Decoding Managed Care ContractingOctober 14, 2015

Lisa RockPresident

Scott AllenVice President, Managed Care Contracting

www.nationalASCbilling.com

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Dissect ion, Interpretat ion and Appl icat ion of a Managed Care Contract

• Chargemaster review

• Definitions

• Obligations

• Claims submission, compensation, and member billing

• Policies

• Term structure

• Reimbursement methodologies

• Opportunities

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Chargemaster Review

• How to analyze current charges

• Setting a chargemaster

• Non-Medicare approved procedures

– Time

– Overhead costs

– Operational costs

• Limitations on chargemaster increase

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Chargemaster Language Example

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Chargemaster Language Example (cont.)

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Clean Claim Language Example

“Unless otherwise required by law or regulation, a claim which (a) is submitted

within the proper timeframe as set forth in this Agreement and (b) has (i)

detailed and descriptive medical and patient data, (ii) a corresponding referral

(whether in paper or electronic format), if required for the applicable claim, (iii)

whether submitted via an electronic transaction using permitted standard code

sets (e.g., CPT-4, ICD-9, HCPCS) as required by the applicable Federal or state

regulatory authority (e.g., U.S. Dept. of Health & Human Services, U.S. Dept. of

Labor, state law or regulation) or otherwise, all the data elements of the UB-04

or CMS 1500 (or successor standard) forms (including but not limited to Member

identification number, national provider identifier (“NPI”), date(s) of service,

complete and accurate breakdown of services), and (c) does not involve

coordination of benefits and (d) has no defect or error (including any new

procedures with no CPT code, experimental procedures or other circumstances

not contemplated at the time of execution of this Agreement) that prevents

timely adjudication.”

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Coding Edit Language Example

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Obligations

• Product participation

• Non-disclosure/confidentiality

• Direction of care

• Most Favored Nations

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Workers’ Compensation Language Example

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Direction of Care Language Example

“In the case of a transfer or referral, PHO Provider will direct care to

Participating Providers if possible, subject to the Covered

Person’s medical condition. Except in the case of an emergency

medical condition, PHO Provider must obtain prior authorization

from Payor for transfers or referrals to providers who are not

Participating Providers.”

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Claims Submission, Compensat ion and Member Bi l l ing

• Coordination of benefits

• Recoupments/offsets

• Adjustments and refunds

• Member billing

• Timely filing

• Payment of claims

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Timely Fi l ing Language Example

“Facility will submit claims for payment within ninety (90) days of furnishing health

care services, or as otherwise required by applicable state or federal law, at

Facility’s Billed Charges for such health care services. Claims received after this

time period may be denied for payment by Client or User, and Facility shall not

bill Client, User, Payor or Participant for such denied claims. Facility will follow

the claims submission procedures contained in the administrative

handbook(s). A Clean Claim shall be deemed to have been received by the

Client: (i) on the date that such Clean Claim is transmitted to the Client if

transmitted by electronic means; or (ii) five (5) calendar days following the

deposit of such Clean Claim in the U.S. Mail, first class postage prepaid and

addressed to the Client at such address set forth on the Participant’s

identification card. Upon request, Facility shall furnish to Client or Payor , all

information reasonably required to verify the health care services provided by

Facility and the charges for such services.”

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Timely Fi l ing Language Example (cont.)

“All information necessary to process a claim must be received by the Payor

no more than 30 days from the date of discharge or 30 days from the

date all outpatient Covered Services are rendered.”

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Claim Payment Language Examples

“As described in further detail in Article VI of this Agreement, Payors will pay

Facility for rendering Covered Services to Customers. Payor will make its

Payment Policies available to Facility online or upon request. Payor may

change it Payment Policies from time to time. In the event that Payor

changes a Payment Policy, Payor will make available information

describing the change.”

“Payor will pay claims for Covered Services as further described in the

applicable Payment Appendix to this Agreement and in accordance with

Payment Policies.

Claims for Covered Services subject to coordination of benefits will be paid

in accordance with the Customer’s Benefit Plan and applicable state and

federal law.

The obligation for payment under this Agreement is solely that of Payor, and

not that of X unless X is the Payor.”

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Claim Payment Language Examples (cont.)

“Except as set forth in Section 5.3 and 5.4(b) herein, for those Clients that

are not subject to the state or federal law with regard to timely payment

of claims, Client will pay or arrange for User to pay Facility the Contract

Rate for Covered Services within sixty (60) business days of receipt of a

Clean Claim and in accordance with the terms of this Agreement. In the

event that a Clean Claim is not paid within sixty (60) business days from

the date of receipt of such Clean Claim, Facility has the right not to honor

the Contract Rate. In such event, Facility shall, within sixty (60) days of

receipt of the late payment (or if no payment was made, within sixty

(60) days of the date that the Clean Claim was deemed received

pursuant to Section 5.1 above) request that Client/User adjust the Clean

Claim, and Client will pay or arrange for User to pay Facility at Facility’s

Billed Charges.”

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Policies

• Compliance

• Notification requirements

• Accreditation and licensure

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Accreditation and Licensure Language Example

“PROVIDER shall procure and maintain for the term of the Agreement: (I)

appropriate licensure and/or certification for PROVIDER and all employees of

PROVIDER required to be so licensed and/or certified, under applicable state

and federal laws, and (II) accreditation under the PROVIDER program of the

Joint Commission on Accreditation of Healthcare Organization (JCAHO),

and/or Commission on Accreditation with Title XVIII of the Social Security Act

of 1972 as amended, and (IV) participation in the Payor program pursuant to

32 CFR 199.6. PHO or PROVIDER shall notify Payor immediately of any

changes in its federal health programs participation, licensure, certification,

license and/or accreditation, or authority to conduct its business, which may

adversely affect Providers’ performance or ability to fulfill its obligations under

this Agreement.”

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Term Structure

• Initial term

– “The Agreement shall be effective for an initial term of four years…”

• Termination

– Without cause

– Breach

• Evergreen

• Obligations following termination

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Reimbursement Methodologies

• Groupers

• Percentage of billed

• APCs / APGs / EAPGs

• Case rate

• Carve outs

• Implants and implant charges

• Multiple procedures

• Combination

• Escalators

• 2015 CPT additions

• Leveled reimbursements

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Case Rate Language Example

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Carve Outs: Total Joint Replacement

Potential carve outs in managed care contracts

CPT Description

23330 Removal foreign body, shoulder

23333 Removal foreign body, shoulder; deep

23470 Hemiarthroplasty-shoulder

23472 Total Shoulder

23473 Total Shoulder, revision humeral or glenoid

23474 Total Shoulder, revision humeral and glenoid

27125 Hemiarthroplasty-hip

27130 Total hip arthroplasty

27132 Conversion of previous hip surgery to total hip

27134 Revision of total hip arthroplasty

27137 Revision of total hip arthroplasty, acetabular

27138 Revision of total hip arthroplasty, femoral

23474 Total Shoulder, revision humeral and glenoid

27702 Total Ankle

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Implant Language Example

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Ungrouped Procedures Reimbursement Language Example

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Using HOPD as Leverage

• Calculate what and how many procedures are being performed at the hospital for that carrier

• Estimate what the hospital was being reimbursed including expenses

• Use that at as leverage to renegotiate new rates

CPT Codes Specialty

Total Cases 2013

Carrier 2013 MCR

82% of Base % MCR HOPD 110% Base

110% Base/MCR Savings

29824 Orthopedic 5 5 $ 2,090.07 $ 1,050.68 50% $ 4,780.00 1409.452 67% $ 16,852.74

29880 Orthopedic 9 4 $ 1,057.88 $ 1,050.68 99% $ 5,000.00 1409.452 133% $ 14,362.19

29881 Orthopedic 10 6 $ 1,057.88 $ 1,050.68 99% $ 5,000.00 1409.452 133% $ 21,543.29

29888 Orthopedic 1 1 $ 3,193.25 $ 2,288.96 72% $ 50,000.00 3070.551 96% $ 46,929.45

64721 Orthopedic 9 6 $ 679.13 $ 629.92 93% $ 2,300.00 845.02 124% $ 8,729.88

29880 Orthopedic 16 6 $ 1,057.88 $ 1,050.68 99% $ 5,000.00 1409.452 133% $ 21,543.29

29881 Orthopedic 48 21 $ 1,057.88 $ 1,050.68 99% $ 5,000.00 1409.452 133% $ 75,401.51

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Opportunit ies

• Provide complete contracts and education to billing department

• Utilize a quick reference guide to monitor key performance indicators

• Apply the managed care contract throughout the revenue cycle process

• Recommend professional review of managed care contracts

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Discussion

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