Contract Management

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This is the eleventh article in the Managed Care Contracting"Signature Series" by Managed Care Resources, Inc. -- articles on topics in managed care written by experts in the field. The authors of this article are  Ira H. Rosenberg,  Denise Cameron and Roberta Carefoote.

You are a hospital or service provider that has just negotiated a managed care contract. You understand the risks, you know your fee schedule, and the division of responsibilities is clear. Now, you can relax a little, right?

Wrong! The work of contract management is just beginning. For the most part, there are three important steps in contract management. The first step, identification of key dates, is a simple one, but without it you may find yourself losing track of time and missing important dates. The second step involves selecting the right individual to manage the contract day-to-day, and the third step assures that your responsibilities are identified and tracked appropriately. Here are some of the basics involved in each step.

Each contract contains a number of important dates and timeframes essential to enacting the contract and securing the agreed-upon monies. Your first job is to identify and document these dates and timeframes. Start with the "effective date", end with the "termination date" and note all other key dates and timelines in between. Many people find the use of a "tickler" system helpful in keeping track of these dates. Examples of important timelines include the timeframe for authorization and notification of admissions, submitting claims, expecting payment, and reviewing denials. Failure to pay close attention to this information may result in loss of reimbursement, impositions or sanctions against the organization from the managed care organization (MCO), and possible contract termination.

Having noted key dates and timelines and established a system to make sure that these dates will not be inadvertently missed, your next job is to identify an individual within your organization to oversee contract management and serve as the liaison for you on day-to-day operational matters. The contract liaison is usually someone in administration who was involved in the contract negotiations and who has a good grasp of the practical implications for complying with the contract terms and conditions. This is the individual who serves as a conduit between the MCO and your organization, assuming general responsibility for the following basic activities -- compliance tracking, staff orientation, and information dissemination. Depending on the size of the contract, this position may be a full-time or part-time position.

There are a number of activities that demand your attention when overseeing contract compliance. These activities can be grouped into four areas: orientation and training, information dissemination, specific requirements, and compliance tracking.

• Orientation and Training -- You will need to orient all the participating hospital's and/or service provider's key department leaders. The MCO generally carries out the orientation session but the liaison is responsible for reinforcing the information. The objective is to let key individuals know their specific responsibilities in relation to the contract. This orientation session may need to be repeated several times over the life of the contract, especially for new employees. Topics to be covered in the orientation include an overview of the MCO, the type of members covered, the list of services provided, how to check for eligibility, who to call with questions, where to send claims, and how to get authorization for services. Staff should be encouraged to develop a working relationship with MCO staff, particularly in the areas of enrollment, member services, and provider relations. By calling the MCO with questions, staff is more likely to learn and use the "right" processes, and identify any issues of concern early on.

• Information Dissemination -- You will need to disseminate the MCO reference manual and ensure that a process exists for maintaining its accuracy and currency. Changes to the manual are usually binding after 30 days notification by the MCO, so it is important that your system be able to cope with frequent updates. A way to inform staff of the changes also needs to be built into the dissemination process-- some individuals find that mini-orientations accompanying changes helpful in reducing staff confusion or errors. Contact names and numbers usually provided by the MCO should be highlighted, kept as part of the reference manual and in a place that is readily accessible by staff. In particular, front-line staff should know whom and when to call so that their decisions are appropriate and in keeping with contract specifications.

• Specific Requirements - While there are many requirements that are important, three areas deserve special attention as they speak directly to the issue of reimbursement:
  1. Admission/Pre-certification/Referral Requirements

     The MCO reference manuals will stipulate the process that should be followed to deal with admissions, pre-certifications, and referrals. Of importance to the contract liaison are the following points.

     • You must have a process for verifying a member's eligibility for health services, either by requesting an identification card or by contacting the MCO's offices. Any services provided without member verification are vulnerable to non-reimbursement. During the staff orientation sessions, it is usually helpful to bring in member cards and teach staff how to read them appropriately.

     • You must have a system in place to notify the MCO of any admission to your facility. Elective admissions usually require a notification of 3-5 days before admission. In the event of urgent or emergency admission, notification within 24 hours of the admission is usually acceptable. When an admission falls on a holiday or the weekend, notification usually falls to the next business day. Any authorization numbers assigned to the admission by the MCO should be noted and sent along with the hospital or provider claim in order to expedite payment. While these timeframes serve as general guidelines, the reference manual will specify the exact process that should be followed. It is safe to say that your nursing staff will and should be in daily contact with the utilization management staff of the MCO.

     • You must also have a process for notifying the MCO of any member presenting to the emergency department for treatment. The MCO will generally assign an authorization number for the visit - that number should accompany any claim to the MCO.

     • You must work with the member's case manager to design the patient's discharge plan. Failure to refer the patient to the MCO's contracted network of ancillary providers or specialists may result in non-payment for services rendered. Any service such as durable medical equipment, home health or therapy services must be authorized in advance by the MCO. It is also helpful to clarify the roles of your staff vis a vis the MCO case managers. Your job is usually to identify the needed services, and then the case managers oversee the ordering of these services. Try to avoid taking on the role of the MCO case manager, as this is likely to lead to "non-paid" work and confusion for your staff.

  2. Utilization and Quality Program Requirements

     The MCO expects compliance with its stated utilization and quality management programs. Generally this means that you will cooperate with MCO staff as they go about their day-to-day activities, including but not limited to peer review, member grievance, and on-site or telephone review of continued stays. With many MCOs a utilization coordinator will assign an initial length of stay, expressed in days. An extension to the initial length of stay is usually authorized in advance by the Plan. If not discussed in advance, your organization may not receive reimbursement for the additional, unapproved days. Keeping staff abreast of the requirements can be a challenge, but leaving them unattended can have severe financial penalties for your organization. As with pre-certification and emergency department notifications, your staff should expect to be in daily communication with MCO utilization staff.

     As part of quality and utilization reviews, you may be asked to furnish copies of the MCO's member's medical record as it pertains to the covered services. In most agreements, the organization can levy a charge for this service, so you need to have a process in place to ensure cost recovery. It is equally important to remember that your organization maintains responsibility for the confidentiality of member records - a patient's consent must accompany any request for review of records. It is also important to know how long the MCO can have access to the records for the purpose of their reviews. In some cases, your organization may be required to house member records for up to three to five years after the termination of the contract.

  3. Billing Requirements

     Managing the billing process throughout the contract period usually means dealing with coverage issues as well as with submission, payment, and denial timeframes. Some of the more important points to consider include the following:

     • Claims that are denied for medical reasons should include a process whereby a physician currently licensed to practice medicine in the state has personally reviewed the claim.

     • Claims must be submitted within a specified time period from the date of service. In some cases, if the claim is submitted later than six months after the date of service, it will be ineligible for payment. In the event that an initial length of stay needs to be extended and the extension has not been authorized, the MCO can deny payment. Requests for review of days not initially authorized are usually allowed within 45 days of the original denial.

     • You can expect payment for a properly submitted claim within an agreed-upon number of days usually stipulated in the contract. Your job will be to make sure that the MCO receives properly submitted claims.

     • Remember, the member is held harmless and not responsible for any payment related to covered services by the MCO excluding co-payments and deductibles and any other third party coverage. Your organization is not permitted to bill the members directly (except in select circumstances). Consequently, your duty lies in understanding the organization's responsibility for collection of co-payments, and for designing and overseeing a process that ensures you meet your requirements. Try to collect co-payments when the patient first presents himself/herself, as it is often difficult to secure the funds after the care has been rendered and the patient leaves your facility.

     • In the cases where the MCO is the secondary insurance provider, your organization must identify the primary insurance carrier and bill that carrier first. The organization can expect reimbursement from the MCO only for the difference between what the primary carrier paid up to the contracted rate.

• Compliance Tracking -- As part of their general responsibilities, liaisons develop a list of events or activities that they track to ensure contract compliance. Following up on claims paid, pended or denied is a way to quickly assess level of compliance. In most cases, pended or denied claims occur because you are doing something wrong in your submission of claims. This could be as severe as not following authorization procedures, to something as simple as inserting information in the wrong box on the claims form. Tracking claims payment and logging phone conversations with MCO staff will help you comply with all aspects of the contract. Compliance equals patient satisfaction, provider satisfaction, and appropriate reimbursement for services well performed.

The difference between a successful and disastrous contract can depend on knowing how to manage the negotiated contract. Making sure that you receive the full benefit from the agreement, having an operating system that limits your risk exposure, and paying very close attention to the details of the contract are but three factors that will promote a successful relationship. More importantly, you need to partner with the "right" MCO(s), under the "right" circumstances, and for the "right" reimbursement. This means carefully evaluating your MCO contracts yearly and selecting partners that make good business sense.

For more information on Managed Care Contracting please contact us at (708) 482-0123 or by email at info@mcres.com .

I hope that you will join us as we explore all of the elements of managed care contracting in the coming months. In addition, we also offer a "Signature Series" on "Medical Management Under Managed Care". We hope that the two series combined will lessen the mystery of managed care and help level the playing field between providers and payers.

Ira H. Rosenberg

President, Managed Care Resources, Inc.

The Managed Care Resources, Inc. team has over 150 years of combined experience in the development and implementation of managed care services. Please visit our home page to learn more about how we can assist you with your managed care needs. We also invite you to contact us with questions or comments.

www.mcres.com email: info@mcres.com