Payor Contracting in Maryland Legal and Regulatory Issues

Payor Contracting in Maryland: Legal and Regulatory Issues, Practical Considerations, Pay for Performance Initiatives Presented to Med Chi/MSBA on 9/18/2006 James F. Doherty, Jr. Jennifer Dreyfus Pecore & Doherty, LLC Competitive Health Strategies, LLC 1

Recent Legislative Changes n “Most Favored Nations” Ban (SB 1086/HB 897) n Credentialing Reform (SB 636/HB 574) n Network Adequacy (SB 686/HB 1003) n Worker’s Compensation Reform (SB 555/HB 868) 2

Most Favored Nations (SB 1086) n Prohibits contract clauses requiring providers to give the contracted payor their lowest rate (“Floor MFN”). n Prohibits contract clauses requiring a provider’s rate to the contracted payor not to be higher than the next highest payor’s rate (“Ceiling MFN”). n Becomes Effective October 1, 2006. n Does not appear to ban any MFNs entered into prior to October 1. 3

Credentialing Reform (SB 636) n Prohibits carriers from requiring provider recredentialing due to a change in: n n n Provider’s tax ID number; Provider’s employer (if employer participates) Provider’s employer’s tax ID number; n Providers must notify the carrier at least 45 days prior to change n n with required information Within 30 days of notice, carrier must acknowledge receipt and issue new provider number if necessary Prohibits contract termination based solely on notice of change Also changes time to notify Provider of acceptance onto panel from 150 days to 120 days from receipt of application. Effective October 1, 2006 4

Network Adequacy (SB 686) n Requires carriers to maintain accurate information n n regarding their network (e. g. verify at credentialing and recredentialing that provider is accepting new patients). Update roster within 15 days of change notice Does not allow provider to refuse to accept new patients from that carrier Enhances patient ability to see out of network specialists Requires the state to adopt standards of accessibility by regulation Effective June 1, 2006 5

Workers Compensation Panels (SB 555) n Prohibits carriers from requiring that participating providers also participate in worker’s compensation n Prohibits retaliatory termination for provider refusal to participate in worker’s compensation panel n Provider agreement must contain notice of the ability to opt out of worker’s compensation panels. n Effective July 1, 2006 6

Contract Issues I – Hold Harmless n Prohibits participating and non-participating providers from billing patients for covered services, other than approved copay/deductible amounts n Issue: is service non-covered by exclusion or by denial (e. g. . medical necessity)? n Effect on provider ability to bill n Provider may generally bill patient for non-covered services if patient has advance notice of personal responsibility (check contract). 7

Contract Issues II – Hold Harmless n Hold Harmless impact on: n n n Providers in “concierge” medical practice Providers attempting to charge for non-covered “administrative services” (e. g. , phone calls, faxes, etc. ) Providers engaging in “private contracting” 8

Contract Issues III – Lines of Business n Check contract for description of permissible lines of business n Note that different LOBs may pay at different rates n Provider may not be forced to accept all lines of business (e. g. , worker’s comp) – no “cram down” or “full line forcing” n Exception: If carrier offers Medicaid MCO product, provider may have to participate in MCO LOB to participate in commercial and other LOBs n Provider may agree to participate in all LOBs by contract 9

Contract Issues IV – Term/Termination n Check term closely, not always one year evergreen n “Lock in” terms – may only be terminated for cause or with notice prior to specified anniversary, after initial term or all terms. n Get additional concessions for multi-year “lock in” n Termination with or without cause? n Notice, opportunity to cure defaults? 10

Contract Issues V - Rates n Are rates locked in for full term? n What rates apply to different LOBs? n What is carrier’s ability to adjust rates? n Is notice of change in rate required? n If multi-year lock in, does rate apply for full locked in term? n Ability to periodically request top volume codes n Incentive compensation? n n Standards? Tracking? 11

Contract Issues VI - Amendment n By mutual agreement or unilateral by plan? n Ability of provider to opt out, consequences n n (termination)? Office staff should flag amendment documents, updates to Provider Manual, effective dates, etc. Amendments may be made by email or fax Contract changes vs. “policy” changes Changes in law 12

Contract Issues – VII – Post Termination n How long does service obligation run post- termination? n n n Complete course of treatment, Transfer to another provider, Specific day limit (30 -60 days) End of plan year End of premium payment period n Payment at contract rate or standard fee schedule? n Patient Abandonment issues n Termination of one, not all LOBs 13

Contract Issues VII – Dispute Resolution n Internal Grievance and Appeal mechanisms n Maryland Insurance Administration appeals n Patterns of conduct, not individual claims n Arbitration (binding/non-binding) n n Faster than litigation More up front expense n Judicial review 14

Business Issues in Managed Care n Four ways to improve revenue for a physician n n Better billing and collections Better rates through negotiating or terminating participation Changing or expanding service mix Monetary recognition for quality care 15

The New Quality Leader n Historically been Institute of Medicine for the scientific basis, with some commercial HMOs, health care providers and employers looking for innovation n Then came the Deficit Reduction Act n In order to avoid a decrease in the Medicare conversion factor, the AMA signed the “Joint Senate-House Working Agreement with the AMA” 16

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The Impact Today n On July 27 th, AMA said that it is “on track” to meet deadlines n n Information at: ama-assn. org, under The Consortium Indicators being done by disease, multidisciplinary approach n 6000 physicians are voluntarily reporting on 16 quality measures as part of the Medicare claims according to CMS n Information at cms. gov, under Medlearn Matters MM 4138 n 19 of 38 specialty societies currently have quality indicators n For 2007, is the way to avoid Medicare rate cuts? ? 18

Players in the Quality Field n National Quality Forum n “. . membership organization created to develop and implement a national strategy for health care quality measurement and reporting. ” n Endorses AMA recommended measures n NCQA – looking to have both a leadership role and an n n accreditation role Leapfrog Group – mostly for hospitals, coalition of employers Bridges to Excellence – the payment vehicle for NCQA American Board of Internal Medicine – maintenance of certification program & new collaboration with Bridges to Excellence The AMA Consortium 19

Overview of Players in No. Virginia/ Washington/Baltimore Corridor n Tier 1: Care. First, United & Kaiser n Tier 2: Aetna n Tier 3: NCPPO, Cigna, Coventry n Medicaid: Chartered, Amerigroup, Priority Partners n Medicare: Elder Health, Aetna, Evercare 20

True P 4 P Activities in this Market n Care. First & Aetna currently working with Bridges to Excellence (BTE) n n Care. First 3 year pilot program now with 29 practices Aetna licensed BTE nationally in early 2006 n Aetna currently has a small program for diabetic care n United has national premium program – not in this market yet 21

More P 4 P in this Market - Subnetworks n Aetna has created a subnetwork and claims that its Aexcel sm specialists “…deliver cost-effective care with fewer complications and repeat procedures. Plan sponsors and members may benefit from the expected lower costs in medical care as well as from the value of having information to make better health care decisions. ” “These 12 medical specialties drive approximately 70 percent of Aetna’s medical specialty costs and more than 50 percent of Aetna’s total medical costs. ” www. aetna. com/producer/e. briefing/2004 -08/ma 8_04 aexcel. html 22

What’s next? n Medicare may become the leader for 2007 n Pay-for-Performance will expand to: n n n Cover commercial PPO members; Cover Medicaid managed care members; Blend with disease management vendor agreements; Support selective recontracting of networks; Interface with increased consumerism, HSAs and high deductible accounts; and Be the gold standard of “quality. ” 23

Contact Information James F. Doherty, Jr. Pecore & Doherty, LLC (410) 715 -8905 jdoherty@pecoredoherty. com Jennifer Dreyfus Competitive Health Strategies, LLC (301) 270 -8550 competitivehealth. net 24