While larger hospitals and health systems may have legal departments to oversee the contracting process, smaller hospitals may need additional strategies and resources when negotiating managed care contracts. Here are a few:
Know Your State Laws—Every hospital should be aware that healthcare contracts need to be tailored to state laws, says Thomas R. Neal, a partner with Krieg Devault LLP, Carmel, Ind. Many states, for example, have prompt pay laws that require payers to reimburse for clean claims within a certain period of time. If not, interest is added to the claim. In order for the out-of-state payer to acknowledge the law, Neal says the contract must in some way refer to the state law. “It’s always better for the document to require compliance with this law,” Neal says. If the payer has not included state laws in the contract, Neal says the provider can add them by using attachments. “And, include language that if the attachment conflicts with the main contract, then the attachment governs the issue,” he says.
Participate in State Industry Associations— Lynn M. Guillette, director of contracting for Dartmouth-Hitchcock Medical Center, Lebanon, NH, says providers should share best practices with each other through affinity groups, such as state hospital associations, which can offer a wealth of information and guidance. Guillette is a member of the managed care contracting committee of the New Hampshire Hospital Association. “We get together once a month. We don’t share trade secrets. We don’t talk about rates,” she says.
“But, it is an opportunity to say, `Here’s what’s going on. Here’s what we’re hearing from the payers. Here are some issues that we’re seeing. Here’s a way that we’ve tried to address this.’” Guillette says it would be especially beneficial for small hospitals to send representatives to such meetings to know what issues to be aware of and what options are available for strengthening their contracts.
Use Examples—Incorporating examples into the contract can prevent disputes. For instance, a stop loss provision in a contract with special implant pricing should include an example of a stop loss case with implants to specify whether implants will be included under the stop loss provision or separately governed by the implant language. “If you don’t put a concrete example in, often some of the financial language gets so abstract that the two parties may disagree on the intent of the language,” says Pam Waymack, manager director of healthcare consulting firm Phoenix Services, Evanston, Ill. “It’s not common to put in lots of examples, but I think the more financial protections we put into the contract to limit our risk, the more the onus is on us as providers to illustrate the various scenarios under which those protections work.”