• Protect yourself from over-utilization.
If you can’t manage your costs, stop-loss coverage is mandatory, says Strickland, especially if you’re a victim of adverse selection. Adverse selection occurs when, by circumstances of geographic location or time of year, you end up with extremely sick patients.
• Don’t contract with just any plan.
Choose a plan with longevity and substantial enrollment size, says Eslami. They’re likely to be around longer and behave more businesslike.
"If [the senior HMO] has been around for less than a year, they’d better have something really different and better to offer like a wonderful drug benefit," she adds.
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