April 21, 2004
Ensuring that a managed care contract covers all bases and contains no surprises is a perennial challenge for healthcare financial managers. Reviewing multiple contracts in an efficient manner is even more of a challenge. To that end, members of HFMA's Managed Care Forum collaborated to develop a common contracting negotiation checklist to help both providers and payers thoroughly assess and negotiate effective contracts. Contributors included managed care professionals from both payer and provider organizations.
The checklist covers criteria for volume, payment terms, contract terms, operational terms, and financial terms. The following excerpt addresses some important points to consider when assessing contract terms.
Contract Terms Criteria
1. Does the contract contain an automatic renewal clause?
2. Does the contract contain an inflation index?
3. Are all hospital services included? What services are excluded?
4. Is the termination notification for no more than 90 days (with 90 days being the best practice)?
5. What are the provider's obligations to continue, and the payer's obligations to pay for, care for patients in treatment at the expiration of the contract?
6. Is an advanced beneficiary notification (ABN) acceptable for noncovered services?
7. Does the hospital have the ability to obtain member deposits for noncovered services?
8. Is there an exclusivity clause?
9. Are subcontracting relationships disclosed?
10.Are indemnification and malpractice insurance stipulations included such that the hospital and the payer each pays its own legal fees?
11.Is there an independent contractor clause?
12.Is "medical necessity" clearly defined? What are the criteria for medical necessity?
13.Are "emergency condition" and "emergency admission" clearly defined and do the definitions conform to EMTALA requirements?
14.Is there a definition of "covered services," and are covered services clearly identified?
15.Is the "plan agreement" clearly defined?
16.Is "material breach" clearly defined and do terms include the plan's failure to adhere to reporting obligations?
17.Is there a provision that prohibits reassignment of the contract without consent?
18.How many days of advance notice to providers is required for modifications in payments, covered services, procedures, documents, and requirements with "substantial impact"?
19.Is there a warranty of HIPAA compliance?
20.Is "observation services" or "observation care" clearly defined?
SOURCE:
"The Managed Care Forum Contracting Negotiation Checklist," based on input from HFMA's Managed Care Forum. This checklist is an exclusive Managed Care Forum benefit.
Additional Resources
- "Scrutinize Payment Language to Avoid Costly Contracting Pitfalls" HFMA Wants You to Know, June 18, 2003
- "Reconcilable Differences: Mending Payer-Provider Relationships with Real-Time, Web-Based Connectivity" By Jay Gordon, October 2003 Managed Care Forum Newsletter (available to Managed Care Forum members only)
- Tools from the Plan-Provider Claims Workgroup:
1. Coordination of Benefits:Tips for Reducing Payment Delays and Improving Accounts Receivable (PDF)*
2. Interactive Claim Correction Form (PDF)*
3. Improving Claims Processing and Payment: A Self-Assessment Tool for Providers
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble at lnoble@hfma.org.
HFMA Wants You to Know ISSN: 1540-0697. Volume III, Issue 9. Copyright 2004, Healthcare Financial Management Association. All rights reserved.