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reading and understanding MCO contracts BEFORE you sign them. This article will cover things to consider before you review any contracts, including language that you should consider in any contract and provisions to question and avoid. This article will not cover reimbursement issues except as required to ensure the contract does not violate Florida law.Before you start to review MCO contracts, you should analyze your office performance and look at your internal contracting procedures. While the size of the practice will dictate your policies, every office should periodically review their procedures. Do you know what your time is worth? Do you know the extent of your overhead costs? According to Dr. Tom Hicks (a family practitioner and the Medical Director of Patients First, Tallahassee) an excellent, simple calculation is to take your overhead costs and divide by the number of patients seen (or number of procedures accomplished). This gives you a known amount (sans professional costs) to use in evaluating contract reimbursement rates. What percent of your practice does patients from each MCO represent? If 20% of your practice is with a particular HMO, what will you do when the HMO cuts your fees? With a large number of patients from one MCO, you reduce your ability to cancel or renegotiate a contract. Who reviews and understands MCO contracts in your office? Who monitors not only your compliance with the contract but the carriers’ compliance as well? These are a few of the questions you should ask before you review MCO contracts. Through the Office of Insurance Regulation (OIR), the state has many laws to regulate the insurance industry. For example, Chapter 641, Florida Statutes, regulates Health Maintenance Organizations (HMOs) and Chapter 627, Florida Statutes, regulates the other insurance entities. Included in the insurance code are many protections for Florida patients. Statutes outline items that must be included in subscriber contracts, the clarity of the language, rates, etc. MCOs are required to have OIR pre-approval of any subscriber contract prior to offering the plan for sale. For physicians there is NO SIMILAR protection. The state considers you to have enough knowledge of contract law to protect yourself. During your initial scan of the contract, identify sections and elements that should be in a balanced and fair contract. Often the MCO will include clauses for its own protection and self-interest that should be avoided by the provider. In your review, mark these provisions for question and/or negotiation. CONSIDER/INCLUDE:(1) FINANCIAL IMPLICATIONS. While your primary purpose may be to provide services to patients; if you do not cover your costs you will not be in business for very long.The contract must clearly define compensation rates/amounts. MCO contracts usually specify a fee schedule; make sure you review, understand and accept any referenced schedule. Also ensure that a copy is included as an attachment to the contract. If different fee schedules are incorporated into the contract, make sure you have copies of each and understand their financial implications. If appropriate, address the definition of “usual and customary” (and when it might apply, i.e. for emergency services). Often MCOs will provide you with a small sample of what they consider to be usual and customary reimbursement fees. Make sure you review enough examples to feel comfortable with their payment plan. Discuss exactly when and how authorizations are obtained – does authorization guarantee payment? Put any agreed upon modifications to their normal procedures into your contract. If the MCO ties the fee schedule to Medicare RBRVS, you might want to designate a specific year, or specify an exact conversion factor that can only be changed by mutual agreement. Also have some understanding of compensation rates should you decide not to sign the contract and treat a MCO patient as a non-participating provider. You should have some understanding of the MCO’s policyholders’/subscribers’ agreements as well. Subscriber contracts define the covered services for which you will be reimbursed (and either by omission or exclusion, the non-covered services for which you may bill the patient your usual and customary amounts). Employees of the MCO will often erroneously give you authorization to perform a non-covered service; however, at a later date the MCO will deny payment for that service.You must understand the administrative burden the contract will require, for example, your office costs to comply with the contract (i.e. claim filing and follow-up costs). Ask if the MCO charges administrative fees (by withholding a percentage of monthly or annual reimbursements). Are fees built in, if so, are they excessive? This cost can mean the difference in profit or loss from MCO contracts for small practices. Dr. Hicks stated that one contract he reviewed entitled the MCO to compensation of excess costs incurred if a physician referred a patient to a non-participating provider.Watch out for language that says “will pay the lesser amount of …” This is a red flag for an issue that requires additional investigation. How to negotiate with the MCO and make changes to a proposed contract will be discussed later in this article.(2) PROFESSIONAL LIABILITY INSURANCE REQUIREMENTS. Because of the environment of professional liability insurance in Florida, many physicians are self-insuring or going “bare.” This is not a reference about heading to the nearest nude beach, but to the minimum coverage allowed under the Florida Financial Responsibility law [Section 458.320, Florida Statutes] for physicians holding an active license. When a MCO discovers you are self-insuring, it will reevaluate your credentialing and assess your risk to the company - many physicians who self-insure are receiving contract termination letters. MCO contracts often require medical malpractice insurance in specific amounts, for example, coverage of $1,000,000 per occurrence and $3,000,000 aggregate. To avoid problems, we suggest that you have the language changed to say that the MCO “accepts $250,000/$750,000 or the lesser amount required by state law;” or simply have the contract require you “be in compliance with the state financial responsibility laws.”Remember amounts may vary depending on if you have or need hospital privileges. Note that the contract may require that you have privileges in at least one member hospital.(3) NOTICE REQUIREMENTS. Make sure the MCO cannot unilaterally change/amend the contract or their rules/policies without notice to you. Ensure you get sufficient notice and have the ability to change/amend/reject any proposed changes (i.e. all changes require the agreement of both parties) or you have the ability to terminate the contract on the effective date of the contested change. You should be given at least 60 days to review any proposed changes. This notice will prevent a decrease in your reimbursement fees without your knowledge. Some contracts provide for notice of amendments and effective dates to be given by the MCO, but provide no options for your approval, ability to recommend changes, etc. Some contracts are very detailed, including how the notices are to be delivered. Make sure you understand and agree with these provisions. The time to protect yourself and your practice is BEFORE you sign the contract. Note that notice requirements will vary in different portions of the contract – read the entire contract.(4) TERMINATION/RENEWAL LANGUAGE. The contract usually identifies a list of circumstances under which termination “for cause” may occur. It should also allow either party to terminate the contract without cause, with 60 or 90 days notice. Watch for language limiting termination effective dates. For example, don’t get trapped into the situation where you can only get out of the contract on the anniversary date. Watch out for automatic or immediate termination language, for example: “if disciplined by a
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