Tips for negotiating a quality-based contract

Base payments on guideline compliance

The renewed interest in reducing medical errors and improving quality of care may be a signal that it’s time for practices to negotiate a separate arrangement with managed care plans that increases their reimbursement for adhering to clinical guidelines. Here are the recommendations from David A. Hess, director of contracting for PMSCO Healthcare Management and Consulting, a subsidiary of the Pennsylvania Medical Society in Harrisburg:

• Propose using clinical guidelines that would cover the most prevalent and costly diseases within your practice as it relates to the health plan’s members. If you have a smaller practice, ask the health plan’s medical director what is the most prevalent condition affecting the health plan’s membership, and choose a corresponding guideline.

To simplify things, propose using two of the health plan’s clinical guidelines. "It is not worth the time to enter into lengthy negotiations/meetings with the health plan over guidelines and measures," says Hess.

Review for modifications

A smarter approach is to request that the physicians in your group be given an opportunity to review the proposed guidelines for possible modifications. It is also reasonable to request literature references and background information to support the clinical guidelines used to develop the measures.

• Highlight the guidelines that can be easily converted into economic performance measures. You will have to work with the health plan to determine how to define these measures to ensure they reflect the clinical guidelines accurately.

• Determine how this information will be standardized and entered into the plan’s database.

• Develop a description of the reports (including reporting time periods) that will be used to determine if the clinical guidelines are being met. One way to do this is to use current medical record reviews the plan already performs as part of its Health Plan Employer Data and Information Set requirements.

• Determine prices for your services on a per guideline basis. Remember that your goal is to increase reimbursements to your practice, says Hess. In turn, pick a price that is reasonable based on the size of your practice and the number of the health plan’s members.

Hess recommends performance awards of 100% of the allotted monies for achieving 10% better than the national average. Prorated payments should also be considered. For example, should your group meet the national average, 70% of the allocated dollar amount for meeting the national average should be paid. A prorated schedule is also envisioned for adherence between the national average and 10% above this level, as well as 10% below the benchmark.

Tip: Besides this price, also request a separate payment from the health plan to cover training staff about these new clinical guidelines, updating internal documentation forms and procedures, and ongoing in-house audits to determine how well the practice is performing

• Regarding timetables, Hess likes a nine-month adherence period. Guidelines and measures should be established prior to implementation.

• Finally, try to structure the arrangement so it automatically renews on a yearly basis with an annual 3% to 4% increase in the per-clinical guideline rate identified above, he recommends.