By 
Providers should be aware that managed care contracts often have two common problems: 1) very important terms are unclear, and 2) cost control provisions are unfair. In addition to the need for clarity, most managed care arrangements lack what many consider basic procedural fairness. For example, most agreements contain provisions that allow the plan to implement the rules, regulations, policies, and procedures the plan desires at any time, often without notice or public disclosure. The doctor does not necessarily know about these things, and such things can undermine the very language of the contract. To satisfy these concerns, the following should be helpful:
“[Participating Provider’s] agreement to be bound by such [policies, procedures, rules or regulations] will be subject to [Participating Provider] receive advance written notice of any proposed decision or adverse event and a reasonable opportunity to respond to such proposal. In addition, the parties agree that to the extent the foregoing conflicts with the terms of this Agreement, the terms of this Agreement shall control.”
Sometimes, however, the payer is not actually responsible for the payment, but rather acts as an intermediary between the provider and the payer. In such cases, it is essential to create clear lines of responsibility. For example:
“In the event that a Payer fails to make payment in accordance with the terms of this Agreement, [Plan] shall (a) make such payment on behalf of the Payer, (b) bring legal action to recover such payment on behalf of [Participating Provider]or (c) assign to the [Participating Provider] the right to bring such action. In the case of (b) or (c), the Payer will provide [Participating Provider] a copy of the contract by which [Participating Provider] may rely on the prosecution of such action and will release [Participating Provider] from any other obligation to provide services to [Members].”
It is also quite common for doctors to be denied payment even from patients who were authorized and treated. In addition to requiring the plan to identify members, the following should be helpful in dealing with such cases:
“Verification of coverage at the time of service will be final. In addition, notwithstanding anything to the contrary in this Agreement, any preauthorized admission or covered service will be paid for, regardless of any subsequent benefit determination.”
Even after a provider signs a contract, the managed care company does not always meet its contractual obligations to pay according to the contract, resulting in many practices leaving money on the table and ultimately staying in the bottom line (ie profit). for the managed care company. The MGMA states that only 35% of healthcare providers and companies appeal denied claims! The key to mitigating this financial impact is to understand the problem before it becomes a trend. For example, one of the ways to stay ahead of a developing trend is to monitor a payer’s denial rate. A denial rate is, by definition, a percentage of claims denied by the payer. A low refusal rate indicates that cash flow is healthy. A good benchmark for payer compliance would be a 5-10% denial rate. Often, healthcare practices and businesses operate at a much higher rate, and even in the 20-30% range without even knowing it. The AMA states that a 5% denial rate for an average family practice equates to about $30,000 walking out the door!
It makes sense that this perfect storm of poorly negotiated and poorly constructed contracts, rising payer denial rates, and broken contractual obligations leaves many healthcare providers and companies feeling like a cartel now running their practice and business. results. However, there are many opportunities along the progression of the managed care process for providers and healthcare companies to take back control.