General Considerations to Contracting with a Managed Care Plan

Deciding whether or not to join a particular plan can be a difficult and time consuming task.

Managed care is a fact of life for many optometric practices. With so many different plans out there, many questions come to mind:

Which plans are best for the practice?
Will a plan provide a fair number of patients at acceptable reimbursement levels?
Will it bring hundreds of new patients at an unacceptable reimbursement rate?

A plan that promises fair reimbursement on the surface can become a nightmare if it uses complicated forms and commits frequent errors.

Deciding whether or not to join a particular plan can be a difficult and time consuming task. For many, managed care plans have become a “can’t live with them; can’t live without them” proposition. The following questions can help the doctor get through the invitations and determine the plans that may be best for the practice.

How widespread is the plan in my area?

A concern of many doctors is the number of subscribers a particular plan has in the area in which the practice is located. A plan might cover few employers and no enrollees in the area today. Tomorrow the plan may land a big contract. Suddenly, it covers several thousand people and their families who can only go to participating doctors. By the time the doctor has made a decision to participate, it may be too late to sign on as a provider.

More than one optometrist has regretted not participating early enough in a plan that is otherwise acceptable. Many doctors ask this question first, but it should be considered in the context of all the other information gathered.

What is the reimbursement level?

This is usually the first question asked. The decision to enroll in a particular panel should not be based on reimbursement levels alone. The doctor knows what kind of reimbursement you would like to get, but you don’t have to be willing to accept a financial loss due to participation on a third-party plan. Do not assume that patients from a new third-party plan will only fill the downtime, and that any fee would be better than receiving nothing. Each plan should be considered on its own merit. Take a close look at reimbursement levels, and know how to evaluate the reimbursement and contract terms in relationship to your practice’s needs.

How does the plan actually reimburse providers?

Most third party plans assume some type of risk. They collect premiums from subscribers and/or employers, then pay out claims to doctors and hospitals—and take a risk that the proceeds from premiums cover the payouts.

Payment error rates and withholds can make a difference on the decision of whether or not to participate in a MCO plan.

There is another way some plans manage risk: capitation. The plan passes the risk onto providers by paying a fixed amount per member patient per month. In order for the patients to collect plan benefits, they must receive care from a particular group of providers. This arrangement is fairly common for primary care physicians, but it is not all common with specialists such as optometrists.

Preferred provider organizations—PPOs—contract with large employers, insurance companies, etc., but do not usually assume the risk. PPOs simply administer the plan and manage the provider network. Some MCOs have an option that allows subscribers to use providers outside the network, called a Point of Service Plan. These patients, however, receive less reimbursement for going outside the MCO, and are responsible for a higher copayment.

You should have a clear understanding of the type of panel to sign with. Some MCOs have all-products networks where signing on to one panel allows you to be a provider for all their products.

Some plans make you wait 60 or 90 days, or even longer for payment. Find out if the plan has a high payment error rate and if providers have to file frequent appeals. There may also be withholds which might not ever be paid back to you. Check whether your state has prompt pay requirements and whether they are applicable to the plans to which you belong.

What are the contract provisions?

This topic is complicated enough to merit its own section. Do not assume that you will probably have little negotiating room when it comes to rejecting or changing unacceptable language in a managed-care plan contract. Because of this, you must fully understand the contract. Members should utilize AOA’s Contract Analysis Service to assist with understanding your contract. It may be advisable to have a health care attorney review any contracts. One big problem for doctors: Most contracts give the plan the right to drop a provider for any reason, at any time, with only brief notice, usually 60-90 days. Conversely, doctors are free to drop a plan on the same terms.

How easily can my office handle this plan's paperwork?

Some optometrists say they spend more time filling out forms than patient charts.

This is a question that leads to even more questions. Some optometrists say they spend more time filling out forms than patient charts.

Does the plan burden you with forms radically different than those the staff now handles? Or does it use the standard CMS 1500 or fee slips?
Can the office staff understand the guidelines for submitting claims?
How easily can the office staff find out if a patient is actually covered by the plan, and what is the copayment or coinsurance?
The patient’s identification card is rarely if ever a guarantee of reimbursement. Can the plan deny eligibility after the doctor has provided service?

Even a plan with reimbursement levels viable for your practice might not be worth the hassle of too much paperwork.

How easily can patients access services?

Is there a self-referral system from routine vision care and/or primary eye care, or do patients need a referral from their primary care gatekeeper before they visit you? If the latter scenario applies, find out how easy it is to get these referrals. In any case, networking with these primary care gatekeepers essential for building a referral base.

What is the overall reputation of the plan?

This is critical. If patients and other doctors are happy with the plan chances are you will be, too. Find out if the plan is known for accurate claim processing, and if it promptly and professionally resolves problems when they occur. Try to determine if its provider service representatives are accessible either by phone or by visiting the practice. Ask patients what they think, too.

Not every plan it good for every practice. You must consider a plan’s impact on the entire practice:

Will it enable the practice to succeed?
Will you need additional staff?
Will you need to spend more time in the office, or perhaps hire an associate?

Weigh all the factors carefully. The last thing you need is a plan that is going to clutter the practice’s appointment book with patients and force you to scramble while the bottom line suffers.

Additional Important Considerations

Who are the parties to the contract?
What is the legal status of the plan, HMO, PPO, IPA, PHO?
What is the organizational structure of the MC system?
How long has the plan been in business?
What is the:
- general financial condition?
- business reputation?
- health care reputation?
- complaints or lawsuits against plan?
Who manages the MCO?
Does the MCO comply with all the state and federal regulations and laws?
What does the MCO membership profile look like?
How many consumer groups have contracted with the plan?
What are the enrollment expectations for the next 3 years?
What is the plan’s reputation within the physician’s community?
Is the plan part of a national or regional plan?
If the plan is national or regional, what functions are maintained locally?
If the MCO is a for-profit corporation:
- can the physician purchase stock in the MCO?
- are the physician required to purchase shares in the MCO?
- how is the price of the stock determined?
- are there any restrictions on the stock the physician own?
What hospitals participate in the MCO?
Is the MCO sufficiently staffed?
How financially stable is the Plan?

Personal Responsibilities

Are ODs or other providers involved in the management/administration of the MCO?
Is there any OD input in the MCO?
Is there an eye care advisory group? Does it include ODs?
Is the plan a carve-out for eye care only or part of a general MC plan?
Does the plan allow the physician to practice full scope optometry?
Who has an interest in the contract other than those signing the contract, i.e., other ODs, MDs, etc.?
Does each individual provider have a separate contract?
If the physician contracts with a MCO:
- what are the MCO’s responsibilities to the physician?
- are there any potential liabilities to the physician?
Is there a fee to belong to the MCO?
How many providers participate in the plan? What health care disciplines are represented?
Does the plan treat MDs and ODs the same?
Are there other non-MDs in the MCO?
What is the length of the contract and what is the renewal period?
Is there an automatic renewal provision?
Does the contract refer to other documents that are not there in front of the physician?
Does the contract cover all agreements between all the parties or are there other written or oral agreements?
Can the physician review the quality assurance and utilization review procedures prior to contracting with the MCO?
Can the MCO use the physician’s name in their advertising for in their brochures?
Can the MCO make changes in the contract without prior notice and agreement?
Under what circumstances can the physician terminate the physician’s participation?
How can the physician terminate the physician’s participation?
What notice is given to the patients if the contract is terminated?
Can the contract be assigned by the MCO?
Can the physician assign the contract?
Does the MCO understand and comply with all applicable state laws and regulations?
Will the physician be required to continue to provide services if the MCO ceases to exist?
Does the contract contain a "hold harmless" clause?
Will the physician incur any additional liabilities for any administrative decisions made by the MCO?
Does the physician’s Malpractice insurance cover any liability assumed through the contract?
Are on site visits performed to ensure compliance?
What are the penalties for non-compliance?
Is the physician’s quality assurance (peer-review) performed by an OD or by a nurse or other provider?
Are there other ODs involved in the credentialing process?

Services and Benefit

What are the eyecare benefits offered by the MCO? Vision only? Medical?
How often are enrollees eligible for eyecare services?
Are primary and preventive care exams covered for enrollees of all ages?
As a provider for the MCO what services are the physician required to provide?
Does the contract language require the physician to:
- see a certain number of patients per day?
- see all patients referred by the MCO?
- spend a certain amount of time with patients from the MCO?
Does the MCO use practice guidelines?
What services require prior authorization and how long does that take?
Does the MCO require the provider to have certain equipment and instrumentation?
Does the MCO require the provider to have hospital privileges?
If the program is capitated?
Who provides the malpractice insurance and does each party have to be listed on each policy?
Is the physician’s professional judgment affected by the MCO?
Does the contract restrict the physician’s referral patterns?
Does the MCO monitor the physician’s utilization patterns?
Does the physician know the standard of care against which the physician’s decisions will be reviewed?
Does the contract require that the physician be involved in peer-review activities?
What are the procedures for referring patients for secondary and tertiary care?

Payment

If the physician provide services that are deemed unnecessary by the MCO, will the physician be paid and by whom? Can the patient be billed?
If payment is disallowed can the physician bill the patient?
What services require preauthorization and does pre-authorization guarantee payment?
How will the physician be paid: capitation or per occurrence?
If paid “by occurrence” what is the basis of that payment?
How much of the fee is the MCO going to retain?
Does the contract allow the MCO to change the fee schedule without prior notice or consent?
Do the patients have copayments, coinsurance or deductible?
Does the capitation rate change with enrollment changes?
Who bills the patient: the physician or the MCO?
Are noncovered services clearly defined? Is the provider allowed to bill the patient directly for noncovered services?
Does the MCO have a "most favored nation" clause?
Is the provider accepting risk?
What referred services are deducted from the physician’s capitation fee?
How are other providers in the plan reimbursed for like services?
When the physician submit claims:
- is there a time limit for submission?
- how long does the MCO have to pay the claim, per contract and per state law?
- is the physician entitled to interest on late payments?
Does the physician’s involvement in the MCO affect seeing Medicare/Medicaid patients?
Under what circumstances can the patient be billed?
In what format must the claims be submitted?

Access

How are enrollees notified of the physician’s participation in the plan?
Are patients free to choose any provider on the panel?
How is the doctor/patient relationship affected by the contract?
How do the patients access eye care:
- directly or by gatekeeper referral?
- if by referral, is it mandated or does the patient have freedom of choice?
Are the physicians mandated to use certain secondary or tertiary providers for services such as laboratory?
Is the non-optometric gatekeeper allowed to specifically designate services the patient receives after the referral is made, who is liable for the outcome if there is litigation?
How does the plan inform enrollees of participation providers?
Can the provider directly advertise to the enrollees?
What advertising methods does the plan utilize?