For some oncology practices, it makes sense to contract with a managed care organization (MCO)—a contract simply enables you to treat enrollees of an MCO.
Typically, the payment method under a managed care contract for oncology services is discounted charges, with the amount of the discount negotiated between the practice and the MCO.
However, such contracts are complicated and need to be reviewed carefully. Pay special attention to provisions that spell out the services to be furnished, the payment amounts, and the terms of payment.
It is also important to have a complete understanding of the MCO’s payment for each CPT code.
Five Important Questions to Ask
1. How important is this contract to your practice? The answer determines what the contract means in terms of your revenue and expenses, and leads to another question: What are your alternatives to this contract?
2. How does the contract define “medically necessary” care? It is vital to understand if the contract uses an objective standard, such as a “prudent physician” standard, or if it gives the MCO wide flexibility in determining what is medically necessary treatment.
3. Does the MCO have an obligation to pay you promptly? Make sure that the contract includes a specific payment period, and the MCO should agree to pay interest if it delays payment beyond the agreed-to period. Many states have laws requiring prompt payment.
4. Can the MCO change reimbursement terms unilaterally? If so, make sure that the MCO is required to provide you notice of any such reimbursement changes.
5. How can you terminate the contract? Make sure there is adequate room for terminating the contract if, for instance, the MCO breaches its agreement in any way. Also, ask whether the MCO is obligated to provide notice of your rights to terminate every year.