2-3 Page Short Assignment
HCA 360 Short Paper 2- Key Areas to Include
I. Start by Choosing your preferred Unit of Payment and How Much You Want to Be Paid:
Payment systems can be categorized by 2 dimensions
a. Payment Basis
b. Unit of Payment
The basis of payment defines how the actual payment will be made. There are 3 primary methods-
1. Cost (where you are reimbursed for what you spent plus a percentage- AKA Cost Plus Reimbursement)
2. Fee Schedules – MOST COMMON (like Medicare or you can make your own. You can also do a % of Medicare such as 150 or 200%).
· e.g. DRG’s, APC’s, which are codes on the schedule with a defined amount
3. Price Related
· e.g. 75% of billed charges. You negotiate for a % of the total amount on your charge description master (CDM).
Unit of payment defines how the services provided are consolidated into an actual claim. There are 2 primary methods-
a. Specific Services
i. Individual items that are listed in a claim are paid
b. Bundled Services
ii. Specific services listed in a claim are paid on some aggregated basis – such as a DRG or per diem
c. Bundled Services with certain carve outs for specific expensive medications or supplies. MOST COMMON
II. How would you approach a health insurance company to ask them to send you their patients? How flexible would you be? Would you start high and negotiate cheaper? How cheaper?
III. Consider other Contract Elements: Below are several different contract elements you may want to reference in your paper:
Indemnification or “Hold Harmless” Provision
When a health plan offers a contract to a physician, its terms will be unfairly and predictably favorable to the carrier. One such example of a “one-sided” term is the indemnification or “hold harmless” provision of the contract. An indemnification provision essentially protects one party to a contract from any liability arising from the actions or omissions of the other party to the contract in performing its obligations therein. Often, a proposed contract will provide this protection only for the health plan. Therefore, it is important that the indemnification provision be modified so as to provide mutual protection against the respective liabilities arising out of actions or omissions of both parties – essentially forcing both parties to handle their own liabilities.
Termination Without Cause
As in any agreement that a physician may enter into, it is essential that there exist an “exit strategy” whereby the contract can be terminated for any reason. As the contract will likely contain terms that may change according to factors outside the physicians’ control, it is necessary that the physician be able to terminate the contract if those changes cause its terms to become onerous or result in the practice losing money. This is of particular importance if the health plan, pursuant to the provisions of the contract, chooses to reduce the amount of reimbursement for a particular service under its fee schedule. Thus, if this reduction in fee reimbursement causes the contractual relationship to become untenable, it is essential for the physician to have the ability to terminate it.
Evergreen Provision
Similarly, it is important for the physician to be able to re-negotiate the terms of a contract over time, while at the same ensuring it remains in effect without interruption. This can be established by insisting that an “evergreen provision” be added to the contract. An evergreen provision provides that the contract (and its present terms) will automatically renew at a set time interval – usually every year. While this provides the physician with the peace of mind that the contractual relationship will carry on without interruption, it also provides a mechanism whereby the physician can force re-negotiation of certain provisions of the contract in anticipation of the renewal. This ability to re-negotiate is essential as it allows the physician to avoid “being stuck” with unfavorable terms for an untenable period of time.
Claims-Based Provisions
At the heart of a managed health care contract are the provisions setting forth the obligations of both parties when it comes to the actual submission of claims and the subsequent payment thereof. It is in the best interests of the physician that the contract provide for both a clear and efficient methodology for the submission of claims and the prompt payment of those claims by the health plan. Therefore, it is essential that the physician take great care to review these “claims-based” provisions to ensure the cost-effectiveness of the contract to the practice. To that end, the physician is encouraged to pay particular attention to the following:
• the amount of days a physician has to submit a claim after performing a particular service;
• the documentation a physician must submit with a claim;
• the amount of days a health plan has to remit payment upon receipt of a claim;
• the amount of interest, if any, the health plan will pay if remittance of payments are late; and
• the amount of time the health plan has to institute overpayment procedures.
HCA 360 Short Paper 2
–
Key
Area
s to Include
I.
Start by Choosing your
preferred
Unit of Payment and How Much You Want to Be Paid:
Payment systems can be categorized by 2 dimensions
a.
Payment Basis
b.
Unit of Payment
The
basis of payment
defines how the actual payment will be made. There are 3 primary methods
–
1.
Cost
(where you are reimbursed for what you spent plus a percentage
–
AKA Cost Plus
Reimbursement)
2.
Fee Schedules
–
MOST
COMMON
(like Medicare or you can make your own. You can
also do a % of Medicare such as 150 or 200%).
–
e.g. DRG’s
, APC
’
s, which are codes on the schedule with a defined amount
3.
Price Related
–
e.g. 75% of billed charges
.
You negotiate for a % of the total amount on your
charge description master (CDM).
Unit of payment
defines how the services provided are consoli
dated into an actual claim. There are 2
primary methods
–
a.
Specific Services
i.
Individual items that are listed in a claim are paid
b.
Bundled Services
ii.
Specific services listed in a claim are paid on some aggregated basis
–
such as a
DRG or per diem
c.
Bundled Services with certain carve outs for specific expensive medications or supplies.
MOST COMMON
II.
How would you approach a health insurance company to ask them to send you their
patients?
How flexible would you be? Would you start high and negotiate cheaper?
How cheaper?
III.
C
o
nsider
other Contract Elements:
Below are several d
ifferent contract elements you may
want to reference in your paper:
Indemnification or “Hold
Harmless” Provision
When a health plan offers a contract to a physician, its terms will be unfairly and predictably favorable
to the carrier. One such example of a “one
–
sided” term is the indemnification or “hold harmless”
provision of the contract. An ind
emnification provision essentially protects one party to a contract from
any liability arising from the actions or omissions of the other party to the contract in performing its
obligations therein. Often, a proposed contract will provide this protection o
nly for the health plan.
HCA 360 Short Paper 2- Key Areas to Include
I. Start by Choosing your preferred Unit of Payment and How Much You Want to Be Paid:
Payment systems can be categorized by 2 dimensions
a. Payment Basis
b. Unit of Payment
The basis of payment defines how the actual payment will be made. There are 3 primary methods-
1. Cost (where you are reimbursed for what you spent plus a percentage- AKA Cost Plus
Reimbursement)
2. Fee Schedules – MOST COMMON (like Medicare or you can make your own. You can
also do a % of Medicare such as 150 or 200%).
– e.g. DRG’s, APC’s, which are codes on the schedule with a defined amount
3. Price Related
– e.g. 75% of billed charges. You negotiate for a % of the total amount on your
charge description master (CDM).
Unit of payment defines how the services provided are consolidated into an actual claim. There are 2
primary methods-
a. Specific Services
i. Individual items that are listed in a claim are paid
b. Bundled Services
ii. Specific services listed in a claim are paid on some aggregated basis – such as a
DRG or per diem
c. Bundled Services with certain carve outs for specific expensive medications or supplies.
MOST COMMON
II. How would you approach a health insurance company to ask them to send you their
patients? How flexible would you be? Would you start high and negotiate cheaper?
How cheaper?
III. Consider other Contract Elements: Below are several different contract elements you may
want to reference in your paper:
Indemnification or “Hold Harmless” Provision
When a health plan offers a contract to a physician, its terms will be unfairly and predictably favorable
to the carrier. One such example of a “one-sided” term is the indemnification or “hold harmless”
provision of the contract. An indemnification provision essentially protects one party to a contract from
any liability arising from the actions or omissions of the other party to the contract in performing its
obligations therein. Often, a proposed contract will provide this protection only for the health plan.
