Health Care Plan Contracting A Deliberate Approach

1. Health Care Plan ContractingA Deliberate Approach Presented by: Association of Washington Public Hospital Districts and Ogden Murphy Wallace, PLLC

2. Taya Briley, RN, JD Director Legal Services & Health Policy, AWPHD Presenters Doug Albright Ogden Murphy Wallace, PLLC Don Black Ogden Murphy Wallace, PLLC

3. Overview of Presentation • Goals of a Deliberate Approach to Payor Contracts • The Negotiating Team • Market Dynamics • Washington State Statutes and Regulations - Insurance Commissioner (OIC) • Highlights of Contract Issues and Language

4. Related Topics Not Covered • Joint Hospital Contracting • Physician Contracting • Dispute Resolution Tactics • Class Action Litigation

5. Definition of Commonly Used Terms • Payor • Plan • Subscriber/Member • Facility • Physician • Provider • Hospital Based Physicians • Manual

6. The Goals of a Deliberate Approach • Test negotiation leverage - you can negotiate • Avoid the most troublesome contract language proposed by the payor

7. The Goals of a Deliberate Approach • Make the contract manageable • Improve the economic terms • Avoid surprises - don’t sign what you don’t understand or cannot explain • More balanced language in the contract

8. Key Steps of a Deliberate Approach • Is there an existing contract with the payor? • Review existing documents - compare to new proposed draft from payor • Assess issues and concerns under existing documents • Assess performance issues that should be addressed in new contract • Payment issues • Process issues

9. Key Steps of a Deliberate Approach • Clearly understand the compensation issues • This is a critical point • Analyze past payment issues • Determine the proposed payment methodology • Assess impact of payor’s proposal on your facility’s: • Revenue • Efficiency of operation, especially in admitting area and the business office

10. Key Steps of a Deliberate Approach • Assess your strengths, weaknesses, opportunities and threats - “SWOT” • Realize that the contract cannot be made perfect, but measure it against your “Best Alternative” • Using this process, establish your economic goals

11. Key Steps of a Deliberate Approach • Establish priorities • The A List: Deal breakers • The B List: Important, but negotiable • The C List: Nice, but can live without • Everything Else: Not worth the effort

12. Key Steps of a Deliberate Approach • Develop a comprehensive, rational written response to the payor’s proposals • Insist on a response • Drill down to the real issues • Identify and prepare options and alternatives

13. The Negotiations Team - Identify • Identify your team - all have important roles to fill in order to achieve a contract that will provide reasonable payment without unnecessary complications and inefficiencies

14. The Negotiations Team - The Leads • Business lead, policy maker • Makes the ultimate decision on major issues • Determines the deal points • Financial goals • How important is the contract to the facility, and what compromises will be made • Lead negotiator • May be CFO, Director of Contracting, attorney, or ? • Should have good negotiating skills • Appropriate level of authority

15. The Negotiations Team - Support • Financial analysts • Make sense out of the payment appendices, none of which are alike • Operations/Business Office analysts • Provide input on the mechanics of administering the contract • Utilization Review (UR) analysts • Provide input on the mechanics of UR, and coordination with various payors

16. The Negotiations Team - Attorney • Attorney • Negotiates legal aspects of contract • Interprets the contract to inform client of material issues and to help other team members understand the terms • Drafts/reviews language to reflect agreement of parties

17. The Negotiations Team - Use of Technology • E-mail • Track changes/redlining • Word searches (e.g.: “discretion” “sole” “manual”) • Form language

18. Market Dynamics • Does the payor control a large portion of the market? • Does the payor insure key employers in the facility’s service area? • Does the payor need the facility more than the facility needs the payor?

19. Key Elements of Washington Statutes and OIC Regulations • Prompt Pay • Minimum Notice of Termination • Insolvency • Emergency Services • Retrospective Denials • Unilateral Amendments • Subscriber Agreements Paramount

20. Prompt Pay Provisions:WAC 284-43-321 • 95% of clean claims paid within 30 days of receipt • 95% of monthly volume of all claims paid within 60 days of receipt • What is a “clean claim” • Date of receipt • Interest required for non-compliance • Denials must be communicated with specific reasons! • Not applicable in cases of facility fraud

21. Notice of Termination:WAC 284-43-320(7) • Termination without cause • By payor or facility • Minimum 60 days written notice

22. Payor Insolvency and Payment: WAC 284-43-320(2) • Required contract language • Limitation on seeking payment from beneficiary • Continued care if payor is insolvent • Denials based on facility’s failure to comply • Knowing collections from a covered person in violation of the contract is a felony

23. Emergency Services: RCW 48.43.093 • "Emergency services" • Means otherwise covered health care services medically necessary to evaluate and treat an emergency medical condition, provided in a hospital emergency department. • Emergency services are covered • Prudent layperson standard • No retroactive denial

24. Retrospective Denials: RCW 48.43.525 • Not allowed for emergency or non-emergency care if there was prior authorization under the payor’s written policies at the time care was rendered

25. Payor Policies and Procedures: WAC 284-43-320(4) • Payor must provide notice and access to all policies and procedures • Payor must give not less than 60 days written notice of changes that affect provider compensation or health care service delivery • Facility may terminate contract if it does not agree to changes • Changes cannot be retroactive without the agreement of the facility

26. Subscriber Agreements Paramount: WAC 284-43-320 • Nothing in a facility contract can modify benefits, terms or conditions in the payor’s subscriber agreements • If there are conflicts, the benefits, terms and conditions of the subscriber agreement control with respect to coverage for covered persons • Liability for conflicts

27. Coordination of Regulatory Requirements and the Contract • Make a check list of regulatory requirements to ensure the contract contains the necessary provisions in a manner that complies with the regulations: • prompt pay • dispute resolution • termination • amendments • retroactive denials • pre-authorization • recovery from covered persons

28. Contract Issues - Beware of the Short “Simple” Contract • Ill defined terms • Important issues not covered • Undue reliance on payor’s policies and procedures

29. Contract Issues - Who are the Parties? • Normally the parties signing the contract are: • The payor • The facility • A medical group (less often)

30. Contract Issues - Who is Covered by the Contract? • Payor • Facility • Affiliates of payor? • Plans? • Physician clinic? • Hospital based physicians?

31. Contract Issues - What is the Contract? • Contract • Schedules • Payor’s policies, procedures, and manuals • Subscriber agreements • OIC regulations

32. Contract Issues - How Can the Contract be Amended? • Mutual agreement • Limitation created by Insurance Commissioner regulations • Notice by one party to the other? • With right to terminate? • Notice with right to object?

33. Contract Issues - Payor Manual • Review before execute contract • Reference clearly in the contract • Limit right of payor to change the manual • Reasonable notice • Right to terminate contract if changes not acceptable

34. Contract Issues - Credentialing • Initial credentialing is OK • The purpose of payor credentialing is to establish a quality network • Avoid language giving payor right to: • Unilaterally change criteria • Terminate the facility’s credentials • Terminate the contract in the payor’s sole discretion

35. Contract Issues - Credentialing • “De-credentialing” should be limited to defined situations • Failure to meet the standard of care • Termination of licensure or accreditation • Define facility’s appeal rights

36. Contract Issues - Peer Review • Avoid intrusive language such as requiring a payor member on Quality Assurance Committee • Protect confidentiality of the peer review process and resulting information • Make any notice requirement specific to final peer review actions

37. Contract Issues - Most Favored Nation • Facility agrees to accept compensation as provided in the contract or any lower compensation agreed with another payor • Issues regarding different mix of pricing, volumes and other distinguishing factors • Avoid at almost any cost

38. Contract Issues - Payor’s Discretion • “Discretion” = arbitrary! • Do a word search • Payor should not have discretion to: • Change terms of the contract • Change compensation amounts • Change its policies and procedures without notice

39. Contract Issues - Miscellaneous Language of Concern • Scope of service requirements/limits on changing services • Process - compatible with facility’s? • Retrospective denial based on: • Incorrect information from payor regarding eligibility • Determination that service not medically necessary

40. Contract Issues - Miscellaneous Language of Concern • Non-solicitation of subscribers, especially “indirect” • Confidentiality of terms

41. Contract Issues - Dispute Resolution • Arbitration is the norm • Privacy, convenience of arbitration, versus the right to appeal • Avoid undue limitations on right to demand arbitration • Cumbersome internal payor process • Short time limitations

42. Contract Issues - How Long is the Commitment? • What term is to the facility’s advantage? • Reasonable economic and other terms? • Annual adjustments? • Right to terminate without cause? • Mutual? • Reasonable notice period? • Avoid “Evergreen Clauses” - automatic renewal unless provide notice before end of current term

43. Contract Issues - Termination for Cause • Causes should be mutual • Avoid causes that are likely to occur, e.g.: • Failure to abide by all laws and regulations • Actions beyond facility’s control, such as physician performance • Negotiate a right to cure a breach within a reasonable time, unless the cause impairs the basic purpose of the contract, e.g.: the licensure or operation of the payor or facility

44. Contract Issues - Compliance with Law • Duty to notify other party that contract or actions not in compliance with law • Obligation to negotiate in good faith to bring into compliance • Right to terminate if unable to reach agreement on revisions • Include compliance clause in contract

45. Contract Issues - Reimbursement Attachment • Clearly defined and adequate compensation? • Discounted fee for service • Per diem • Per case • Automatic annual adjustment? • Pipe dream: reimbursement reverts to full fee for service if payment is not timely

46. Contract Issues - Reimbursement Attachment • Ask individuals not involved in negotiations to review and critique for clarity, issues • Coordinate with negotiation of contract to assure consistent use of terms - avoids interpretation issues • Review for practicality - can the facility bill as required using its automated system?

47. Contract Issues - Carve Outs • Outliers • High cost and unpredictable services • New/high cost technology - case by case? • High cost drugs/implants • Invoice required? Cumbersome and manual. • Establish agreed formula?

48. Conclusion Presenters Taya Briley, RN, JD, Director Legal Services and Health Policy Association of Washington Public Hospital Districts • tbriley@awphd.org • awphd.org • 206.216.2554

49. Conclusion Presenters Doug Albright, Chair Health Care Practice Team Ogden Murphy Wallace, P.L.L.C. • dalbright@omwlaw.com • www.omwlaw.com • 206.447.7000 Don Black Health Care Practice Team Ogden Murphy Wallace, P.L.L.C. • dblack@omwlaw.com • www.omwlaw.com • 206.447.7000

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