Endorsed Partner: Coastal Healthcare Consulting Group • Contract Analysis

Bad managed care contracts can be a continual plague on your practice, your patients, and your finances. Many physicians find themselves seeing too many patients in order to maintain cash flow as a result of poor reimbursement from their contract portfolio. You can avoid this stressful cycle by spending a little time to understand your contracts so that you can take charge of your practice:

1. Evaluate Your Internal Contracting Procedures: Do you have copies of your contracts? Do you have a copy of the rates or a rate grid? Do you know if you are making money or losing money on a specific code? Do you know what your time is worth in comparison to reimbursement? It takes only a few hours to construct a simple contracting grid. Every practice would have a grid of their top 10 health plans and their top 20 codes. You will be amazed at what you find with a simple review.

2. Cancel Silent PPO Entities: Most practices are infested with bad contracts, the worst being silent PPOs. A silent PPO is an administrative organization that exists for the purpose of discounting your claims on the backend after the services have been rendered. A quick review of your EOBs will identify these entities. Terminate them today.

3. Watch Out for These Three Revenue Robbing Clauses:

a. All Products Clauses: These clauses obligate you to see all plans, all members, under all conditions. Negotiate separate agreements for different product lines.

b. Affiliate and Reciprocity: These clauses allow the plans to sell or lease your rates to all their friends, and they usually charge a fee when they sell or lease your discount. Eliminate this clause completely.

c. Notice Requirements: Make sure the plan cannot change/amend the contract without sufficient notice, and that you can terminate the contract in that same timeframe.

4. Contracts Are Negotiable: CMA reported that HMOs in California made more than $4.3 billion in profit last year alone. Anthem Blue Cross sent over $1 billion in profit back to Indiana last year. Health plan executives often make more than a $1 million a year. The average premium increase last year was 11 percent, while deductibles and co-payment amounts were increased. Business is good at the health plans. They have plenty of money to negotiate contracts, and they have multiple fee schedules they can offer providers. Ask for a raise - they do every year.

5. Terminate Bad Contracts: Out of panel business is good business. Strategic termination of plans can lead to record profits. Physicians are fear-based when it comes to taking a stand against a plan that is financially detrimental to their practice. Stop subsidizing bad plans and implement a portion of out-of-panel business.

If you don't have time to review your contracts, it is not an expensive process to have someone review them for you. Hire a company that can sit down with you and your staff and explain the contract rates, clauses, and pitfalls. After a short period of time, you will become educated and able to figure out the financial viability of each contract. Don't sign every contract that comes your way, and learn how to take control of your practice and your future - it is easier than you think!

YOUR ENDORSED PARTNER BENEFIT:

• Endorsed Partner: Coastal Healthcare Consulting Group (www.healthcareconsultant.org) is a specialty consulting firm that assists clients with managed care contracting, contract negotiations, credentialing, revenue enhancement, and strategic planning.

• Member Benefit: SDCMS members receive a free contracting analysis, a discount on hourly rates, and a package price on services for contract negotiations, including health plan contracts!

• Contact: Kim Fenton, president, at (949) 481-9066 or at kimf@healthcareconsultant.org.

• Potential Value: 10 percent of Net Revenue!