If health plans ask for data about all patients, make sure it is de-identified to avoid privacy violations.
As value-based contracts in the healthcare industry gain traction, provider organizations must be on the lookout for contracting pitfalls that can cause problems when it comes time to calculate incentive payments or shared-savings allotments.
Although health plans are introducing a wide range of value-based approaches—pay-for-performance, bundled payments, accountable care arrangements, global capitation, and others—there are no standards for the definitions, metrics, and data-sharing requirements featured in these contracts.
Why Understanding Quality Measures Matters
Because of the lack of standards, hospital and health system contracting officers must be savvy in negotiating issues that are typically not part of fee-for-service contracts, says Ellen E. Stewart, a healthcare partner at Spencer Fane LLP, Denver. She offers these tips:
Understand quality measures and what they mean for successful contracts . Most value-based contracts carry financial incentives tied to provider organizations’ performance on certain quality indicators. Organizations should be clear on what the quality measures are and whether they will be able to collect and report those metrics to health plans.
If it would be onerous to collect data for some of the proposed quality indicators, hospital contracting professionals can ask health plans to consider using healthcare organizations preferred quality measures. “In some cases, payers are very willing to look at different indicators,” Stewart says.
Every health plan is not willing to use other indicators, so health systems need to decide how they can succeed. If contracts include some quality measures healthcare organizations currently do not collect, hospital contracting leaders should check to see whether collecting the data is possible, how much that data collection would cost organizations, and what the financial consequences will be if they failed to report certain measures.
At the same time, hospitals should understand how to earn quality bonuses. For example, one health plan may offer a 0.5 percent bonus for each quality indicator met, while another may require meeting 10 quality indicators at a 95 percent level to earn bonuses, Stewart says. Hospital contracting managers should consult with clinical leaders to make sure they understand how bonuses will be calculated, protocols or data collection they need to change to earn bonuses, and financial incentives associated with quality measures.
Understand what constitutes good performance on quality measures . Will the health plan set its own performance thresholds for earning a bonus? Will it use a national dataset, and, if so, what is it?
“It’s very important that providers understand how they will be measured and what they will be benchmarked against,” Stewart says.
Organizations should look at benchmarks closely to determine whether they can hit them and earn bonuses. If that is unlikely, the contract may still need to be signed, depending on how important that health plan is to the organization’s revenue. But it needs to be known up front whether the organization will try to hit all the quality metrics and what changes, if any, need to be made for that to happen.
Be clear about what patient data will be shared with health plans . It is a violation of federal law to share patient-specific data with health plans unless that plan is responsible for those patients. If health plans ask for data about all patients, make sure the data is de-identified.
For example, if a hospital is proposing a global rate for a normal vaginal delivery, a health plan may ask for aggregated cost data for all patients that supports the rate proposal. “Make sure you’ve de-identified in the aggregate so you’re not giving individual patient data,” Stewart says.
Don’t assume all parties agree to the contract terminology and definitions . There are no standard definitions for many of the terms and concepts that appear in value-based contracts, so make sure that all parties are using terms in the same way.
Terminology can confuse contract negotiators even in standard fee-for-service arrangements, Stewart says. Most health system contract officers might assume the term “DRG” means diagnosis-related group, and they would be right. But whose DRG? “I have had clients sign an agreement with a payer that uses the term ‘DRG’ and they failed to look at the definition to see that means the payer’s DRG,” Stewart says. “They assumed DRG is a Medicare DRG.”
Specify in contracts how health plans can use the organization’s name . It is reasonable to allow health plans to use hospital or health system names and addresses in provider directories but be careful about allowing other uses. For example, if a health plan wants to publish quality rankings or other information about the hospitals in its network, organizations might not want to allow that—and the contract is the only way to control it.
Be careful what information is agreed to be shared about hospital medical staff . “Particularly concerning is language in contracts that requires the provider to share information regarding the medical staff of the hospital,” Stewart says. “They don’t actually say ‘peer review,’ but the language that they use is so broad, it could include peer review information.”
Negotiate that point so that peer-review information is explicitly not available to health plans. Peer-review findings are, by law, immune from disclosure; sharing that information with a health plan risks the possibility of eliminating that immunit.
Interviewed for this article:
Ellen E. Stewart, JD, MHA, FHFMA, is an attorney with Spencer Fane LLP, Denver, and is a member of HFMA’s Colorado Chapter.
