Managed Care Contracting & Provider Payment

Evaluating financial risk in a managed care contract – Capitation payment methods.

This is the 5th in a series of posts on evaluating financial risk in managed care agreements. Don’t bother looking for the 4^th – DRG payments and case rates – I skipped ahead to number 5.

In this post, we look at capitation or “per-member-per-month”` payment methods.

Interesting Feature about Regional Cost Differences

Here is a link to an interesting graphic at the New York Times Website.  Regional Differences in Cost of Care

Accord & Satisfaction: Some Tips & Cautionary Statements

I was fortunate to listen to a presentation given by Marla Hirsch at Decision Health’s Payment Seminar in Orlando a few weeks ago. You may know Marla as the editor of “Private Payer News”. Marla’s presentation focused on issues between payors and providers and took a problem solving oriented approach. One of the topics she discussed was “accord and satisfaction” and it’s such an important topic, I’d like to explore it here.

Accord and satisfaction is a term used to describe a process where one party to a dispute makes an offer to settle the dispute for some amount less than the other party is demanding. A semi-official definition is HERE. If the person accepts the payment, they are considered to have accepted the settlement offer and they lose their claim for any additional amount. This is a technique sometimes used by insurance companies and other payors trying to pay a claim for less than the amount billed.

Evaluating financial risk in a managed care contract – Per diems and per procedure payment methods.

This is the 3^rd in a series of posts on evaluating financial risk in managed care agreements. In this post, we look at per diem and outpatient per procedure payment methods. As with discounted fee-for-service, per diem and per procedure payment methods incorporate business risk. The provider or practitioner is taking a risk that his / her / its average cost for providing the service will be less than the per procedure rate he is paid. If you accept per procedure payments without protections in place in your agreement, there may be a tendency for more expensive cases to come your way. 

Evaluating financial risk in a managed care contract – Part 2 Discounted fee-for-service

In our 1^st post on financial risk, we outlined some of the payment structures. This 2^nd post addresses some considerations for fee-for-service payment arrangements.

It has been said that discounted fee-for-service, particularly percentage of charge arrangements are the “holy grail” for providers. If the plan will agree to a fee-for-service payment arrangement, the provider is well on the way to having a good deal. Some providers consider fee-for-service payment arrangements to be “non-risk” arrangements. While there are very good reasons why a fee-for-service arrangement may be more favorable for a provider (see last post), there are still significant business risks to be evaluated.

Evaluating financial risk in a managed care contract

Every contract with a managed care plan entails some risk that the arrangement will be burdensome or unfavorable in some way. (What a gloomy start to this post!) This post (I hope the 1^st in a series) discusses financial risk involved in the different types of financial arrangements between a provider and a payor. 

There are two basic types of financial risk involved in managed care contracts: 

- Business Risk: the risk that you will not be paid the full value for the services you provide;

- Insurance risk: generally accepted to mean financial liability for the costs of a patient’s care for services from providers besides yourself - potentially in excess of the amount you are paid. (Check the laws in your state to be sure.)