Contract Modeling – Avoiding
the Pitfalls
Paula R. Dillon, Director of Managed Care
Rockford Health System
Objectives and Outcomes
•
After this session, participants will be able to:
– Understand challenges presented by modeling contracts system
wide
– Establish effective techniques to overcome barriers to contract
modeling issues
– Identify potential modeling issues before executing agreements
– Understand ground level reimbursement needs to discuss as part
of modeling
•
Tools for sharing
– Checklist of essential elements needed in contracts
– Managed Care Review Questionnaire
– Contract Review Sheet
– Top 15 Reimbursement topics to address
2
System Overview –
Rockford Health System
• Multi entity health system
– 395-bed acute care hospital
– 175 physician multi-specialty physician group
– Community based home health agency
– Reference laboratory
• 3,000 FTEs
• 350 Medical Staff physicians
• General acute care and tertiary services
– Regional designation for Perinatal, NICU and PICU
services
3
System Overview –
Rockford Health System
• 2012 Volumes
– RMH:
 12,409 Admissions
 67,508 patient days
 51,767 ER visits
– RHPH
 1,151,536 RVUs
– VNA
 1,1618 Home Health Episodes
 Hospice average census - 43
4
Managed Care Penetration
• Rockford Memorial Hospital
– 28 Independent Contracts; 12 Specialty/Niche contracts
• Rockford Health Physicians
– 29 Independent Contracts; 10 Specialty Niche contracts
• Rockford Visiting Nurses Association
– 15 Independent Contracts
• Rockford Health Medical Laboratories
– 15 independent Contracts
5
Managed Care Revenue
• Rockford Memorial Hospital
– 33.5% Traditional “Managed Care” (e.g. Blue Cross and
other payers
– Net Patient Service Revenue of $328.8 million
• Rockford Health Physicians
– 42% Traditional “Managed Care”
– Net Patient Service Revenue of $79.5 million
• Rockford Visiting Nurses Association
– 15.2% Traditional “Managed Care”
– Net Patient Service Revenue of $10.6 million
6
Challenges of Modeling within
Integrated Delivery System
• Extensive system – geographically located in
diverse locations
• Multiplied data sources by entity – no
commonality in tracking of data
• Variances in Service Line Mix – within system and
within each entity
• Payer Mix Variances
28
Challenges of Modeling within
Integrated Delivery System
• Reporting Capabilities
• Varying plan designs embedded in contracts and
products
• Level of staff engagement at point of registration
and service in selecting plans
29
Multiple Data Sources
• Current Challenges:
– 4 separate operational platforms house claims and
contract data
 Two automated systems – EPSI (hospital) and
Athena (physician group)
 Two manual spreadsheets – lab and home health
– Identifying outcomes generated by data platforms
 More robust reporting by hospital, including
contribution margins and underperforming contracts
 Identifying reporting needs through EPIC
30
Multiple Data Sources
• Current Challenges:
– Lack of connectivity between data compiled on all
entities
 Physician group does not track underpayments
 Home health tracks by top 5 payers but not by products
•

Creates issues when negotiating varying rates by product type
Data compiled on payments varies based upon how robust product
and & plan groupings are defined
•
Discrepancies in Medicare Advantage tracking
•
Discrepancies in Workers Compensation tracking
31
Multiple Data Sources
• Current Challenges:
– Lack of connected system-wide database to capture
information on all system entities

Creates inability to begin effectively analyzing risk-based,
shared savings agreements, bundled payments or other ACOtype models
– New hospital billing system through EPIC not functional
yet with regards to reporting needs

Running parallel systems between EPIC and EPSI until full data
set exists in EPIC
•
More robust ability to monitor payments, write offs and
reimbursement discrepancies
32
Variances in Service Line Mix
• No prior reporting of payer variances with regards
to mix of services
– Made assumptions across the board in evaluating
service categories
– Created issues when evaluating impact of payer
steerage programs – CT/MRI, Ambulatory
Surgeries, PT/OT, Pain Management
33
Variances in Service Line Mix
• Service line mix, including trends positive or
negative, good indicator of needed changes to
payment methodology
– Still heavily weighted on per diems and some mixture of
percentage of charges agreements
– Ineffective evaluation of stop loss protection for high
dollar cases
– Evaluation of fixed pricing for selected services
34
Payer Mix Variances
• Shifting of membership between government
programs, managed care, self pay, and noncontracted (commercial payers)
– Most robust tracking on hospital based membership
– Ongoing issues related to correct payer selection –
reimbursement error ratio of approximately 15%
 (Medicare versus MA plans)
 Traditional workers compensation versus WKC PPOs
35
Reporting Capabilities
• EPSI historically used for budgeting/cost
accounting/reporting
– Typical modeling reports evaluated:
 Split amongst payor class
 Gross versus net revenues
 IP versus OP
 Days, cases, ALOS
 Expected versus actual and variance calculations
36
Reporting Capabilities
• Implemented standing contribution reports by
payor
– Quarterly
– IP versus OP
– Includes service line breakdown
• EPIC go-live 4/27/2013 for hospital
– Running parallel systems; 12 months before robust
data available
– EXPLORATORY MODE in designing new reports that
move beyond traditional Revenue Cycle reports
37
Varying Plan Designs
• Increase of plans with higher deductibles or
• Tracking of unique employer group restrictions
• Understanding self-funded versus fully-funded
plans
• Plans with up-front collection restrictions
– Direct HRA or HSA payments
– Increases lead time for actual payment – either from
payor source and/or patient

Increases liability on patient and decreases likelihood of
payment by patient
38
Staff Engagement in Selecting
Correct plans
• EPSI/EPIC and Athena systems
– Building for each payor and by separate products and
plans
• Potential for creation of individual employer group
plans
• Correct product selection
• Ongoing monitoring of crossover plans
– Shifting from government to managed care plans
 Medicaid, Medicare Advantage
39
Top 8 Errors in Contract Modeling
– We’ve Learned the Hard Way
• Overall systems integration
• Chargemaster Increases – tracking and tying into contract
renewals
• Costs of managed care portfolio - Service line, Product Mix
• Changes to payor administrative policies or procedures
• Legislative changes impacting product mix - shifting of
traditional government programs into managed care models
• Unresolved payor denials
• Payor operational inefficiencies
• Shift in payor mix cannibalization – new payors entering
market
40
Lack of System Integration
• Lack of consolidated database to share payor
information system
• Lack of recognition of changing payment models
– Reduced or lost opportunities in negotiating deals with specific
payors
• Inability to evaluate potential performance under
proposed shared savings models
– Termination of a specific payor HMO product
41
Chargemaster Increases
• Lack of communication between Finance (setting
Chargemaster increases) and Managed Care
(administering contractual caps on allowed increases)
– Select evergreen contracts allowed to roll over

Missed opportunities to ensure that fixed payments were
improving net margins by negotiating increased fixed payments
– Adjustments to claims exceeding contractual cap –
revenue hit for RMH
– Increases reported in aggregate – still potential
opportunity to evaluate at revenue department level
total impact of increase for a particular area
42
Costs Associated with Managed
Care Product Portfolio
• Is your organization evaluating overall contribution
margin?
– Inpatient versus Outpatient services
– Tracking by payor, sub-tracking by payor product

Are certain managed care products or payors absorbing
increased resources when compared to overall revenue and
margins?
• Are you evaluating shifts in revenue attributed to
fixed versus variable cost?
– What trends are spotted with regards to service line
variances?
43
Changes to Payor Administrative
Policies & Procedures
• Coding policy changed that may vary by payor
• Bundling of CPT codes
• Claim edit programs
• Changes to claim payment time frames
• Changes to precertification policies
• Miscellaneous changes to policies and procedures
unspecified in the “provider manual”
• Primary challenge is that the above changes
typically vary between payor
44
Legislative Changes Impacting
Product Mix
• Aggressive growth in Medicaid Managed Care
• Competition amongst Medicare Advantage plans
• Workers Compensation Plans
45
Legislative Changes Impacting
Product Mix
• Aggressive growth in Medicaid Managed Care
– Will Medicaid plans will keep facilities whole?
 Impact on payment limits
 Supplemental payments
 Impact on Provider Assessments
46
Legislative Changes Impacting
Product Mix
• Competition amongst Medicare Advantage
plans
– Inconsistent tracking system-wide
 Conflicts between product registration – driven by
incorrect plan selection at point of registration
 Understates reimbursement numbers – we assume
our hospital and MD group are paid correctly
 Inconsistencies with whether or not plans are actually
paying correct percentage of Medicare negotiated
47
Legislative Changes Impacting
Product Mix
• State mandated changes to Workers’
Compensation
– True lack of understanding managed workers
compensation plans and reimbursement methods

Approximately 40% of registered members are housed in
incorrect payment buckets – requires fixing after the fact once
determined that member is actually a WKC recipient
•
Impact on modeling – delay in reimbursement; delay in
potential follow-up; if member is not moved back to correct
bucket, reporting incorrect rates and not tracking to the
correct WKC payor source
48
Legislative Changes Impacting
Product Mix
• State mandated changes to Workers’
Compensation
• Items such as implants are reimbursed in manual ways
in Illinois that fall outside of normal system tracking
mechanisms
49
Unresolved Payor Denials
• Completely manual reporting process –
– Not real time – average length of time to receive detailed data
was 4 months;

Payor breakdown only – not specific to payor-level products
• Timeliness of receiving denials
• Lengthiness of process in reviewing and
overturning denial decisions
– Are they governed by the plan or ERISA plans?
50
Unresolved Payor Denials
• Quantify by cost impact
• Loss of revenue
• Benchmark against payors with similar attributes
• Denial percentage factors into ongoing
negotiations
51
Unresolved Payor Denials
• For Medicare Advantage Plans:
– Previous negotiations did not include formula to include
estimated percentage of denials or cost associated with
movement from traditional Medicare to a replacement
plan
– Modeling process now follows a 4 step process to
incorporate
• Medicaid plans to follow suit
52
Payor Operational Inefficiencies
• Inability of payors to credential/load and update physician
information
– Currently reporting a backlog of unbilled MD charges at
approximately $300,000
– Not incorporated yet into modeling scenario
• Auditing processes – high dollar claims, Medicare
Advantage RAC-like audits
53
Payor Operational Inefficiencies
• Underpayments
– Length of time before account fully settled
• Refunds/Offsets
• Enhanced service steerage that delays or denies
provision of services
54
Shift in Payor Mix –
Cannibalization of Business
• Modeling analysis assumes overall percentage
growth in Managed Care business
– As employer groups have shifted from BCBS to United,
previous models did not account for changes in
reimbursement methodology between plans (assuming
there are variances)
 Requires tracking of employer group information
and capturing during registration process
55
In God we trust – all others bring
good data!
56
Key Questions to Ask When
Modeling Data
• Modeling Capabilities are only as effective as how
the data is entered on the front end
57
Key Questions to Ask When
Modeling Data
•
Percentage of business driven by fully funded products versus self
funded products – are any plans a combination of both?
•
Mix of varying plan designs with increased patient payment
responsibilities – gap between in versus out of network benefits;
increase in deductibles
•
Mix between gatekeeper based products or fully open access products
– HMO versus PPO versus POS
•
Where are variances in services rendered?
– Do certain payors skew specific IP versus OP trends?
•
How are changes tracked that have a negative impact on payor
revenue? E.G. – physician non-compliance with policies?
58
Key Questions to Ask When
Modeling Data
• What is the percentage of steerage experienced at a
payor/product level?
– Total volume and total projected loss of revenue
• Variances in cost margins – payor and product mix
• Tracking of accuracy level of plan selection at point of
registration
• Cost of bad debt incurred – payor and product level?
• Overall cost of doing business – missed opportunities for
revenue, either internally generated or payor specific?
• Comparison of payor metrics (scorecarding) = denials, bad
debt, days in A/R, overall percentage of standardization of
policies
59
Key Questions to Ask When
Modeling Data
• Contract performance on a true reimbursement
level?
– Key outliers – stop loss, implants
– What percentage is given back relative to medical
necessity/retrospective audits?
– What is impact of refund/offset process utilized by
payors?
60
Questions?
Paula R. Dillon
Director of Managed Care
Rockford Health System
2400 N. Rockton Avenue
Rockford, IL 61103
815-971-5871
[email protected]
61
Checklist: Essential Contract Elements in Managed Care Contracts
Although every payer contract is unique, there are some key elements that should be addressed in all contracts.
Rockford Health System created this detailed checklist to assist contract management staff in verifying the
presence of essential contract elements. This checklist helps the organization realize consistency across
contracts and ensures appropriate protections in terms of financial, legal, and operational issues.
INSURANCE COMPANY:
ISSUE
SATISFACTORY
I. General Considerations
1.1 All key terms (I.e. medical necessity, covered
services, emergency services, etc.) are defined in the
Agreement and used consistently throughout the
Agreement.
1.2 All policies and/or procedures to which the
Provider is bound are set forth in the Agreement.
1.3 If all policies and/or procedures to which the
Provider is bound are not set forth in the Agreement
then the Agreement refers to specific policies which
are incorporated by reference into the Agreement
and cannot be modified without a reasonable review
period (i.e., 60 days).
1.4 The scope of services is clearly set forth in the
Agreement and only includes those services which
the Provider can provide or arrange for.
1.5 The Provider's obligation to provide services
under the Agreement is limited to the extent of the
availability of its resources and Provider's obligation
to perform is excused in situations involving acts of
God, labor strikes, etc.
1.6 The term of the Agreement is clearly set forth.
1.7 The Agreement may be terminated voluntarily (at
any time with or without cause) upon the expiration of
a reasonable notice period (I.e., 60-120 days).
1.8 The Agreement contains an expedited
termination provision in the event of non-payment.
1.9 The Agreement contains a termination provision
that allows termination for failure to cure a material
breach and allows termination (without extending a
further "cure" period) in the event that the breaching
party commits the same or substantially similar
breach within 6 months of the date that the previous
breach was cured.
1.10 If the Agreement allows the Payor to implement
new or revised existing policies upon the expiration of
a specified notice period, the Agreement allows the
Provider to either reject the new or modified policy or
terminate the Agreement upon the expiration of the
notice period.
1.11 The Agreement provides for immediate (or
expedited) termination in the event of Payor
insolvency.
1
NOT
SATISFACTORY
COMMENTS
1.12 The Agreement provides for continuation of
care provisions upon termination which are
reasonable in time, scope, and payment amount (I.e.,
limited to the time period for which premiums have
been paid not to exceed a period of 3 months) and
define provider's compensation after termination.
1.13 The Agreement describes major benefits
exclusions and/or limitations.
1.14 The Agreement clearly sets forth who makes
what determinations and does not include any
"passive" clauses (i.e., if it is determined that …").
1.15 The Agreement binds the "decision maker" to
the standard of reasonableness with respect to all
matters within such decision maker's discretion.
1.16 The Agreement provides that utilization
management decisions impact payment but does not
require the Provider to adhere to such
determinations.
1.17 The Agreement requires the Plan and/or Payor
to list the Provider in the Provider Directory.
1.18 The Agreement does not prohibit the Provider
from discussing with the patient various alternative
treatments.
1.19 The Agreement does not prohibit the Provider
from notifying the patient regarding a Payor's refusal
to cover a specified procedure.
1.20 The Agreement does not prevent the Provider
from notifying patients regarding the termination of
the Agreement and of the Provider's participation in
other plans.
1.21 The Agreement incorporates the definition of
medical necessity into the definition of "Covered
Services" so that a service does not constitute a
Covered Service unless it is determined to be
medically necessary.
1.22 The Agreement & Reimbursement Schedules
clearly define what managed care organization
(MCO) benefit products are included in the
Agreement and does not allow MCO to unilaterally
add new products at the same reimbursement
without Provider approval.
II. Financial Considerations
2.1 The Agreement clearly sets forth who is
responsible to pay.
2.2 The Agreement clearly sets forth when and
where claims must be submitted.
2.3 The Agreement does not include any arbitrary or
unreasonable "cut-off" dates relative to claims
submission that impact payment.
2.4 The Agreement clearly sets forth the time frame
in which "clean" claims must be paid.
2.5 The contract clearly defines what constitutes a
"clean" claim and requires the Payor or notifies the
Provider promptly (not more than 30 days) when a
submitted claim does not constitute a clean claim.
2
2.6 The contract provides that payment decisions
will be based upon the Payor's obligations under the
benefit plan document and does not provide for the
Provider to forfeit payment solely on the basis of
noncompliance with contract requirements and/or
utilization management policies if the care is clearly
covered under the benefit plan.
2.7 The Agreement clearly sets forth who conducts
and retains coordination of benefits (COB) and third
party liabilities (TPL) recoveries and how such
recoveries impact Provider's overall payment.
2.8 The contract requires the "primary" Payor to pay
without regard to the existence of "secondary"
coverage.
2.9 The Agreement requires the "secondary" Payor
to pay the Provider within 30 days of the "primary"
Payor's issuance of its final estimate of benefits
(EOB).
2.10 The COB provision allows the Provider to
recover from the "secondary" Payor the lesser of the
amount owing under the Agreement of the difference
between the "primary" Payor's payment and the
Provider's usual and customary charge.
2.11 The Agreement provides both parties with
appropriate audit rights that are reasonably
necessary to ensure appropriate payments
consistent with any agreed upon payment
methodology.
2.12 Any audit rights held by either party are
described with sufficient specificity, are mutual (if
appropriate), and are reasonable in time and scope.
2.13 The Agreement satisfactorily addresses what
happens if, as a result of an audit, the Provider or
Payor determines there was an under-payment or
over-payment (I.e., payment time line, appeal rights,
etc.), and includes specific time line for all
settlements to avoid take-back requests.
2.14 The Agreement (or policies referenced therein)
clearly set forth fair, reasonable and timely appeal
procedures.
2.15 The appeal procedures set forth in the
Agreement do not provide for final and binding
decisions unless such decisions are made by a
"neutral party" (I.e., not the Plan's medical director).
2.16 The “hold harmless” clause in the Agreement
only prohibits the Provider from billing the patient for
Covered Services and not services that do not
constitute Covered Services such as: services which
are included in a Payor's listed exclusions; services
that would have been covered but with respect to
which the patient has exhausted any coverage limits;
and services denied by the Plan on the basis of
medical necessity.
2.17 The Agreement contains satisfactory provisions
to address payment for services in the event of
subsequent adverse eligibility determinations or
subsequent adverse coverage (benefit verification,
medical necessity) determinations.
2.18 The Agreement addresses the Plan's ability
(when, how, under what circumstances, if any) to
down-code as part of its claims adjudication process.
2.19 The Agreement allows for the submission of
interim bills for "lengthy" and/or "high costs" hospital
stays.
3
2.20 The Agreement sets for the time period during
which rates remain effective.
2.21 The Agreement satisfactorily addresses what
happens when the rates expire.
2.22 If the Agreement contains a consumer price
index (CPI) adjustment, it sufficiently identifies the
applicable index and measurement period.
2.23 If the Agreement provides for a fixed
compensation regardless of the volume or value of
services provided (I.e., per diem arrangements, case
rates, capitation, percentage of premium, etc.), it
clearly set forth all services that are excluded and
included within the payment. Billing codes reflect
codes utilized by Rockford Health System charge
master.
2.24 If the Agreement includes provisions for
sharing/distribution of funds/pools __ formula used to
determine how pools/funds are financially funded,
defined criteria and formula used for distribution, who
conducts the calculations, how verifications are
performed, how any disputes regarding a calculation
are resolved, and when and how payments are
made, etc.
2.25 The Agreement clearly defines the
methodology for renegotiating rates.
2.26 The Agreement includes penalty for failure of
Payor(s) to pay claim in agreed time frame: - charge
interest on unpaid balance - revert to paying billed
charges.
2.27 Changes to the fee schedule/reimbursement
methodology cannot be made without Rockford
Health System's approval or renegotiations of the
terms of the Agreement.
2.28 Services by CPT-4 Codes covered under
Primary Care Capitation must be clearly defined and
consistent with community practice standards.
2.29 Physician reimbursement based on Medicare
Fee Schedule must always reflect current year fee
schedule by January 1 of the next fiscal year.
2.30 MCO must agree to convert to new Healthcare
Financing Administration’s (HCFA) fee schedule by
January 1 of the next fiscal year.
2.31 If Physicians are reimbursed by MCO's own fee
schedule, at least a market basket reimbursement
analysis of highly utilized CPT-4 codes by specialty
area must be included as an attachment or exhibit to
the contract. The Agreement must define when fee
schedules are updated providing 30 days advanced
notice to Physicians prior to the effective date.
2.32 The Agreement includes a rate escalator for
multiple contract years if utilizing MCO's own fee
schedule.
2.33 Anesthesia reimbursement must include
American Society of Anesthesiologists (ASA) units,
time intervals, conversion factor and ASA billing
guidelines for anesthesia. Reimbursement for pain
management services must be defined on the
Reimbursement Schedule.
2.34 The Physician fee schedules must include
defined reimbursement for pharmaceuticals/supplies
and codes not valued by Medicare.
4
2.35 MCO defines how Physicians will be
reimbursed for: assistant surgeon, multiple surgical
procedures and obstetrics (OB) cases.
2.36 With respect to payments based upon a
number of enrollees (I.e., capitation payments), the
Agreement clearly sets forth: what members are
included in the defined population; how retroactive
additions and deletions are handled; what the "auto"
assignment policies of the Plan are (for those
members that fail to make primary care provider
(PCP) election); the Provider's audit rights with
respect to the accuracy of capitation payments and
adjustments thereto; the time when payments are
made and the period of time covered by the payment;
and any minimum membership threshold, etc.
III. Operation/Administrative Issues
3.1 The Agreement clearly sets forth the Payor's
obligation (as applicable) to make prompt utilization
management (UM) determinations, claims
determinations, eligibility and/or benefits verification,
and develop and disseminate clear procedures for
claims submission, and other procedures necessary
for the effective administration of the Agreement.
3.2 The Plan's utilization management policies and
procedures are consistent with our internal practices
and policies.
3.3 The Plan has furnished Provider with a complete
list of all services requiring authorization/precertification. Plan defines information required to
certify/authorize services.
3.4 The Plan clearly defines referral
procedures/requirements.
3.5 The Plan defines specific services that are not
included in the Agreement (Mental Health, lab, etc.),
lists Providers who are contracted to provide carveout services, and defines how Provider will be
reimbursed if authorized to provide services on an
interim or stat basis.
3.6 The Agreement addresses specific areas related
to determining member eligibility/verification such as:
1) member must have identification card provided by
Payor(s) or another means of identifying acceptable
to Provider; 2) if Provider unaware individual is a
member and learns of eligibility after timely filing
requirements have expires; and 3) MCO verified
eligibility at time of service but later determined
member was ineligible.
3.7 The quality assurance requirements in the
contract are reasonable.
3.8 The grievance procedures set forth in the
contract are reasonable.
3.9 We can adhere to all administrative requirements
set forth in the Agreement as drafted or with some
minor internal operational modification.
3.10 The Agreement satisfactorily addresses our
ability to terminate the Provider-Patient relationship
with respect to members who are habitually noncompliant, inordinately disruptive or combatant.
3.11 The Agreement adequately and satisfactorily
addresses the Payor's credentialing requirements.
5
3.12 The credentialing requirements are reasonable
(the information requested is not overly burdensome)
and appropriate (reasonably related to credentialing
activities) and based on NCQA/URAC requirements.
3.13 The credentialing policies/agreement defines
the time frame to complete credentialing process,
how Provider will be notified and consistency of
effective date.
3.14 The Agreement and/or policies must include
provision that MCO must agree to accept all
physicians that meet credentialing standards.
3.15 If the Agreement requires us to share
credentialing information with respect to physicians
on our medical staff, it provides that we are not
required to provide any such information without the
physician's written consent and satisfactorily
addresses who is responsible for obtaining the
physician's written consent.
3.16 With respect to the sharing of medical
information, the Agreement only requires us to share
medical information to the extent mandated by law or
consistent with laws and regulations relating to
patient confidentiality and satisfactorily addresses
who is responsible for obtaining the patient's consent
and under what circumstances.
3.17 The Agreement addresses compensation for
copying of medical records.
3.18 The Agreement allows the Provider to
"credential" the health plan for financial solvency.
3.19 Any record keeping requirements are clearly
defined and reasonable.
3.20 The Agreement allows both parties to publicly
announce the "participation" relationship between
them but requires the prior written consent of the
other party before additional descriptive information
is used in marketing materials or other documents.
3.21 The "notice" requirements in the contract
(including those requiring the Provider to notify the
Plan of specified events/occurrences within specified
time frames) are fair and reasonable.
3.22 The Agreement clearly sets forth the Payor's
electronic billing and electronic remittance
capabilities and our obligations with respect to the
same.
IV. Preferred Provider Organization (PPO)
Considerations
4.1 The Agreement clearly defines what persons or
entities constitute a "Payor".
4.2 All persons and entities who constitute a "Payor"
meet at least the following minimum requirements;
they are directly financially responsible for payment
of Covered Services pursuant to the terms of the
benefit plan; and they have entered into a written
agreement with the contracting party pursuant to
which they agree to pay for all services rendered in
accordance with the Provider Services Agreement
and otherwise comply with the requirements
applicable to Payors set forth therein.
4.3 The Agreement requires the PPO to provide the
Provider with a detailed listing of all Payors that is
routinely updated as necessary (at least quarterly).
6
4.4 The Agreement allows the Provider to terminate
the entire Agreement for the nonpayment of one
Payor, terminate the Agreement selectively as to a
specific Payor upon reasonable notice; and terminate
the Agreement selectively as to a specific Payor on
all expedited basis in the event that the Payor fails to
pay, repeatedly pays late or generally engages in
unfair (dilatory) payment practices.
4.5 The Agreement clearly sets forth the PPO's
obligations to develop and disseminate a Provider
Manual covering all matters material or the
successful and efficient administration and operation
of the Agreement (I.e., billing procedures, eligibility
verification, Payor information, etc.)
4.6 The Agreement contains provisions that enable
the Provider to monitor the financial solvency of any
Payor.
V. Legal Considerations
5.1 The Agreement requires both parties to have
adequate insurance limits.
5.2 Any indemnification clause contained in the
Agreement is limited to indemnification against the
acts or omissions of the party or the party employees
(not agents) and requires a tender of defense.
5.3 The Agreement does not provide for a waiver of
co-payments and/or deductibles with respect to
Medicare beneficiaries unless the Plan is a risk
contractor.
5.4 Any exclusivity provisions or requirements
contained in the Agreement are appropriate,
reasonable, and have been approved by Legal
Services.
5.5 Any "most favored nations" clause is
appropriate, reasonable, and has been approved by
Legal and Corporate CFO.
5.6 The confidentiality clause contained in the
Agreement meets the following minimum
requirements: 1) is limited to rate and other
information which is truly confidential and proprietary;
2) does not apply to information which is available in
the public domain or is otherwise available to either
party from any non-qualified sources; and 3) does not
prohibit either party from disclosing information
pursuant to a valid court order, subpoena or other
compulsory legal process or is reasonably necessary
to defend against or assert, any claim.
5.7 Any non-solicitation provisions contained in the
Agreement are clear, fair and reasonable and
specifically exclude general solicitations not
specifically directed to the Plan's members and
notification to member regarding the termination of
the Provider Agreement and the Provider's contained
participation in other plans.
7
5.8 Any binding mediation or arbitration provision
contained in the Agreement meets the following
minimum requirements: institution of arbitration does
not require the exhaustion of certain informal, nonbinding, dispute resolution processes which could
result in the untimely filing of an arbitration claim;
there are provisions for some type of interim partial
payment pending outcome of the dispute resolution
process; the Provider is entitled to interest if it
prevails and the prevailing party must pay the
reasonable attorney fees of the non-prevailing party;
the Agreement contains an express warranty that any
Payors who may access Provider's services pursuant
to the Agreement is contractually bound to participate
in an arbitration process identical to that required in
the Provider Agreement; and the Agreement contains
the necessary "Notice of Binding Arbitration" clause
above the signature blocks.
5.9 The Agreement does not permit assignment
without the other party's prior written consent.
5.10 The Agreement requires either party to provide
notice to the other party in the event of the change of
ownership or control or the transfer or sale of
substantial assets.
5.11 The contract adequately addresses the impact
of new or modified laws, regulations, rulings or
interpretations thereof upon either party's obligations
and financial expectations under the Agreement if the
law materially impacts either party's obligation or
reasonable financial expectation in the event that the
parties are unable to reach agreement with respect to
satisfactory amendment which conforms the
Agreement to the new or modified law in a manner
which preserves the original obligations and
expectations of the parties.
5.12 If the Agreement is an agreement between
providers (I.e., subcontract or a contract between a
hospital and a provider sponsored network or Plan),
the contract meets the following minimum
requirements: the duration of the contract is at least
one (1) year, and the compensation is based on
FMV, does not vary based on the volume or value of
referrals or business between the parties (except for
Physician Incentive Plan's approved by Legal
Services) and is the result of arms length
negotiations.
Source: Rockford Health System, 2011. Reprinted with permission.
8
NON-RISK
MANAGED CARE CONTRACT
REVIEW SHEET
Payor: ___________________________
Medical Group/IPA Name:
________________
Contract Type: ____________________
Review Date: __________________
Contract Renewal Date: ____________
Reviewed By: __________________
Contract Period: __________________
When to start Renewal Process: ______________
CORE CONTRACT INFORMATION
CRITERIA
AGREEMENT:
Agreement needs to be between the Payor and the
Medical Group/IPA (MG).
CREDENTIALING:
Reviewed all policies and procedures
All MG providers who pass credentialing are
approved
PROVIDERS:
Who are the other providers in the network?
Can we use our own ancillary services?
Policy on closing a MG to new members
TERMINATION PROVISION:
Are they appropriate?
Fees revert to full billed charges for services
performed for members after date of termination.
Payor request to remove a MG provider must first
be given to MG with at least a 15 day advance
notice
INDEMNIFICATION:
None or applies to both parties.
REMUNERATION:
Has the fee schedule been evaluated for
appropriateness?
Changes to the fee schedule can not be made
without MG approval.
Withholds: Make sure the amount, what it applies to
and the settlement process are well defined.
CLAIMS:
Timeframe for filing a claim
Payor standards for claim payment turn around,
accuracy, guarantees and appropriate penalties.
PRECERTIFICATION AND REFERRALS:
Services are identified for precertification and
referrals.
Referrals inside the MG, are they required?
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
ROCKFORD CLINIC
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
OTHER KEY CONTRACT PROVISIONS
AGREEMEMT:
Agreement needs to be between the Payor and the
Medical Group(MG)/IPA. There should be no
reason for the Payor to have direct contracts with
the individual providers.
IMPORTANT DEFINITIONS:
Covered Individuals/Members: Who will be
eligible for services? Are dependents included?
Covered Services: The definition should not imply
that the hospital or physician must provide services
that it does not customarily provide.
Emergency or Emergency Service: Definition
must be broad enough to cover EMTALA screening
and stabilizing treatment required by law.
Medically Necessary: Should be clearly defined
according to community standards.
Non-Covered Services: Are non-covered charges
clearly defined in the contract? Is the patient liable
for the payment of non-covered charges?
Does the contract require the physician to inform
patients whether the physician’s services are
covered or non-covered under the patient’s health
plan?
Payor(s): If the PPO or HMO will extend the
contractual discounts to other payors, the agreement
needs to include an attachment listing all such
payors, and all additional payors must be approved
in advance.
PROVIDER OBLIGAITONS What obligations
would be imposed upon you as a contracting
provider? Are you willing and able to comply with
them?
Grievance Cooperation: Obtain copy of grievance
plan and make sure it is reasonable.
Indemnification: Avoid indemnification language.
If Payor insists on the language, make sure that it is
mutual. Also, have your insurance company review
to confirm that Physician Group is only
indemnifying against acts covered under its
insurance policy.
Insurance: Make sure that limits in the contract
are no greater than the limits required by law.
Treatment Decisions: Hospitals and physicians
should not assume liability for each other’s
treatment decisions, or for improper UR decisions
by payor.
What obligations does the physician assume if
physicians covering for the contractual physician
see his or her patients?
Rockford Health System
Page 2 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
Does the contract require a “contract” physician to
cover during absences and vacations?
Claim Forms: Should be similar to the standard
forms used by Medicare and other payors
(HCFA1500 and UB 94). If electronic billing is
required, make sure you are equipped to comply.
Submitting Clean Claims: The provider should
have at least 60 – 90 days in which to submit clean
claims; longer if a delay is beyond the provider’s
reasonable control. Payor should notify provider
promptly, within 10 business days, if additional
information is needed to process a claim.
Books & Records: Payors should only have access
to books and records related to the members and
provision services under the contract. They should
give reasonable notice and must not disrupt
provider’s usual activities.
Peer Review Information: Hospitals should not
agree to share any privileged peer review
information. The release of such information would
waive the privilege, making it available to
malpractice plaintiffs.
Does the contract make reference to a peer review
organization review program? Has the physician
obtained a copy of such programs? Are the
procedures of these programs subject to unilateral
change without prior notice to the physician without
the prior consent of the physician?
Scope of Services: Restrict to those services
customarily provided. Hospitals: Unless a global
fee has been negotiated, make it clear that physician
fees are not paid out of hospital’s fee.
UR/QA Cooperation: Obtain and review UR/QA
plan to be sure it is reasonable.
Acceptance of Patients: Must physician accept
payor’s members? For how long? Are there limits
on how many new patients must be accepted?
Physicians should be able to terminate relationships
with disruptive of non-compliant patients.
Closing Physician’s Practice: How much advance
notice must be given before closing the practice to
new patients? Can physician eventually close
practice to new managed care patients but continue
taking other patients?
Credentialing: Ensure that credentialing standards
are reasonable. Are they based on NCQA
standards?
Payor must agree to accept all MG physicians that
meet credentialing standards.
Does Contract address Payors responsibility to
credential Physicians within a reasonable amount of
time (i.e. 30 days).
Rockford Health System
Page 3 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
Deselection: Ensure payor’s policy is fair.
All deselections of a MG physician must first go
through the MG.
The physician should be able to appeal deselection
if based in professional competence or quality or
care, especially if a Data Bank report is involved.
Adverse Outcomes: Do not agree that Physician
Group will notify MCO upon the filing of any
malpractice suit against Physician Group. Only
agree to notify MCO if filing is by an MCO patient.
How are disputes resolved? Does the physician
have any meaningful right to participate in the
process?
Malpractice Reports: Ensure reporting
requirements are reasonable; shouldn’t have to
report: nuisance” settlements.
Primary Care Duties: These should be clearly
defined. What gatekeeper duties are required?
Referrals: Requirements and procedures should be
clear. Are referrals to non-participating physicians
allowed without a loss of coverage? Can
emergency patients be referred with out prior
approval?
Standards of Care: Should be based on
community standards.
Must the provider abide by unspecified “medical
policies?” Find out who establishes these policies
and where they can be obtained in writing.
Does anyone or any organization, other than
physicians, control determinations of quality care?
PAYOR OBLIGATIONS:
If payor stipulates that provider has to comply with
payor provider manual-Obtain Copy. Make sure
you are notified before any significant changes. If
provider disagrees with payor changes, then 60 day
termination provision.
Claims Administration: Will claims be
administered by the payor or third-party
administrator? Payor should retain ultimate
responsibility for making sure claims are
administered properly.
Claims Payment: Payment of complete and
undisputed claims should be made within 15 days of
receipt. Failure to pay on time should result in loss
of negotiated discounts.
Credentialing: Will credentialing be conducted by
the payor or the provider network? If conducted by
a third-party, or if payor’s credentialing standards
are required, the payor should retain ultimate
responsibility for the appropriateness of
credentialing standards.
Demographic Reports: It is helpful if the payor
Rockford Health System
Page 4 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
provides periodic reports showing demographic
information on members and payors, including
geographic concentration and utilization patterns.
Eligibility Verification: 24-hour, toll-free
telephone is optimal. If 24-hour service is not
available, are the hours convenient? How long
must the provider wait for the response?
Verification Binding: The provider should be able
to rely on verification that has been properly
obtained. If the payor erroneously verifies
eligibility, it should be obligated to pay for care
given.
Indemnification: Avoid indemnification language.
If Payor insists on the language, make sure that it is
mutual. Also, have your insurance company review
to confirm that Physician Group is only
indemnifying against acts covered under its
insurance policy.
Liability Insurance: The payor should have
adequate general liability insurance and insolvency
insurance or reinsurance.
Marketing: Payor should agree to include the
provider’s name and specialty in all directories.
Provider should give prior approval to any
marketing material that includes references to the
provider.
Payor Insolvency: Provider should be notified if
payor becomes insolvent, so the provider can
promptly terminate the contract.
Licensure/Certification: If the payor is subject to
licensure or certification by the state, copies of such
approvals should be obtained.
Steerage Incentives: Do not agree to any waiver
or discount of co-payments of deductibles that
violate state or federal law. Ensure that members
are fully aware of incentives offered by the payor
and that such incentives are adequate.
Make sure that the contract includes proper steerage
to Physician Group. Do not contract with MCOs
that sell discounts on the open market.
UR/QA PLAN
Administration: Who administers the UR/QA
plan? Is it the payor, a TPA, the provider network,
or the hospital?
Reviewer: Is the reviewer a qualified nurse,
physician, or specialist?
Appeals: Is there a mechanism for prompt appeals
of urgent situations? After-the-fact appeals are not
helpful in such circumstances.
Medical Records: Copies: If possible, the payor
should be required to pay a reasonable fee for
copies. Patient Consent: When a member applies
Rockford Health System
Page 5 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
for insurance coverage, the payor should obtain the
member’s written consent to the release of medical
records. Confidentiality: All patient records must
be maintained in compliance with state and federal
confidentiality laws.
UR Modifications: Changes in UR requirements
should be agreed to in writing by both parties before
they can become effective. Do not agree to
unilateral modifications by the payor.
UR Visits/Concurrent Review: Will on-site visits
be required? If so, they should be announced at
least 24-hours in advance and must not interfere
with patient care or disrupt the provider’s usual
course of business. Reviewers must agree to
comply with provider’s policies and requirements.
Precertification: Prompt Availability: If 24-hour
service is not available, are the hours convenient?
How long must the provider wait for a response?
Exemptions for Emergencies: The provider must
not be required to obtain precertification in an
emergency, since that could endanger the patient
and violate state and federal laws.
Retrospective Review: If retrospective denials are
allowed, the contract should include a clause that
prohibits such denials on the basis of medical
necessity, as long as the provider obtained valid
precertification prior to providing services.
TERM AND TERMINATION
Automatic Renewal: Automatic renewals can be
very dangerous unless the contract can be
terminated without cause after a reasonable period
of time.
Termination: Physician Group must have the
ability to terminate without cause with a maximum
of 90 days written notice.
Physician Termination: Do not allow MCO to
individually terminate physicians of Physician
Group without cause.
Term Length: A long term is acceptable if the
contract is extremely desirable. If a provider is
unsure of the benefits, a short term is preferable.
Termination With Cause: Advance Notice: 30days advance written notice is recommended.
Opportunity to Cure: Should be allowed
opportunity to cure breach to the reasonable
satisfaction of the other party. Repeated Breach:
Immediate termination should be allowed, without
opportunity to cure, upon repeated breach.
Make sure that the contract terminates immediately
with the insolvency of the Payor.
Does the termination provisions allow the physician
to remove himself from the participating physician
Rockford Health System
Page 6 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
list on short notice if the plan does not live up to his
expectations?
Post-Termination Treatment: Time Frame: How
long will the provider have to continue treating
current patients after termination. May want to
limit to lessor of 30 days or completion of current
course of treatment. Reimbursement: If long-term
continued treatment is required, reimbursement
should revert to minimum discount-off-charges
rather than capitated, per case, or per diem rate.
Member Contract: Some payors won’t allow posttermination solicitation or contact with members.
However, provider should be allowed to conduct its
usual marketing activities as long as it does not
make derogatory or negative statement about payor.
To prevent any “gag clause” interpretation, the
provision should state that providers are free to
discuss alternative treatment options with patients.
What are the physician’s obligations if the plan goes
bankrupt?
Termination If Laws Change: All parties should
be required to renegotiate in good faith to bring the
agreement into compliance with any new law. If
they are unable to agree, the contract should
terminate automatically.
REIMBURSEMENT:
Audits/ Disputed Claims: Payor should give
provider written explanation of why its claims are
being audited. Before any funds are withheld, the
provider should have the opportunity to appeal.
Collection from Member: Co-Payments: Find out
in advance the amounts set out in payors’ health
plans. Also find our whether co-payments are
collected prior to admission, at time of service, or
after payor has paid. Avoid waiving or discounting
deductibles and copayments, as this could violate
some insurance laws. Non-Covered Services: If
member requests a non-covered service, provider
should be able to collect payment from the member.
Coordination of Benefits: If possible, should
allow provider to collect 100% of its usual and
customary charges, as long as payor’s share of bill
does not exceed negotiated rates.
Hospital-Based Physician Fees: If the physician’s
fee is included in a global rate, be sure the physician
has agreed to a reduction in the hospital’s portion of
the fee.
“Most Favored Nations” or “Most Favorable
Agreement” Clause: Do Not Agree With These.
They require the provider to inform and extend to
the payor any lower rates given to other payors. By
giving out such information, the provider may be in
violation of the other payor’s contractual
Rockford Health System
Page 7 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
confidentiality requirements. Additionally, it is
often very difficult to compare different payment
methodologies to determine who is getting the
lowest overall rate.
Payment for New Services: New services added
after original rates are set should be subject to
separate reimbursement, or rates should be
renegotiated to compensate the provider for
additional costs.
Rate Changes: The provider should have the right
to renegotiate rates periodically. If the Parties
cannot agree on new rates, consider adding any
automatic increase based on the CPI.
Stop-Loss Provision: Make sure stop-loss
protection (such as outlier limits or reinsurance) is
included in case of unexpectedly expensive
treatment.
Payment Method: Discount-Off-Charges: Make
sure the discount is based on the provider’s usual
and customary charges, rather than on what the
payor deems reasonable. Per Diem: Does the rate
cover the day of admission or the day of discharge?
Per Case/DRG: Are there different rates for
different levels of care? Capitation: Is it clear who
is responsible for what payments? Who pays for
out-of-plan services? Withholds or Risk Pools:
What percent is withheld? What other providers are
included in the risk pool? Are they appropriate
utilizers? How often are the risk pools reconciled
and paid out? Make sure you have adequate data
and reports to support the risk pool settlement.
Fees: Agree to a specific fee schedule to be
attached to the contract. Specifically state how fees
not included in the attachment will be set (i.e. fees
for CPT codes not listed in the attachment will be
paid at ___% of “Year” RBRVS for Area __.) Do
not allow MCO to amend fees without approval of
MG.
Rockford Health System
Page 8 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
OTHER CONCERNS:
Amendments: Amendments should only be
allowed with the express written consent of both
parties. Do not agree to amendments whereby the
Payor notifies the Physician Group and deems the
amendment effective unless notified otherwise.
Assignment: Neither party should assign without
the written consent of the other party.
Audits: If either party wishes to audit the other, at
least 5 business days notice must be given to the
other party. Audits must be conducted during
normal business hours. Audits will be limited to the
information on only those members of the Payor.
The party initiating the audit will incur all costs
associated with the audit.
Confidentiality: Medical Records: Medical
records must be kept confidential in accordance
with applicable laws. Financial Records: The
payor must agree not to divulge the provider’s
financial information , including rates and charge
master information. Policy and Procedures: The
payor must agree to return all confidential policies
upon termination of expiration of the contract.
Rockford Health System
Page 9 of 9
NON-RISK
MANAGED CARE CONTRACT
REVIEW SHEET
Payor: ___________________________
Medical Group/IPA Name:
________________
Contract Type: ____________________
Review Date: __________________
Contract Renewal Date: ____________
Reviewed By: __________________
Contract Period: __________________
When to start Renewal Process: ______________
CORE CONTRACT INFORMATION
CRITERIA
AGREEMENT:
Agreement needs to be between the Payor and the
Medical Group/IPA (MG).
CREDENTIALING:
Reviewed all policies and procedures
All MG providers who pass credentialing are
approved
PROVIDERS:
Who are the other providers in the network?
Can we use our own ancillary services?
Policy on closing a MG to new members
TERMINATION PROVISION:
Are they appropriate?
Fees revert to full billed charges for services
performed for members after date of termination.
Payor request to remove a MG provider must first
be given to MG with at least a 15 day advance
notice
INDEMNIFICATION:
None or applies to both parties.
REMUNERATION:
Has the fee schedule been evaluated for
appropriateness?
Changes to the fee schedule can not be made
without MG approval.
Withholds: Make sure the amount, what it applies to
and the settlement process are well defined.
CLAIMS:
Timeframe for filing a claim
Payor standards for claim payment turn around,
accuracy, guarantees and appropriate penalties.
PRECERTIFICATION AND REFERRALS:
Services are identified for precertification and
referrals.
Referrals inside the MG, are they required?
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
ROCKFORD CLINIC
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
OTHER KEY CONTRACT PROVISIONS
AGREEMEMT:
Agreement needs to be between the Payor and the
Medical Group(MG)/IPA. There should be no
reason for the Payor to have direct contracts with
the individual providers.
IMPORTANT DEFINITIONS:
Covered Individuals/Members: Who will be
eligible for services? Are dependents included?
Covered Services: The definition should not imply
that the hospital or physician must provide services
that it does not customarily provide.
Emergency or Emergency Service: Definition
must be broad enough to cover EMTALA screening
and stabilizing treatment required by law.
Medically Necessary: Should be clearly defined
according to community standards.
Non-Covered Services: Are non-covered charges
clearly defined in the contract? Is the patient liable
for the payment of non-covered charges?
Does the contract require the physician to inform
patients whether the physician’s services are
covered or non-covered under the patient’s health
plan?
Payor(s): If the PPO or HMO will extend the
contractual discounts to other payors, the agreement
needs to include an attachment listing all such
payors, and all additional payors must be approved
in advance.
PROVIDER OBLIGAITONS What obligations
would be imposed upon you as a contracting
provider? Are you willing and able to comply with
them?
Grievance Cooperation: Obtain copy of grievance
plan and make sure it is reasonable.
Indemnification: Avoid indemnification language.
If Payor insists on the language, make sure that it is
mutual. Also, have your insurance company review
to confirm that Physician Group is only
indemnifying against acts covered under its
insurance policy.
Insurance: Make sure that limits in the contract
are no greater than the limits required by law.
Treatment Decisions: Hospitals and physicians
should not assume liability for each other’s
treatment decisions, or for improper UR decisions
by payor.
What obligations does the physician assume if
physicians covering for the contractual physician
see his or her patients?
Rockford Health System
Page 2 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
Does the contract require a “contract” physician to
cover during absences and vacations?
Claim Forms: Should be similar to the standard
forms used by Medicare and other payors
(HCFA1500 and UB 94). If electronic billing is
required, make sure you are equipped to comply.
Submitting Clean Claims: The provider should
have at least 60 – 90 days in which to submit clean
claims; longer if a delay is beyond the provider’s
reasonable control. Payor should notify provider
promptly, within 10 business days, if additional
information is needed to process a claim.
Books & Records: Payors should only have access
to books and records related to the members and
provision services under the contract. They should
give reasonable notice and must not disrupt
provider’s usual activities.
Peer Review Information: Hospitals should not
agree to share any privileged peer review
information. The release of such information would
waive the privilege, making it available to
malpractice plaintiffs.
Does the contract make reference to a peer review
organization review program? Has the physician
obtained a copy of such programs? Are the
procedures of these programs subject to unilateral
change without prior notice to the physician without
the prior consent of the physician?
Scope of Services: Restrict to those services
customarily provided. Hospitals: Unless a global
fee has been negotiated, make it clear that physician
fees are not paid out of hospital’s fee.
UR/QA Cooperation: Obtain and review UR/QA
plan to be sure it is reasonable.
Acceptance of Patients: Must physician accept
payor’s members? For how long? Are there limits
on how many new patients must be accepted?
Physicians should be able to terminate relationships
with disruptive of non-compliant patients.
Closing Physician’s Practice: How much advance
notice must be given before closing the practice to
new patients? Can physician eventually close
practice to new managed care patients but continue
taking other patients?
Credentialing: Ensure that credentialing standards
are reasonable. Are they based on NCQA
standards?
Payor must agree to accept all MG physicians that
meet credentialing standards.
Does Contract address Payors responsibility to
credential Physicians within a reasonable amount of
time (i.e. 30 days).
Rockford Health System
Page 3 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
Deselection: Ensure payor’s policy is fair.
All deselections of a MG physician must first go
through the MG.
The physician should be able to appeal deselection
if based in professional competence or quality or
care, especially if a Data Bank report is involved.
Adverse Outcomes: Do not agree that Physician
Group will notify MCO upon the filing of any
malpractice suit against Physician Group. Only
agree to notify MCO if filing is by an MCO patient.
How are disputes resolved? Does the physician
have any meaningful right to participate in the
process?
Malpractice Reports: Ensure reporting
requirements are reasonable; shouldn’t have to
report: nuisance” settlements.
Primary Care Duties: These should be clearly
defined. What gatekeeper duties are required?
Referrals: Requirements and procedures should be
clear. Are referrals to non-participating physicians
allowed without a loss of coverage? Can
emergency patients be referred with out prior
approval?
Standards of Care: Should be based on
community standards.
Must the provider abide by unspecified “medical
policies?” Find out who establishes these policies
and where they can be obtained in writing.
Does anyone or any organization, other than
physicians, control determinations of quality care?
PAYOR OBLIGATIONS:
If payor stipulates that provider has to comply with
payor provider manual-Obtain Copy. Make sure
you are notified before any significant changes. If
provider disagrees with payor changes, then 60 day
termination provision.
Claims Administration: Will claims be
administered by the payor or third-party
administrator? Payor should retain ultimate
responsibility for making sure claims are
administered properly.
Claims Payment: Payment of complete and
undisputed claims should be made within 15 days of
receipt. Failure to pay on time should result in loss
of negotiated discounts.
Credentialing: Will credentialing be conducted by
the payor or the provider network? If conducted by
a third-party, or if payor’s credentialing standards
are required, the payor should retain ultimate
responsibility for the appropriateness of
credentialing standards.
Demographic Reports: It is helpful if the payor
Rockford Health System
Page 4 of 9
NON –RISK MANAGED CARE CONTRACT REVIEW WORKSHEET
CRITERIA
SATISFACTORY
NOT
SATISFACTORY
ACTION
PLAN
RENEWAL
ACTION
ITEMS
provides periodic reports showing demographic
information on members and payors, including
geographic concentration and utilization patterns.
Eligibility Verification: 24-hour, toll-free
telephone is optimal. If 24-hour service is not
available, are the hours convenient? How long
must the provider wait for the response?
Verification Binding: The provider should be able
to rely on verification that has been properly
obtained. If the payor erroneously verifies
eligibility, it should be obligated to pay for care
given.
Indemnification: Avoid indemnification language.
If Payor insists on the language, make sure that it is
mutual. Also, have your insurance company review
to confirm that Physician Group is only
indemnifying against acts covered under its
insurance policy.
Liability Insurance: The payor should have
adequate general liability insurance and insolvency
insurance or reinsurance.
Marketing: Payor should agree to include the
provider’s name and specialty in all directories.
Provider should give prior approval to any
marketing material that includes references to the
provider.
Payor Insolvency: Provider should be notified if
payor becomes insolvent, so the provider can
promptly terminate the contract.
Licensure/Certification: If the payor is subject to
licensure or certification by the state, copies of such
approvals should be obtained.
Steerage Incentives: Do not agree to any waiver
or discount of co-payments of deductibles that
violate state or federal law. Ensure that members
are fully aware of incentives offered by the payor
and that such incentives are adequate.
Make sure that the contract includes proper steerage
to Physician Group. Do not contract with MCOs
that sell discounts on the open market.
UR/QA PLAN
Administration: Who administers the UR/QA
plan? Is it the payor, a TPA, the provider network,
or the hospital?
Reviewer: Is the reviewer a qualified nurse,
physician, or specialist?
Appeals: Is there a mechanism for prompt appeals
of urgent situations? After-the-fact appeals are not
helpful in such circumstances.
Medical Records: Copies: If possible, the payor
should be required to pay a reasonable fee for
copies. Patient Consent: When a member applies
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for insurance coverage, the payor should obtain the
member’s written consent to the release of medical
records. Confidentiality: All patient records must
be maintained in compliance with state and federal
confidentiality laws.
UR Modifications: Changes in UR requirements
should be agreed to in writing by both parties before
they can become effective. Do not agree to
unilateral modifications by the payor.
UR Visits/Concurrent Review: Will on-site visits
be required? If so, they should be announced at
least 24-hours in advance and must not interfere
with patient care or disrupt the provider’s usual
course of business. Reviewers must agree to
comply with provider’s policies and requirements.
Precertification: Prompt Availability: If 24-hour
service is not available, are the hours convenient?
How long must the provider wait for a response?
Exemptions for Emergencies: The provider must
not be required to obtain precertification in an
emergency, since that could endanger the patient
and violate state and federal laws.
Retrospective Review: If retrospective denials are
allowed, the contract should include a clause that
prohibits such denials on the basis of medical
necessity, as long as the provider obtained valid
precertification prior to providing services.
TERM AND TERMINATION
Automatic Renewal: Automatic renewals can be
very dangerous unless the contract can be
terminated without cause after a reasonable period
of time.
Termination: Physician Group must have the
ability to terminate without cause with a maximum
of 90 days written notice.
Physician Termination: Do not allow MCO to
individually terminate physicians of Physician
Group without cause.
Term Length: A long term is acceptable if the
contract is extremely desirable. If a provider is
unsure of the benefits, a short term is preferable.
Termination With Cause: Advance Notice: 30days advance written notice is recommended.
Opportunity to Cure: Should be allowed
opportunity to cure breach to the reasonable
satisfaction of the other party. Repeated Breach:
Immediate termination should be allowed, without
opportunity to cure, upon repeated breach.
Make sure that the contract terminates immediately
with the insolvency of the Payor.
Does the termination provisions allow the physician
to remove himself from the participating physician
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list on short notice if the plan does not live up to his
expectations?
Post-Termination Treatment: Time Frame: How
long will the provider have to continue treating
current patients after termination. May want to
limit to lessor of 30 days or completion of current
course of treatment. Reimbursement: If long-term
continued treatment is required, reimbursement
should revert to minimum discount-off-charges
rather than capitated, per case, or per diem rate.
Member Contract: Some payors won’t allow posttermination solicitation or contact with members.
However, provider should be allowed to conduct its
usual marketing activities as long as it does not
make derogatory or negative statement about payor.
To prevent any “gag clause” interpretation, the
provision should state that providers are free to
discuss alternative treatment options with patients.
What are the physician’s obligations if the plan goes
bankrupt?
Termination If Laws Change: All parties should
be required to renegotiate in good faith to bring the
agreement into compliance with any new law. If
they are unable to agree, the contract should
terminate automatically.
REIMBURSEMENT:
Audits/ Disputed Claims: Payor should give
provider written explanation of why its claims are
being audited. Before any funds are withheld, the
provider should have the opportunity to appeal.
Collection from Member: Co-Payments: Find out
in advance the amounts set out in payors’ health
plans. Also find our whether co-payments are
collected prior to admission, at time of service, or
after payor has paid. Avoid waiving or discounting
deductibles and copayments, as this could violate
some insurance laws. Non-Covered Services: If
member requests a non-covered service, provider
should be able to collect payment from the member.
Coordination of Benefits: If possible, should
allow provider to collect 100% of its usual and
customary charges, as long as payor’s share of bill
does not exceed negotiated rates.
Hospital-Based Physician Fees: If the physician’s
fee is included in a global rate, be sure the physician
has agreed to a reduction in the hospital’s portion of
the fee.
“Most Favored Nations” or “Most Favorable
Agreement” Clause: Do Not Agree With These.
They require the provider to inform and extend to
the payor any lower rates given to other payors. By
giving out such information, the provider may be in
violation of the other payor’s contractual
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confidentiality requirements. Additionally, it is
often very difficult to compare different payment
methodologies to determine who is getting the
lowest overall rate.
Payment for New Services: New services added
after original rates are set should be subject to
separate reimbursement, or rates should be
renegotiated to compensate the provider for
additional costs.
Rate Changes: The provider should have the right
to renegotiate rates periodically. If the Parties
cannot agree on new rates, consider adding any
automatic increase based on the CPI.
Stop-Loss Provision: Make sure stop-loss
protection (such as outlier limits or reinsurance) is
included in case of unexpectedly expensive
treatment.
Payment Method: Discount-Off-Charges: Make
sure the discount is based on the provider’s usual
and customary charges, rather than on what the
payor deems reasonable. Per Diem: Does the rate
cover the day of admission or the day of discharge?
Per Case/DRG: Are there different rates for
different levels of care? Capitation: Is it clear who
is responsible for what payments? Who pays for
out-of-plan services? Withholds or Risk Pools:
What percent is withheld? What other providers are
included in the risk pool? Are they appropriate
utilizers? How often are the risk pools reconciled
and paid out? Make sure you have adequate data
and reports to support the risk pool settlement.
Fees: Agree to a specific fee schedule to be
attached to the contract. Specifically state how fees
not included in the attachment will be set (i.e. fees
for CPT codes not listed in the attachment will be
paid at ___% of “Year” RBRVS for Area __.) Do
not allow MCO to amend fees without approval of
MG.
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OTHER CONCERNS:
Amendments: Amendments should only be
allowed with the express written consent of both
parties. Do not agree to amendments whereby the
Payor notifies the Physician Group and deems the
amendment effective unless notified otherwise.
Assignment: Neither party should assign without
the written consent of the other party.
Audits: If either party wishes to audit the other, at
least 5 business days notice must be given to the
other party. Audits must be conducted during
normal business hours. Audits will be limited to the
information on only those members of the Payor.
The party initiating the audit will incur all costs
associated with the audit.
Confidentiality: Medical Records: Medical
records must be kept confidential in accordance
with applicable laws. Financial Records: The
payor must agree not to divulge the provider’s
financial information , including rates and charge
master information. Policy and Procedures: The
payor must agree to return all confidential policies
upon termination of expiration of the contract.
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