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
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Recent Legislative Changes
 “Most Favored Nations” Ban (SB 1086/HB 897)
 Credentialing Reform (SB 636/HB 574)
 Network Adequacy (SB 686/HB 1003)
 Worker’s Compensation Reform (SB 555/HB 868)
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Most Favored Nations (SB 1086)
 Prohibits contract clauses requiring providers to give
the contracted payor their lowest rate (“Floor MFN”).
 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”).
 Becomes Effective October 1, 2006.
 Does not appear to ban any MFNs entered into prior
to October 1.
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Credentialing Reform (SB 636)
 Prohibits carriers from requiring provider recredentialing due to
a change in:
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Provider’s tax ID number;
Provider’s employer (if employer participates)
Provider’s employer’s tax ID number;
 Providers must notify the carrier at least 45 days prior to change
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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
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Network Adequacy (SB 686)
 Requires carriers to maintain accurate information
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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
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Workers Compensation Panels (SB 555)
 Prohibits carriers from requiring that participating
providers also participate in worker’s compensation
 Prohibits retaliatory termination for provider refusal to
participate in worker’s compensation panel
 Provider agreement must contain notice of the ability
to opt out of worker’s compensation panels.
 Effective July 1, 2006
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Contract Issues I – Hold Harmless
 Prohibits participating and non-participating providers
from billing patients for covered services, other than
approved copay/deductible amounts
 Issue: is service non-covered by exclusion or by
denial (e.g. .medical necessity)?
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Effect on provider ability to bill
 Provider may generally bill patient for non-covered
services if patient has advance notice of personal
responsibility (check contract).
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Contract Issues II – Hold Harmless
 Hold Harmless impact on:
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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”
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Contract Issues III – Lines of Business
 Check contract for description of permissible lines of
business
 Note that different LOBs may pay at different rates
 Provider may not be forced to accept all lines of
business (e.g., worker’s comp) – no “cram down” or
“full line forcing”
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Exception: If carrier offers Medicaid MCO product, provider
may have to participate in MCO LOB to participate in
commercial and other LOBs
 Provider may agree to participate in all LOBs by
contract
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Contract Issues IV – Term/Termination
 Check term closely, not always one year evergreen
 “Lock in” terms – may only be terminated for cause or
with notice prior to specified anniversary, after initial
term or all terms.
 Get additional concessions for multi-year “lock in”
 Termination with or without cause?
 Notice, opportunity to cure defaults?
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Contract Issues V - Rates
 Are rates locked in for full term?
 What rates apply to different LOBs?
 What is carrier’s ability to adjust rates?
 Is notice of change in rate required?
 If multi-year lock in, does rate apply for full locked in
term?
 Ability to periodically request top volume codes
 Incentive compensation?
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Standards?
Tracking?
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Contract Issues VI - Amendment
 By mutual agreement or unilateral by plan?
 Ability of provider to opt out, consequences
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(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
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Contract Issues – VII – Post Termination
 How long does service obligation run post-
termination?
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Complete course of treatment,
Transfer to another provider,
Specific day limit (30-60 days)
End of plan year
End of premium payment period
 Payment at contract rate or standard fee schedule?
 Patient Abandonment issues
 Termination of one, not all LOBs
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Contract Issues VII – Dispute Resolution
 Internal Grievance and Appeal mechanisms
 Maryland Insurance Administration appeals
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Patterns of conduct, not individual claims
 Arbitration (binding/non-binding)
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Faster than litigation
More up front expense
 Judicial review
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Business Issues in Managed Care
 Four ways to improve revenue for a physician
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Better billing and collections
Better rates through negotiating or terminating
participation
Changing or expanding service mix
Monetary recognition for quality care
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The New Quality Leader
 Historically been Institute of Medicine for the scientific
basis, with some commercial HMOs, health care
providers and employers looking for innovation
 Then came the Deficit Reduction Act
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In order to avoid a decrease in the Medicare conversion
factor, the AMA signed the “Joint Senate-House Working
Agreement with the AMA”
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The Impact Today
 On July 27th, AMA said that it is “on track” to meet
deadlines
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Information at: ama-assn.org, under The Consortium
Indicators being done by disease, multidisciplinary approach
 6000 physicians are voluntarily reporting on 16
quality measures as part of the Medicare claims
according to CMS
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Information at cms.gov, under Medlearn Matters MM4138
 19 of 38 specialty societies currently have quality
indicators
 For 2007, is this the way to avoid Medicare rate
cuts????
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Players in the Quality Field
 National Quality Forum
 “..membership organization created to develop and implement a
national strategy for health care quality measurement and
reporting.”
 Endorses AMA recommended measures
 NCQA – looking to have both a leadership role and an
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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
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Overview of Players in No. Virginia/
Washington/Baltimore Corridor
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Tier 1: CareFirst, United & Kaiser
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Tier 2: Aetna
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Tier 3: NCPPO, Cigna, Coventry
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Medicaid: Chartered, Amerigroup, Priority Partners
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Medicare: Elder Health, Aetna, Evercare
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True P4P Activities in this Market
 CareFirst & Aetna currently working with Bridges to
Excellence (BTE)
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CareFirst 3 year pilot program now with 29 practices
Aetna licensed BTE nationally in early 2006
 Aetna currently has a small program for diabetic care
 United has national premium program – not in this
market yet
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More P4P in this Market - Subnetworks
 Aetna has created a subnetwork and claims that its
sm
Aexcel
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/ma8_04aexcel.html
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What’s next?
 Medicare may become the leader for 2007
 Pay-for-Performance will expand to:
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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.”
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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
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