© Springer International Publishing Switzerland 2016
Lewis A. Hassell, Michael L. Talbert and Jane Pine Wood (eds.)Pathology Practice Management10.1007/978-3-319-22954-6_1010. Payor Contracts
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McDonald Hopkins LLC, 956 Main St., 02638 Dennis, MA, USA
Keywords
Payor contractMalpractice liabilityCredentialsUtilizationPeer reviewCapitationIndemnificationCovered servicesNegotiation (payor contract)Most favored nation clauseDispute resolutionHold harmless clauseCase: The Devil Is in the (Contract) Details
Community Pathology, P.C. provides professional pathology services for the patients of its local hospital and has an active outreach practice and a technical component histology laboratory that performs technical component services for the outreach clients. It typically bills its professional services for hospital patients with the -26 professional modifier and bills on a global basis for the outreach services.
Community Pathology, P.C. has been asked by its hospital to participate with Good Health Plan, a managed care payor in the region. The pathology group receives a sample participating provider agreement that is titled “Hospital-Based Physician Agreement.” The contract explains that covered services include the “physician services provided by Group to hospital inpatients and outpatients.” The Good Health Plan representative explained that all pathology groups in the state have the same contract, and the plan makes payment for all services provided by pathology groups.
In addition, the fee schedule exhibit states that “Good Health Plan will pay Group for its Covered Services in accordance with the Good Health Plan fee schedule.” There is a current fee schedule included in the package, and the Good Health Plan representative informed Community Pathology, P.C. that the plan’s fee schedule is typically 120 % of the Medicare physician fee schedule, which is similar to other managed care plans in the community. However, the contract itself does not include a minimum guaranteed fee schedule nor does it reference any guaranteed payment rate.
Under the proposed terms, would Good Health Plan reimburse Community Pathology, P.C. for its professional and technical component services to outreach (nonhospital patients)?
Does the contract guarantee the pathology group payment at 120 % of Medicare, or can Good Health Plan change its fee schedule at any time?
How should contract be modified to ensure that Community Pathology, P.C. receives payment for its global outreach services?
If Community Pathology, P.C. bills for professional component of clinical pathology services, should specific payment for these services be addressed in the contract?
Most pathologists in private practice will negotiate many managed care and other third-party payor contracts during their careers. Some of these contracts may be directly between the pathology provider and the payor, and others may involve an intervening contracting entity, such as a physician-hospital organization (PHO), an independent physician association (IPA) or an accountable care organization (ACO) . At times, the pathologist may not have much negotiating leverage with the payor, yet even in these situations, it is important to understand the terms that are offered by the payor and evaluate whether participation in the contract is beneficial. This chapter provides a comprehensive roadmap of the principal contracting components that a pathology provider can follow when evaluating a managed care contract and/or negotiating with the managed care entity.
Initial Contracting Considerations
Prior to negotiating or entering into any managed care contract, a pathologist should ask why he or she (or his or her group practice) wishes to enter into the contract . Perhaps the contract is necessary to maintain the pathologist’s current patient base or to expand it? The contract might be required by an affiliated hospital or important referral source.
Next, the pathologist should define his or her contract expectations. If the pathologist does not sufficiently define his or her expectations prior to negotiating the contract, those expectations may not be met or may not even be addressed during contract negotiations. Moreover, if the pathologist discusses expectations with his or her practice or negotiating team in advance of contract negotiations, the pathologist can determine if his or her expectations are realistic, or need to be revised, based on the experiences of the other pathologists or team members in negotiating with managed care entities .
To support financial expectations during contract negotiations, pathology providers should conduct a thorough financial analysis of practice and business operations. Simply stated, a pathology provider needs to understand, and share with its negotiating team, the financial specifics of its operation, including the fixed and indirect costs associated with its services. Having this information will assist the pathology provider to determine what reimbursement rates are necessary and appropriate in contract negotiations .
Pathologists should consider how important the contract is to their business interests. If the contract is not important, the pathology provider can be less flexible in contract negotiations. If the contract is critically important, more flexibility may be required. Pathologists should remember that physicians who refer patients to them are usually contractually required to send managed care patients to participating providers. For convenience, such physicians may choose to send all of their referrals to participating providers. Therefore, a pathologist’s failure to participate in a managed care contract may preclude the pathologist from receiving not only a physician’s managed care referrals but also such physician’s nonmanaged care referrals .
Always know why you are signing (or not signing) a contract.
Preparing for Negotiation of a Managed Care Contract
A pathology provider should have a plan of negotiation prior to negotiating any contract and especially contracts with managed care entities that usually employ very sophisticated and experienced negotiators .
As a preliminary matter, a pathology provider should not assume that the provider must sign the standard managed care contract as there is almost always room for negotiation. Prior to negotiating a managed care contract, the pathology provider should do the following:
1.
Assemble an appropriate contract team including provider representatives, and legal and financial representatives, among others. The importance and complexity of the contract should determine the composition of the team.
2.
Determine who will negotiate the contract and avoid multiple contact points. The contract negotiator should be provided with written negotiating parameters.
3.
Require that the managed care entity appoints someone who has decision-making authority to negotiate the contract on its behalf.
4.
Identify problem areas in current managed care contracts and consider how they can and should be corrected and addressed in new contracts.
5.
Identify the “must have” and “deal breaker” positions in new contracts before negotiations begin and prioritize requested amendments.
6.
Attempt to negotiate the contract on your home turf.
7.
Set a timetable for contract completion .
Key Managed Care Contract Provisions
The following material outlines the key managed care contract provisions that should be considered by pathologists during the review and negotiation of the contract . These are not listed in the order of importance, but rather in the order that they typically appear in a managed care contract. This list can be used as a checklist for contract review.
Proper Parties to the Contract/Relationship to Each Other
It is important that the contract be executed by the proper party for the pathology practice. If the provider is a corporate entity (e.g., professional corporation or association, limited liability company, general corporation, or partnership), the contract should be with the corporate entity and not an individual. If not all members of the corporate entity (e.g., members in a group practice) want to participate in the managed care contract, the contract should specifically identify the participating physicians.
The managed care contract should provide that both parties are independent contractors and that the pathology provider has no liability or responsibility for the acts or omissions of the managed care entity. In addition, the contract should specify that the managed care entity will not exercise control or direction over professional judgment. If the managed care entity owns or operates its own facilities (such as the health center of an health maintenance organization (HMO)), the contract should provide that the provider is not liable for injuries to patients due to a defect in the facilities .
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