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Payer-Provider Agreements: Maximizing

Reimbursement and Minimizing Denials

in Value-Based ContractsNegotiating Favorable Contracts to Improve the Chance of Success in Value-Based Contracts

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THURSDAY, MARCH 21, 2019

Presenting a live 90-minute webinar with interactive Q&A

John C.J. Barnes, Partner, King & Spalding, Sacramento, Calif.

Gustavo E.I. Matheus, Member, Anderson & Quinn, Rockville, Md.

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Strafford Publications, Inc.CLE/CPE Webinar

REIMBURSEMENT ISSUES IN

MANAGED CARE CONTRACTING

5

Introductions

➢ John BarnesKing & Spalding, LLPSacramento, [email protected]

➢ Gustavo MatheusAnderson & Quinn, LLCRockville, [email protected]

➢ Audience – Participant types

➢ Some least common denominator information

➢ Q & A at end

6

Nomenclature

Managed care agreement names:

➢ Participating Provider Agreement (“PPA”)

➢ Professional Services Agreement (“PSA”)

➢ Hospital Services Agreements (“HSA”)

➢ Facility Services Agreement (“FSA”)

➢ “Network” sometimes used

7

Nomenclature

Alphabet soup of Managed Care Payers and Plans:

➢ Health Maintenance Organizations (“HMO”)

➢ Medicaid HMO (“MCO”)

➢ Preferred Provider Organization (“PPO”)

➢ Medicare Advantage Plan (“MAP”)

➢ Third Party Administration (“TPA”)

➢ Administrative Services Organization (“ASO”)

➢ Colloquially the “insurance carrier” or “insurer”8

Structure of the Agreement

➢ Main Agreement . . . (signed, “static”)

➢ Attachments . . . (e.g., plans & rates)

➢ Addenda . . . (e.g., plans & rates)

➢ Exhibits . . . (e.g., plans & rates)

➢ Statutes . . . (compliance)

➢ Regulations . . . (compliance)

➢ Provider Manual . . . (incorporated by reference)

➢ Bulletins . . . (incorporated by reference)

9

The Agreement

A court must determine solely from language:

➢ what a reasonable person in the position of the parties would have meant

. . . . Ergo . . .

➢ signed contract must be understood by client

➢ not a question for jury, unless any disputed facts impact meaning of disputed terms

10

Refresher

Objective Theory of Contract Law

“An offer has been made if a reasonable person in the offeree's position, in view of the offeror's acts and words and the surrounding circumstances, would believe . . . the offeree's acceptance.”

- Adams v. Doughtie, 63 Va. Cir. 505 (2003)

11

Refresher

Objective Theory of Contract Law

A court will:

➢ Determine there is no room for construction if contract language is plain and unambiguous

➢ Presume “the parties meant what they expressed”

- City of College Park v. Precision Small Engines,

233 Md. App. 74 (2017)

12

Ideas to Consider

➢ Clarity of terminology is key

➢ Make sure the client understands the core terms - beyond rate sheet & immediate cash value

➢ Drafted by counsel for managed care entity- Contra proferentem clauses

➢ A local judge will be more familiar with applicable laws than an out-of-state arbitrator.

13

Purpose

“to reimburse Provider for . . . Medically Necessary

. . . A/authorized . . . Covered Services rendered to

. . . Eligible . . . Enrollees”

➢ Capitalized terms defined in the agreement

➢ All conditions must be met

14

Purpose

“to reimburse Provider for Medically Necessary, Authorized, Covered Services rendered to Eligible Enrollees”

. . . stated another way . . .

“The right person, in the right place, at the right time.”

15

Prior Authorization


➢ Attachments . . . (e.g., plans & rates) =

➢ Addenda . . . (e.g., plans & rates) =

➢ Exhibits . . . (e.g., plans & rates) =





16

Authorization

“Prior authorization is not a guarantee of payment.”

What is the purpose of authorization?

➢ Confirmation of medical necessity

➢ Approval of medical necessity based on:

- diagnosis (ICD-10)

- proposed treatment (CPT)

Horseshoes game: does “close enough to the post” suffice?

- nearly 70,000 ICD-10 codes17

Authorization

“Prior authorization is not a guarantee of payment.”

What is purpose of prior authorization?

➢ Payer’s participation in delivery of services

➢ Prior-to services or near real-time

➢ Subject to retrospective review or audit

➢ Subject to participation benefits

18

Authorization

“Payer is not required to compensate Medically Necessary, Covered Services rendered without proper authorization . . .

. . . if such authorization is required pursuant to this Agreement and Payer’s Policies and Procedures. “

➢What are Policies and Procedures?

- aka Protocols

19

Authorization

Review Definitions section of Agreement:

“Policies and Procedures. Provider shall abide and comply with Payer’s Policies and Procedures; which shall be amended from time to time, subject to notice provisions under this Agreement.”

➢Provider Manual ➢Bulletins & Mailers➢Emails➢Website➢Online lookup tool

20

Authorization

➢ Is prior authorization a condition precedent?- c.f. billing of claim

➢ Emergency services — notable exception

➢ Forfeiture or penalty? — not enforceable

➢ Liquidated damages? — % reduction

➢ Retrospective review — “retroauthorization”

21

Ideas to Consider

➢ Consider “lack of prejudice argument” –but-for-the-fact that authorization was not obtained, it would have been provided

➢ Statutes may apply – by operation of law or inclusion in the contract

➢ Detrimental reliance – documentation is key

➢ Seek liquidated damages: 5 – 20% reduction

➢ Require retrospective review, if lack of authorization was caused through not fault of provider

22

Retrospective Review









23


Are the Covered Services Medical Necessary?

“The right person, in the right place, at the right time, receiving the right services.”

➢ Which definition of Medical Necessity applies?

- Statutory/Regulatory definitions?

- Contractual definition

- Is the Statutory/Regulatory definition(s) incorporated in the agreement?

24


“Medical Necessity” services for Maryland Medicaid:

(a) Directly related to diagnostic, preventative, curative, palliative, rehabilitative, or ameliorative treatment of an illness, injury, disability, or health condition;

(b) Consistent with standards of good medical practice;

(c) The most cost-efficient service that can be provided without sacrificing effectiveness or access to care; and

(d) Not primarily for the convenience of the participant, family, or provider.

25Md. COMAR 10.09.92.01B(20)

Practitioners Point

“Medical Necessity”

➢ Consider which definition is in the agreement

- Statutory/Regulatory (public) definition

- Public definition incorporated in agreement?

- compare payer’s contractual definition

➢ n.b. “Medical necessity” is based on medical judgmentof a physician

26


➢ Generally initiated and reviewed by nurses

➢ Denials are done (or signed off) by physicians

- medical Board specialty is preferred

➢ Utilization Review guidelines are distinct from “good medical practice”

➢ UR guidelines evaluate limited clinical criteria

- may neglect comorbidities

- usually do not include social issues

27


Utilization Review is distinct but overlaps with Medical Necessity determination

➢ Evidence-based

- peer-reviewed published journals

- nationally recognized guidelines

➢ Not patient-specific

- may not include comorbidities

- has been called a “cook book”

- acknowledged as “guidelines” 28


➢ Premised on Utilization Review (“UR”) criteria

➢ Evaluation of chart to determine if service is:

- Medically Necessary

- Covered Service

➢ published evidenced-based standards

- e.g., MCG (Milliman Care Guidelines)

- e.g., Interqual criteria

29


Results of retrospective review:

➢ Approval of claim – payment

➢ Denial of claim – no payment

➢ Claw back of paid claim – possible audit

- payer or provider initiated

➢ Claw back of many claims – coding-based

30

Concurrent Review

➢ Another “Policy and Procedure”

➢ Akin to Utilization Review

➢ Real-time or near-real time

➢ Inpatient hospital services

➢ Outcome: approval or denial of claim

31

Concurrent Review









32

Concurrent Review

➢ Exchange of clinical information - via web portal- via fax or phone

➢ Inpatient hospital services (admit order)

➢ Prompted by Notification to plan w/in 48 hours

➢ Periodic – up to 3 day intervals

➢ Must provider w/in 24 hours of request

➢ Failure can result in denial of stay33

Concurrent Review

Significance

➢ Failure to provide timely clinical data

➢ Denial of stay from the expiration of request

➢ Are there mitigating circumstances why not initiated or completed?

➢ Cannot be appealed in some cases

34

Concurrent Review

Unenforceable penalty?

“Liquidated damages provision will usually be construed as unenforceable penalty, where damages resulting from breach of contract are susceptible of definite measurement, or where agreed amount of damages would be grossly in excess of actual damages resulting from breach.”

- 301 Dahlgren Ltd. P'ship v. Bd. of Supervisors, 240 Va. 200 (1990)

35

Internal Appeals

Two Varieties of Denials:

➢Medical Necessity denial- Level of care/cost- Not meeting published clinical standards/criteria- Mental/Behavioral usually covered- Experimental (non-Covered Service)- Cosmetic (non-Covered Service)- Dental (usually not covered)

➢Administrative denial (aka technical)- Not related to the quality of the medical care- Lack of authorization- Lack of notification- Lack of concurrent clinical information

36

Appeals









37

Internal Appeals

How far can your client go to get the claim paid?

➢ Member has a distinct appeal right than provider

➢ All plans have at least 1 level of appeal

➢ External appeals and administrative remedies may be available

➢ Time sensitive – differing deadlines among plans and between levels (+ possible reconsideration “level”)

➢ Exhaustion may be required to invoke post-appeal remedies – timeliness may be an issue

➢ Very limited case law 38

Appeals – Provider Manual

39

Take-Backs, Offsets, and Audits









40


Payer has right to retract improperly-paid claims

➢ Coding issues (big data)

➢ Audits

➢ Contractual timeframes

➢ Statute of limitations may apply

➢ Should go both ways: underpayments

➢ Interest may apply

➢ Do not waive administrative remedies 41


Provider must comply with:

➢ Industry coding standards - very specific within medical specialties

➢ Coordination of benefits vs. error in payment

➢ Statute of limitations may be shortened by contract

➢ Documentation is key

42

Provider Manual

➢External to agreement - incorporated by reference

➢Typically not reviewed at execution of main agreement

➢Not negotiated - no provider input- Applicable to all providers- Periodically updated

➢ Implemented by all major payers

➢Main agreement should control in case of conflict

43

Provider Manual

44

Bulletin

Doc: PCA-1-007614-08162017_09062017

UnitedHealthcare Community Plan of Maryland Preferred Laboratory Services Protocol

According to the UnitedHealthcare Community Plan of Maryland Preferred Laboratory Services Protocol,

laboratory services ordered for these members by their primary care physician or specialist must be

performed at the outpatient medical laboratory designated on the member’s health care identification (ID)

card. We developed this protocol to help our members access the right care and keep their health care

costs down.

Claims for services that aren’t performed at the designated outpatient medical laboratory will be denied

unless they qualify as an exception. Exceptions to the requirements include:

• Tests performed during a covered visit to an urgent care facility or hospital emergency

department

• STAT tests performed during a covered visit to a care provider’s office that are listed in the

STAT Outpatient Laboratory Services Exception List (included on next page). For purposes of

this document, STAT refers to items that are urgent or emergent in nature

• STAT tests necessary to perform services at the time of visit

• Pathology services performed on specimens obtained during surgery at a hospital outpatient

department

• Tests required on an intra-operative or intra-procedure basis for outpatient surgery or outpatient

procedures

• Pre-operative blood type and cross-match studies

• Situations in which services are pre-approved and/or contract exceptions apply

STAT Laboratory Tests

If laboratory results are required on a STAT basis, the designated outpatient medical laboratory can

arrange quick pick-up and reporting. If a care provider performs a STAT test for a UnitedHealthcare

Community Plan member and bills for the service, they must use the ET modifier with the CPT code for

the test. Additionally, the diagnosis indicated on the claim must support the STAT billing.

The table on the following page lists the STAT outpatient exceptions to our Preferred Laboratory Services

Protocol with their corresponding CPT codes. This list was updated on Sept. 1, 2017.

If you have questions, please call Provider Services at 877-842-3210.

45

Changes, Modification, Amendments

➢Notice provisions must be followed for unilateral changes

➢Material terms remain unchanged

➢ Signed agreement should prevail in event of conflict

46

Dispute Resolution

➢Arbitration clauses- relatively inefficient- no jury- costly- award cannot be appealed

➢ Local jurisdiction?

➢Notice of dispute provisions must be followed

47

Dispute Resolution

48

Value-Based Contracting

Two Flavors

(1)Value-Based Insurance Design(2)Value-based contracting

49

Value-Based Insurance Design

How it works: Insurance benefit for given service is limited to a set dollar amount. Plan will sometime – but not always – indemnify patient for amounts over the benefit if the patient seeks services from “value-based” network provider

“Value-based insurance design”-- hip replacement:Billed Charges = $20,000Hospital’s Expected = $20,000 Benefit plan has a maximum benefit of $10,000 for hip replacement

Result = Benefit Plan pays $10,000 and issues an EOB assigning balance to patient responsibility 50

Value-Based Contracting

Overview: Payers and Providers are starting the

transition from rewarding volume to rewarding

“value.” This can mean:

• Reduction in services utilization against an agreed-upon

benchmark;

• Improvement in performance based on clinical quality

standards

• Full risk agreements where provider receives a % of the

premium

• Some combination of the above.51

Shared Risk in Value-Based Contracting

Financial Structure

1) Establishment of “budget” (example: baseline - %)2) Agreement on the measured services (HMO – Assigned

members expenses, PPO – “Attribution Methodology”3) Establishment of share of upside/downside risk pool

Note: Providers typically don’t accept downside risk until later years (if at all)

4) Post-measurement period reconciliation5) Impact of performance measurements (gates and

ladders)

52

Shared Risk in Value-Based Contracting

Reporting Considerations

Critical aspect of negotiation of the value-based agreement is the reporting requirements.

• Necessary to track performance against budget in real time

• Access to claims information is key to provider’s ability to manage population

• Identifying high-risk patients and ER “frequent fliers”

• Identifying leakage out of network (and sources of leakage)

53

Some Final Thoughts

Annual review of contracts

➢ Notice provisions – for what, when, and how

➢ Remedies: post-appeal and non-appeal

➢ Reimbursement rates

- Metrics

- Provider representative dialogue

➢ Joint Operating Committee (“JOC”) meetings

54

Final Thoughts

Questions and Answers

55

Documents

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