SCOTTSDALE, AZ — In today’s managed care climate, there’s no shortage of difficult, or just plain defaulting, payors. Judging from comments made by attendees at the Radiology Business Management Association’s (RBMA) 2001 radiology summit on Monday, U.S. healthcare providers have been left holding the bag one too many times.
An administrator from Kansas waged war with three levels of a healthcare maintenance organization (HMO), which routinely denied the facility's claims. The group was finally paid, but "[the HMO is] just trying to wear you down in the hopes you’ll write off the case," she complained.
A business manager from a successful radiology facility in Arizona spoke of an independent physicians association (IPA) that defaulted on more than $100,000 in services provided over a two-month period -- and then declared bankruptcy.
"We later found out they moved payment money around to primary care physicians like a shell game," he said. "There was simply no way they could pay the claims they had outstanding, yet they continued to use physician services across the state."
In a presentation entitled "Stiffed! Protecting yourself from HMOs and IPAs that don’t pay," Jeremy Miller, president of the Los Angeles-based Miller Health Law Group, gave the standing-room-only audience a forum in which to share their reimbursement nightmares. He followed up with a blueprint for negotiating radiology service contracts.
First, Miller recommended a careful investigation of a healthcare maintenance organization (HMO) or independent physicians association (IPA) before a contract is signed. This due diligence process gives an institution the chance to take an honest look at its own management information systems before entering into negotiations.
"Does your facility have the systems and personnel in place to monitor the provider agreements with HMOs or IPAs?" asked Miller. "Although it may be preferable to contract with multiple IPAs and HMOs rather than have a single third-party payor account for a substantial portion of your managed care business, you have to be prepared to monitor compliance."
Miller said business managers should learn as much as possible about potential payors before entering contract negotiations, including:
- The number of years the company has been in business
- Its market share and competition
- The specific employer groups under contract
- Whether it has "stop loss" insurance, or coverage that picks up payment after a third-party payor reaches a certain payout limit
- A record of paying physicians fully, accurately, and on time
- Whether it has adequate funds on hand for incurred but not reported claims
- Speed of the organizations growth (rapid and aggressive acquisitions may leave a company unable to completely assess its claims vulnerability)
- The background, experience and track records of key officers
He also suggested that attendees take the time to check the third-party payor’s financial documents. In most states, these can be obtained from the department of corporations. If the organization is publicly traded, the federal Securities and Exchange Commission (SEC) requires that companies file annual and quarterly reports, which are available to the public.
Once a business manager is satisfied that the organization is solvent and reputable, Miller advised his audience to negotiate contract protection. He also cautioned the group not to enter into contracts without advice of a specialist in healthcare law.
"No contract is oftentimes better than a bad contract," he observed.
According to Miller, an ideal contract should, at a minimum:
- State exactly what services your group will perform, ideally by current procedure terminology (CPT) codes, and how much and when you will be paid for those services.
- Specify that eligibility information for capitated contracts are reconciled on a quarterly, not annual basis. Also, capitation contracts should extend for no longer than one year before renegotiation. Managers should always attempt to get the right to audit the third-party payor in contracts with capitation payments.
- Include a provision for late claims to accrue interest of at least 10% beyond a specified time limit of non-payment.
- Allow the contract to be terminated in the event of non-payment, preferably after 10 business days.
- Provide for attorney's fees to be paid by the losing party, in the event that you have to sue or arbitrate to get paid. In addition, arbitration should be binding, and managers are urged to avoid any contract that calls for extended, nonbonding mediation periods.
Some of the warning signs that a third-party payor is in financial trouble include excessive claim denials, assertions that the claims were not received, and repeated requests for unnecessary documentation, Miller said.
Miller outlined a few protective measures that a practice can take against a failing payor.
If the organization hasn't declared bankruptcy, the facility can terminate the contract and sue for payment. The state's department of corporations should also be notified, as they may be able to bring regulatory pressure on the recalcitrant third-party payor.
If the non-paying organization is an IPA, sometimes HMOs reserve the right to pay physicians directly if the IPA is not doing so. A facility may also be able to negotiate partial payment, which could be preferable to a lawsuit.
In the event the third-party payor has filed for bankruptcy protection, the court limits the radiology facility’s options. Often a facility will not be able to terminate its contract with the HMO or IPA until the term of the contract expires. In addition, an institution that contracts with an HMO may be required to provide services until the enrollees obtain coverage with another, solvent HMO.
"It doesn’t matter how good the contract is, if the entity you’ve contracted with is a ‘bad actor’," Miller said. "Therefore, the most important thing a facility can do is to perform its homework up front. That, and submit clean claims that don’t create an excuse to have your reimbursements delayed or denied."
By Jonathan S. BatchelorAuntMinnie.com staff writer
June 5, 2001
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