Articles by Portico Systems

by Murali Karamchedu

This article was published by ADVANCE for Health Information Executives - January 20, 2010

As health care reform progresses and a deliberate focus on quality and outcomes increases, health plans are re-assessing their provider contract management processes in order to re-define their relationship with their provider network. This change in the health plan's approach to provider contracting is motivated by the need to:

• move away from traditional fee-for-service models;
• ensure end-to-end accountability of contractual obligations; and
• eliminate systemic information leakage that occurs in the lifecycle of provider information management.

A provider contracting management solution's true purpose is to ensure the contractual obligations of payment and medical best practice are met between health plans and providers. Increasingly, such obligations have begun to involve provider performance management, such as pay for performance. To effectively manage and coordinate such obligations, a provider contract management system needs to codify and propagate all service attributes across all operational departments in the lifecycle of provider management. This is a necessary component of a larger framework to deliver better quality outcomes for members and reduce costs for health plans.

To a health plan insider, this is not simply a reorganization of bureaucracy; creating and managing provider contracts involves detailed reimbursement codification, complex processes orchestration and system capabilities that are far more sophisticated than what is offered by document management systems or generic contracting systems. As health plans consider the implications of provider contracting, several complex points must be considered in order to successfully implement a new provider contracting management strategy.

Point 1: Differentiating generic contracting and provider contracting

Traditionally, contracts are viewed as the final (paper) manifestation of a health plan's agreement with the provider. The contract represents an end product -- an artifact to be managed, read, interpreted, translated to a claims payment system and, ultimately, put away (in large filing cabinets) should lawyers or compliance personnel ever need the paperwork. In keeping with progressive automation of records, many health plans have looked to migrate away from paper to provide more access and reliability to these records. An effective document management system automates the mechanics of library management, version control, access control and disaster recovery. More sophisticated systems also allow for contracts to be tagged and offer the ability to more effectively code contracts by managing their constituent language in a more granular fashion.

Document management systems do not handle the "informational challenge" of provider contracts -- obligations such as discretionary variations within a preferred payment methodology or constraints on the periodicity of updates to RBRVS fee schedules. An effective provider contract management system must not only manage the "structural challenges," but more importantly, it must be able to intelligently interpret the obligations (information challenge) of the contract.

Point 2: Managing the information challenge through bottoms-up codification

Contractual information such as payment obligations, quality targets and constraints about provider coverage is ultimately used to pay a claim or otherwise service a provider. These documents need to be read, understood and re-interpreted in the appropriate context so that dependent systems may be provisioned appropriately. This process of re-interpretation becomes even more difficult as the negation progresses between the health plan and provider to finalize contractual information of payment, quality, language and intent. All of this information needs to be assimilated by an associate and typed into the document. The significant dependence on human interpretation opens up the system to misinterpretation at every step along the way and creates a cascade of audit challenges, information leakages and payment-integrity issues.

Health plans have begun taking steps to address all of these by tackling the root problem -- a lack of bottom-up codification of all key information drivers: provider information, payment information and contract-coverage information. The bottom-up codification of this information facilitates a systems-based assimilation of relevant information -- both into the contract, and from the contract into downstream systems -- thus avoiding the need and risk of subjective human misunderstanding. Once a health plan adopts a bottom-up approach to managing the information challenge of contracting, it has a greater ability to specify the complexity of the provider, the services and the financial relationships within the contract. Currently, such complexity is managed entirely by a subjective human assessment of the contract, which happens in an ad-hoc manner and is outside the core of a contract management system.

Point 3: Managing risk and information leakage

Ensuring payment integrity is an operational imperative that offers a key measure by which the health plan may assess and adapt to cost pressures. Conversely, a systemic inability in payment integrity assurance exposes the health plan to more than just legal and financial risk. It also compromises the health plan's ability to fine tune, innovate or introduce new products.

The primary driver of payment integrity assurance is the movement of a claim through multiple levels of claims system-processing logic. Four critical selection choices within the adjudication process are impacted by the way the contract is interpreted and provisioned: (1) provider selection; (2) contract selection; (3) rate exhibit selection; and (4) rate sheet selection.

The provider-selection phase determines the operative profile of the provider for a claim based on that provider's contract structure. Upon selecting a provider, a health plan determines the contract that ought to be used to price the claim; this continues until all operative rate sheets for pricing the claim are determined. In the absence of a bottom-up codification of all these critical decision elements, the contract associates identify and provision these systems based on their contract interpretation.

When health plans rely on associates rather than the system for the contract-to-claims payment orchestration, they introduce errors within the reimbursement process. Health plans run the risk of not accounting for the impact of this hidden leakage in their business-modeling analysis. Furthermore, workflows cannot be meaningfully integrated so that appropriate decision support may be provided to all associates in this lifecycle. These challenges further run the risk of adding to medical and administrative costs.

The challenges described above are daunting, and require a re-examination of the details of all aspects of provider contracting. Health plans need to look at provider contracting as an opportunity to implement an "integrated provider management" approach. It's time to go beyond document management, which addresses one important problem, but stops short of the critical issues specific to provider contracting.

A bottom-up codification and cross-functional coordination of all these significant elements is necessary for accurate and timely response to changes on the horizon for the health care industry. Additionally, this is a key component of implementing an effective provider contracting strategy. Any expectation for a successful implementation of a performance-contracted network depends on an integrated and coordinated provider contracting strategy. All of this activity supports the underlying premise of current payment reforms: Health plans should enable transparency and flexibility in the process they use to align provider incentives in order to enable a performance-based delivery environment. The health plans that achieve this in the near term are those that will experience long-term success.

Mr. Karamchedu is vice president of healthcare architecture at Portico Systems.

Copyright ©2010 Merion Publications

2900 Horizon Drive, King of Prussia, PA 19406 • 800-355-5627

Publishers of ADVANCE Newsmagazines

www.advanceweb.com