Negotiating Favorable Rates and Terms and Anticipating Areas of Dispute

1. Managed Care Contracts: Drafting Considerations for Providers Negotiating Favorable Rates and Terms and Anticipating Areas of Dispute Thursday, March 8, 2012 Sarah E. Swank Ober|Kaler 202.326.5003 seswank@ober.com Alan J. Arville Ober|Kaler 202.326.5020 ajarville@ober.com Dennis G. Hursh Hursh & Hursh 717.930.0600 866.DOC.LAW1 pahealthlaw.com

2. Overview • Health Care Reform and Current Environment • Quality and Cost Containment • Technology • Government and Payor Enforcement • Key Contractual Provisions • Questions

3. Introduction

4. Introduction

5. Introduction Why is next year so important? I will give you a hint: It is happening on November 6, 2012.

6. Current Environment • Move away from fee-for-services • Health Insurance Exchanges • Accountable Care Organizations • Cost and Quality Transparency and Reporting • Data Sharing • Any Willing Provider

7. CMS Innovation Center • CMS Innovation Center Charge • Accountable Care Act • “Test innovative payment and service delivery models to reduce program expenditures, while preserving or enhancing the quality of care” • Three aims • Better care for individuals • Better care for populations (e.g., certain diagnosis) • Lower growth of expenses • $10 Billion in funding for FY 2011-2019

8. CMS Innovation Center • Pioneer ACO Program • Advanced Payment Initiative • Bundled Payments • Comprehensive Primary Care • Health Care Innovation Challenge • Independence at Home Demonstration Note: No double dipping (in certain cases)

9. What is an ACO? Accountable Care Organization (ACO) • Eligible participants • 5,000 Beneficiaries • Tax identification number (TIN) • Legal entity • Shared savings/losses • Quality measures

10. What is an ACO? • Some payors want to work with providers in a new “accountable” era • “Commerical-ACOs”

11. Quality • Pay for Performance • Readmissions • Value Based Purchase (VBP) • Ensure that patients who may have had a heart attack receive care within 90 minutes • Provide care within a 24-hour window to surgery patients to prevent blood clots • Communicate discharge instructions to heart failure patients • Ensure hospital facilities are clean and well maintained

12. Quality • Public reporting • Hospital Compare • Physician Compare (coming soon) • Patient Surveys • Qualified Entities • Appeals/Corrections • Selection of quality indicators • What is a good score? • Data

13. Cost Containment • What is the Relationship between Cost and Quality? • Why do we care now? • Aging of population • Tough economic times • Shift in care setting • ACOs • Medical homes

14. Cost Containment • Waste • Freedom of Choice • Consolidation

15. Technology “People need to be assured that their health records are secure and private. I feel equally strongly that conversion to electronic health records may be one of the most transformative issues in the delivery of health care, lowering medical errors, reducing costs and helping to improve the quality of outcomes.” Kathleen Sebelius, Secretary of Health and Human Services, New York Times, May 30, 2011

16. Technology • Virtual Care • Telemedicine • mHealth • EHR implementation • Patient safety • Care coordination • Meaningful use • Reimbursement not always there

17. Technology • Health plans have data, too • Some want to use it for quality • Focus on population management • Some willing to use it as a tool for providers

18. Government Enforcement • Waste • RACs • Fraud and Abuse • Sanctions

19. Payor Enforcement • Using government enforcement as a model • Others wanting to work together with providers • Kicking out the bad apples

20. Common Provider Frustrations • Lack of leverage and resources to negotiate contract • Payor insistence on “standard” contract • Dealing with multiple contract components (manuals, web sites, etc.)

21. Key Definitions • Clients and/or Payors • Covered Services • Medical Necessity • Standard of Care

22. Provider Obligations • Maintaining Records • Uniformity across contracts • Consistency with Federal and State law requirements

23. Provider Obligations • Audits • Which party is responsible for audit costs? • What documentation is subject to audit? • Is the Payor required to provide advance notice? • Are audit rights limited to a prescribed “look back” period? • May the Payor use statistical sampling or extrapolations as a basis of an overpayment claim?

24. Provider Obligations • Policies and Procedures • Must modifications be provided to Provider in advance? • Can the Provider object to modifications? • In the event of a conflict, does the base agreement or the manual control?

25. Provider Obligations • Utilization Management • Is the Provider’s right to appeal clearly delineated in the contract? • Does the contract require Payor to respond to preauthorization requests within a specific period? • Is the authorization an irrefutable verification of eligibility? • Does the Payor maintain ultimate responsibility for decisions of medical necessity?

26. Claims Submission and Reimbursement • Time Period and Process • Obligation to Pay • Nonpayment • Retroactive Denial of Claims • Coordination of Benefits • Payment Based on a Percentage of “Then Current Fee Schedule”

27. Term and Termination • Contract Term • Is the provider “locked-in” for a multi-year period? • Without Cause Termination • For Cause Termination • Is there a cure period? • How much discretion does the Payor have to terminate “for cause”?

28. Term and Termination • Transition Rights and Obligations • Transition of Care and Continuing Care Obligations • Communications to Members • Dispute and Appeals

29. Other Provisions • Government Program Provisions • Amendments • Insurance • Indemnification • Assignment • Changes in Law

30. Questions

31. More questions, please contact us. Alan J. Arville Ober|Kaler 202.326.5020 ajarville@ober.com Sarah E. Swank Ober|Kaler 202.326.5003 seswank@ober.com Dennis G. Hursh Hursh & Hursh 717.930.0600 · 866.DOC.LAW1 pahealthlaw.com