Persuade the HMO That a Contract Change You Propose Is Also In the Plan’s Interest

Let’s talk about arrogance — managed care arrogance. I frequently remind physicians that a successful managed care contract establishes a relationship where both parties give and receive. Physicians frequently disagree when I tell them that virtually all managed care contracts can be improved substantially by attention to detail and an interest in fairness.

But some managed care contracts betray unmitigated arrogance on the part of the managed care organization. True, what doctors perceive as arrogance is often ignorance on the MCO’s part. But sometimes, an MCO’s approach toward managed care contracting seems to be “If you want the honor of treating our patients, just be a good little provider, do what you are told, sign the documents, and don’t argue.”

Take it or leave it

Probably the most frequent complaint I receive from clients is that the MCO declares that the contract must be signed without changes. However, in at least 75 percent of these instances, the physician’s belief that the MCO is saying “take it or leave it” is inaccurate. Much of the time (maybe most of the time), the MCO never said take it or leave it.

Rather, the physician thought that there was no time to negotiate because the MCO representative presented a preprinted contract ready to be signed; or suggested that she would be willing to modify specific items (in the fee agreement, for instance), thereby implying that the rest of the contract was off limits; or the plan stated that the contract had to be signed within a week or two.

In response to these constraints, doctors must accept two essential rules of managed care negotiation:

  • Never infer; always ask!
  • Never accept that a contract (or a specific contract provision) is non-negotiable until you have exhausted every reasonable opportunity to negotiate.

In workshops, I describe an actual contract negotiation manual that a national insurer made available to all of its contract representatives.

The manual was filled with innumerable substantive contract concessions, and gave suggestions and instructions to the representative about when to agree to certain provisions, how to minimize concessions, and what sort of language to accept.

However, despite the thoroughness of the manual, and despite its underlying message that the MCO would negotiate most provisions in appropriate circumstances, the manual contained one primary warning to MCO representatives: Don’t concede anything if the provider doesn’t ask for it!

Of course, our rule (“If you don’t ask for it, you won’t get it”) does have a key corollary: “If you are not worth it, you won’t get it.” It is essential to enter negotiations with an understanding of the strengths you bring to the relationship — attractive patient base, market penetration, superior reputation among patients and/or referral sources, a history of smooth managed care relations, data showing high patient satisfaction, or data showing cost-effective results.

Don’t forget that most managed care plans — except the most arrogant or the most incompetent — seek provider relationships that can grow. Therefore, when a physician can demonstrate that modifying a particular contract provision will improve patient service or communication between the doctor and the MCO, or in some other way improve the relationship, this demonstrates the doctor’s strengths. Essentially, that physician is suggesting that a particular change will enhance the relationship for the MCO.

The enhancement may be more patients, more loyalty, or enhanced services. Other times, the enhancement is nothing more than a smoother relationship. The fact that the relationship is also thus improved for the physician does not change the importance of pointing out how the MCO gains from the negotiation concession.

Language, not substance

Another method for combating a take-it-or-leave-it strategy is to focus on language. True, most managed care contracts raise substantive issues for negotiation. These include price, pay schedules, scope of services, terms, and termination issues. However, managed care contracts raise 10 language problems for every substantive issue.

Perhaps a provision on Page 3 is inconsistent with a provision on Page 7. Perhaps there is a paragraph on Page 4 that doesn’t make any sense, or can be interpreted in two different ways. Words seem to be missing on Page 5.

Perhaps the procedure for patient verification described on Page 2 conflicts with what the plan’s representative told you was permitted. Or perhaps the fee schedule lists acceptable fees for a dozen procedures, but neglects to discuss fees for several other frequently recurring procedures.

There are many examples of vague, conflicting, ambiguous, misleading, or omitted language in virtually every managed care contract. These omissions are rarely caused by MCO arrogance.

Perhaps the person at the MCO who drafted the contract was thinking in terms of a specific procedure, and didn’t realize that a third party could interpret the language differently. Perhaps the person who drafted Page 7 was not the same person who drafted Page 3. Perhaps a year passed between the drafts, so that the conflicting language went unnoticed.

Or, as frequently happens, perhaps the local MCO office tried to speed up the contracting process by pasting a contract together from prior contracts and other forms and the patchwork document never received legal review.

Regardless, it is important for a doctor to read the document carefully before discussions with the MCO representative.

Then, whenever the plan representative suggests that the contract is not negotiable, or that certain provisions are take-it-or-leave-it, the doctor should point out that there are problems that are not really negotiation issues at all.

Rather, the physician simply wants to ensure that the document says what the MCO wants it to say, and thus must be clarified. What is the correct answer when Pages 3 and 7 conflict? Does prior notice, for example, mean written notice only, or can a telephone call count?

It may be that the clarification results in a rule the doctor finds acceptable. In that case, you simply need to ensure that the contract states what it means to state and only what it means to state. Much of the time, the MCO representative will be unsure how to clarify the language officially.

In these cases, the doctor can help steer the discussion toward a preferred result. When the representative proposes a clarification that the doctor finds unappealing, the fact that the doctor has already demonstrated that the contract is not ready to sign will give him room to negotiate.

Finally, note that a dialogue that initially focuses on language can proceed more easily to substantive issues. Remember to point out that the goal of language clarification and substantive negotiation is the same — to create a relationship that will be beneficial to both parties for the long term.

Neil Caesar is president of the Health Law Center (Neil B. Caesar Law Associates), a national health law consulting practice in Greenville, S.C.

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