Tackling Risk in Provider Contract Management - Case Study: Kaiser Northwest Permanente P.C.

Executive Summary:

 

Like most payers, Northwest Permanente, P.C., used a paper-based system to contract with community healthcare providers. They found that this system could not address the questions raised by the Northwest Permanente management team about risk exposure and realized the need to explore alternatives in contract management. With the implementation of the Portico Choreo Contract Manager, a payer-centric contract management solution, Northwest Permanente reaps the benefits of migrating from paper to electronic data: achieving new visibility into contract information, mobility of data where it is needed, the assurance of consistent information, streamlined and fluid workflow processes, and increased efficiency.

Paper-based Contracts and Risk

Most businesses take using electronic data for granted, yet many healthcare payers are still using paper-based systems to manage their provider contracts. In the United States, over 1,000 healthcare payers create and maintain contracts with as many as 500 to more than 100,000 providers. The sheer volume of paper presents an enormous management challenge.

Northwest Permanente, a for-profit medical group that contracts exclusively with Kaiser Foundation Health Plan Northwest, has 1,208 providers in its network, and contracts with an additional 2,343 providers external to the organization. In the past, their provider contracts sat in multiple filing cabinets in various locations. Staff spent countless hours and resources to coordinate and manage their contracts. However, the cost of paper processes was not the only issue.

"Using paper added an element of risk, in that we had no visibility into our contractual data," says Terry Brown, Assistant Director of Provider Contracting and Relations at Northwest Permanente. "Lack of visibility hindered our internal auditing, and made many aspects of the process difficult, such as amending contracts for new regulations and meeting compliance reporting requirements. With so many contracts, it became very expensive for us to manually gather, coordinate and communicate contract data."

Establishing the Need to Move from Paper to Electronic Data

Northwest Permanente realized that paper-based contracting processes created more than just operational risk. Paper was hindering effective communication between payer departments, with potentially disastrous consequences. "If the manual process of communicating rate changes to the claims system results in incorrect payment to a contracted physician, the ensuing reconciliation process may damage the relationship and complicate future negotiations or result in a terminated contract," says Brown. "Without electronic data that could be shared seamlessly between groups, rate changes were not being communicated from the contracting department to the claims staff. It was a case of the left hand not knowing what the right hand was doing."

Discovering that Contracting Systems are not One-Size Fits All

Northwest Permanente has a long history of using technology to streamline their business, and they realized that provider contracting was an antiquated process seriously in need of an overhaul. Brown assembled a team that included the director of provider contracting, technical leads, and contract negotiators to look at a variety of generic contracting solutions. The team found that generic contracting solutions simply could not accommodate Northwest Permanente's provider contracting requirements. In addition, although they could modify and adapt a generic solution, the specialized development and implementation costs made for an unviable solution.

Payer-centric Design Meets Contracting Requirements

With the Portico Choreo Contract Manager, a modular end-to-end contract management solution built specifically for healthcare payers to manage their provider contracts, Northwest Permanente took notice. According to Brown, "We invested a significant amount of time into creating our own list of likes, dislikes, desires and must-haves. Portico Choreo was designed from the perspective of the payer so everything just clicked."

Portico Choreo creates a central repository for easy accessibility through a web-based interface. Regardless of location, designated team members can find what they need for analysis and audit. Because payer contracting is not "one-size-fits-all," Portico Choreo enables organizations to create a library of contractual language terms, clauses, and fee schedules used to generate contract templates unique to their organization. Portico Choreo includes language, rates, and provider databases so that payers can have visibility into all aspects of provider contracting.

In addition, Portico Choreo tracks the status of every contract, from creation to negotiation through expiration, thereby creating a comprehensive audit trail that records any change in contract status or content, who generated it, and when. It provides critical contract visibility necessary to ensure compliance with both corporate and government regulations.

"After our evaluation, it was clear that Portico's intellectual capital was focused on provider contracting and the associated workflows, which made our decision to buy much easier," added Brown.

The Proof is in the Implementation and Integration

Portico's payer-centric approach expands beyond program functionality. The implementation methodology plays a key role in ensuring that the Portico Choreo solution is deployed and usable by the entire team. Portico's team led Northwest Permanente through a series of workshops designed to address their specific requirements for implementation. Using the knowledge they gained during the workshops, Portico imported historical data and existing contracts into the new system, giving Northwest Permanente a head-start on roll-out. "Successful deployment requires a partner who understands the intricacies of provider contracts in both application design and implementation," says Brown.

Portico designed Choreo to allow seamless integration with other business applications. Northwest Permanente needed to leverage their investment in a customer relationship management (CRM) application that successfully managed all provider information, such as names and billing addresses. Consistency between Portico Choreo and the CRM application was deemed a critical component to the success of the implementation and the Portico team made it work flawlessly. "Now, data elements are always in synch between Portico Choreo and our CRM solution," says Brown. "Updates to either system are reflected in both systems, so we are assured of complete data integrity and can save on data processing costs."

The End of Provider Contracting Headaches at Northwest Permanente

What began as a quest for reducing risk evolved into implementing a solution for transforming contract management. Northwest Permanente now has a system of record that will drive their entire contracting payment system. "Our vision is to integrate our contract system with our claims system and our credentialing system," says Brown. "With our great experience so far with Portico Choreo, I am confident we will do that successfully."