ABOUT APPLIED MEDICAL SERVICES: AMS News Room: Articles

How Well Do You Know Your Managed Care Contracts
By Rachel M. Mitchell, CPC-H and Michelle Durner, CPA

Will Medicare drop rates again? Practitioners are on edge with the anticipation of the final ruling and at the moment it appears that the senate has slowed this process down. How long will the 4.4% rate reduction be in limbo? No one knows for sure. However, there are ways to prepare for reductions as well as boost income should the Medicare cuts be cancelled.

Managed care plays a major role in most physician practices and the contracts you sign today will affect the future of your practice. If you are not reading your contracts before signing you are making a major mistake. Additionally, inexperienced personnel should not handle credentialing. Negotiation requires an abundance of knowledge and painstaking attention paid to the guidelines as set forth by NCQA.

Managed care programs set their fee schedules in many different ways and close attention must be paid to each. Examples are: 1.) Basing fee schedules on Medicares fees, 2.) As a percentage of billed charges, 3.) Capitation. If they pay a percentage of Medicare, then every time Medicare cuts reimbursement, you are getting an across the board pay cut from all carriers that pay based on Medicare.

Contract review must be done yearly. The majority of managed care contracts renew automatically, and though this may be convenient, it will generally not be beneficial to your practice. There may be clauses that state that the fees will drop after the first year of participation. Additionally, reviewing yearly will help your practice keep reimbursement up-to-date.

Contracts usually state that you cannot adjust your fee schedule without first notifying the carrier. Even if you do notify them, the contract may state that you will still be reimbursed under your old fee schedule so raising your fees may only hurt your self pays and the goodwill that you share with them.

The other consideration is that your staff must know what you have negotiated in your contracts so that they can ensure your compliance with the details. Your account representatives should compare your negotiated rates to what you are actually being reimbursed. If you are seeing a difference, you should contact your provider relations representative immediately. Your account representatives need to know the details so that they won’t balance bill a patient if forbidden in your contract. How long do you have to submit a claim? Your schedulers need to know the details of your contracts so that they can make patients aware of your participation status and when they will be responsible for payment. When referring, most contracts state that you should use best efforts to refer patients to other participating physicians. Your nurse should know if you are required to obtain a written agreement from a patient agreeing to receive non-covered services and for the patient to make payment for those services.

Finally, one contract does not fit all sizes and the same contract should not be used for all specialties, as some carriers like to do. For example, the contract may state that you have to verify insurance prior to seeing a patient and Emergency Department physicians are precluded by EMTALA from requesting this information. Also, since these physicians don’t know what kind of insurance the patient has then they aren’t going to be able to refer them to a participating provider.

Any questions regarding the above article can be addressed to rmitchell@ams-nc.com or mdurner@ams-nc.com.