By: Nick Deleeuw for the Michigan State Medical Society
I. INTRODUCTION
Rare is the physician who during medical school’s toughest moments and residency’s longest shifts found the strength to persevere in her deep and abiding passion for completing health plan paperwork, mastering accounting spreadsheets and negotiating fee schedules.
Most pursue medicine with a genuine and purposeful desire to help people during life’s most difficult and challenging moments. No one worked 24-hour residency rotations because they couldn’t wait to do paperwork.
As it turns out, though, it’s the business of medicine that empowers physicians to embrace and master the practice of medicine. The better that business gets done, the better a physician is able to treat patients, build a compassionate staff, and expand quality care and services.
Payer contracting is among the business side’s most important pillars and, like everything else in medicine, the more a physician excels in any one aspect, the more patients benefit. Better contracts mean a better bottom line, sure, but they also mean better patient outcomes.
That’s true in part because payers are moving more and more to “value-based” metrics.[1] At their simplest, these measures aim to align reimbursements with patient outcomes; one physician staffing firm reported in 2017, for instance, that 43 percent of its clients tied physician bonuses to patient satisfaction and other outcome measures.[2]
In a rapidly developing marketplace of ideas and measures, these newer systems offer physicians the opportunity to define success—and to build those definitions around patients themselves.
In creating economies of scale, especially among physician organizations and hospital groups, contracts may even offer physicians the opportunity to minimize prior authorization demands, simplify the referral process, and improve their patients’ timely access to the care they need.
In other words, there’s a lot riding on the contracting process, and for more than just the contracting physician. But…getting those contracts right? In its own way, it can be as complicated as surgery.
Scott Monteith, M.D., is a Board Certified Psychiatrist treating patients in and around Traverse City. His experience has taught him that taking the time and care to carefully negotiate makes a meaningful difference.
“Recognize that negotiations are among the most important things you will do outside of caring for your patients,” Doctor Monteith said. “Spend the time and money to negotiate. Read every word in the contract, understand it, and make sure you are willing to make the promises spelled out in the contract. Negotiating is not easy, but it is one of the best things you can do for your practice and patients.”
Thankfully, physicians don’t have to go it alone. A variety of allies exist to walk alongside health care providers as they interact with payers, from physician organizations to health care contract law attorneys and professional associations like the Michigan State Medical Society.
II. PAYER CONTRACTING AND RISKS, DEFINED
At their simplest, payer contracts define physicians’ obligations to patients and to the insurance plans that cover them. They also detail the payer’s obligations to physicians and their patients, and describe the performance incentives the payer offers to those who achieve benchmarks designed to improve care and reduce costs.
Contracting and billing processes aren’t cheap. A 2018 study published in the Journal of the American Medical Association examined the administrative costs associated with physician billing activities in a large academic health care system that employed certified electronic health records. Researchers found personnel and overhead costs related to billing and insurance-related activities ranged from $20 for a primary care visit to $215 for an inpatient surgical procedure. That breaks out to anywhere from three percent to 25 percent of professional revenue.[3]
The process has also been linked to the growing trend of physician burnout, a crisis that threatens not only providers’ physical and emotional health, but their patients’ access to care.
Getting the contract right is the first, most important step towards minimizing those personal and financial expenses. Measure twice, cut once.
Debra Roberts is the Executive Director of the Huron Valley Physicians Association, P.C. Her organization, like the dozens of other physician organizations in Michigan, also known as POs, helps member physicians navigate the contracting process.
“Physicians need to understand their practice’s ability to meet clinical care metrics and know whether their office workflows will help reduce costs and improve care,” Roberts said. “This means that physicians need to be able to identify and manage their patient populations by providing the right care at the right time for the right reasons.”
Many physicians find it valuable to join a physician organization, or PO, to help streamline the contracting, performance programs and billing processes—among myriad other reasons.
“Joining a group and becoming more engaged by adopting the Patient-Centered Medical Home principles, if they are in Primary Care, and adopting more broadly used Electronic Medical Record systems increases a physician’s ability to effectively participate in value-based contracts and have an opportunity to earn shared-savings,” said Roberts. “The factor of demonstrating active population management will add value from a payer perspective and achieve the elements of the Triple AIM (improving the patient experience of care, including quality and satisfaction), improving the health of populations, and reducitng the per capita cost of health care.”
POs also minimize the administrative lift for member physicians.
Doctor Monteith, the northern Michigan physician, finds value in his own PO, but suggests tapping additional outside help. For example, he recommends every practice work with dedicated legal counsel with extensive health law expertise when negotiating a contract, but—he warns—don’t expect them to do everything for you.
“Recognize that attorneys can offer legal advice, but often are not qualified to offer advice on the business side of an agreement,” Doctor Monteith said. “The legal and business dimensions of agreements can be very different. For example, an agreement can be legally sound (and therefore ‘acceptable’), but it might be an unacceptable business arrangement. When an attorney says that agreement is “acceptable,” remember that opinion may only apply to the legal dimension of the contract, not the business dimension.”
Once a contract is signed, the work has only just begun.
According to McKesson Healthcare Business Consulting Solutions,[4] payers in some parts of the country have moved to reduce fee schedules by five to 12 percent per market. The cuts may come in a variety of ways, including the termination of old contracts and post-signature amendments to new ones. The McKesson consultants warn providers to pay close attention to everything health plans send them. Providers may be given as few as 30 days to respond to proposed amendments, and depending on how they and the contract are written, failure to respond may allow the amendment to go into effect anyway.[5]
“There is annual maintenance of a contract and measurement of physician yearly performance,” said Roberts. “A physician organization can support the practice with focused campaigns to target best performance outcomes and the corresponding financial rewards. POs also can help with ‘best practice’ workflows to help physicians work smarter, not harder, to maximize all payer financial outcomes.”
Of course, not every physician in the state is a member of a PO or a hospital group. Employment agreements and settings are almost as varied as physicians’ specialties. Thankfully, there are a number of contracting tips and best practices that apply to physicians across geographies, specialties and employment arrangements.
III. GETTING THE CONTRACT RIGHT: A PRIMER
With plenty of pitfalls to avoid, where can a physician, hospital group or PO find sure footing? The Michigan State Medical Society and their legal partners at Kerr Russell Attorneys and Counselors have a few suggestions.
Do the early research. Use your voice. Be thorough. (Just to start.)
Dan Schuelte is an attorney with Kerr Russell, a full service Michigan law firm. Schulte is co-chair of its health care law practice. He advises physicians entering the contracting process to begin by asking themselves a simple question: do the benefits they stand to obtain from the contract outweigh the burdens they’re taking on by entering into it?
“In its simplest form the question is: are the fees I’ll be paid, the additional patients I am going to be able to have in my practice…do those economic benefits outweigh the claims filing burdens, or the risk that this payer is going to take unreasonable positions in audit a year or two after the fact,” said Schulte. “[Is it worth the] special documentation requirements and the other burdens I’m taking on in order to gain new patients and revenue in my practice?”
Doing the research at the beginning—understanding with whom the physician is contracting, what they offer, and what risks might arise after signing on the dotted line—can help physicians avoid a lot of regret right off the bat.
Physicians must understand who they are as a provider and the value they or their practice brings to the equation, as well.
“Always recognize the value you bring and focus on the payer priorities,” said Jack H. Dillon, Executive Director for Anesthesia Practice Consultants, PC, in Grand Rapids, Michigan. “Often there is alignment. Before you ever meet, evaluate your data and processes and understand if there are any gaps. Come prepared with specific goals for every meeting.”
A provider or group should also fully know with whom they are contracting. Understand whether it is an insurer and a plan, or an administrator of other plans as well. By understanding the patients represented by the payer, a provider can take a good hard look at his or her own practice to determine how much access to new patients—if any—the payer can provide.
“The tendency is to just sign as many of these agreements as possible, to just increase the likelihood you’re going to get patients you wouldn’t otherwise get into your practice,” said Schulte. “You might only get a handful of patients, and could be taking on tremendous burdens and risks. For what? Assess what you stand to get out of the deal, [so you know if it is] worth entering into it in the first place.”
Schulte, who has 25 years of experience specializing in health care law and physician licensing, staffing and contract disputes, urges physicians to find their voices early in the contracting process, as well.
“Too few physicians take the time to do the due diligence, to not only have the language of the contract reviewed and have a lawyer’s perspective of what is over the top, but also to take the time to request changes [to contract language] and to voice their concerns,” he said. “If more of that went on, the insurers and health plans would have to be more receptive to changes.”
There’s certainly plenty in the average contract to discuss. Payer contracting involves much more than negotiating a fee schedule, Schulte and other experts say. The process—when done right—covers language spelling out rights and obligations for both the payer and the provider. Sound contracts cover claim submission processes, payment requirements, compensation methods, utilization and quality assurances, term and termination, dispute resolution, and much more.
Another key contract element to address is any language related to “indemnification” (in all its forms), including “hold harmless” clauses.
There are thousands of “i”s to dot and “t”s to cross. Every single one of them is critical. Being thorough counts, especially when there are multiple payers on the playing field.
Dillon, the anesthesia practice executive director, suggests no practice overlook the value of organization.
“A practice should develop a grid for their payer contracts,” Dillon said. “Have something to reference that you can build upon and contains all the vital information. That way, you are not recreating the process and negotiation each time you sit down with a payer.”
Keeping an up-to-date grid can also help providers replicate best practices and stay on top of requested changes and amendments from payers.
“…That’s usually when the work begins,” Dillon said. “It’s important after the negotiations are done and everything is signed to have a level-setting meeting with everyone in your practice. Make sure everyone understands the expectations and what needs to be done.
To help providers, groups, and POs through the entire process, Kerr Russell and MSMS developed a catalogue of tools and resources, including a contracting checklist and a contract review service that brings the carefully trained eye of a health care attorney to bear on behalf of a provider.
The Michigan State Medical Society offers many of the resources to members at no cost, and has negotiated legal services for members at a discounted rate. With a little bit of help—and a whole lot of elbow grease—physicians in any setting can secure contracts that benefit their practices, and the patients they serve.
***To obtain a copy of the Checklist, or for more information, please contact the Michigan State Medical Society at (517) 336-5723.
[1] https://www.forbes.com/sites/brucejapsen/2018/06/18/more-doctor-pay-tied-to-patient-satisfaction-and-outcomes/#1cfa83f6504a
[2] https://www.merritthawkins.com/uploadedFiles/Merritt_Hawkins_2018_incentive_review.pdf
[3] https://jamanetwork.com/journals/jama/fullarticle/2673148
[4] http://www.mckesson.com/documents/providers/the-key-to-successful-payer-contracts/
[5] http://www.mckesson.com/documents/providers/the-key-to-successful-payer-contracts/