As California transitions faster than other parts of the country into more and more managed care payment arrangements, the challenges and pitfalls related to payment increase. Thus, providers must identify risks and implement safeguards to protect payments.

New coding issues can require additional attention. Even though in some ways coding is simpler than traditional fee-for-service, in other ways there is a complicated learning curve and the potential of increased government scrutiny. Medicare Advantage, new ACO arrangements and many commercial contract payments are based on the patient’s diagnosis.

As California transitions faster than other parts of the country into more and more managed care payment arrangements, the challenges and pitfalls related to payment increase.  Thus, providers must identify risks and implement safeguards to protect payments. 

New coding issues can require additional attention.  Even though in some ways coding is simpler than traditional fee-for-service, in other ways there is a complicated learning curve and the potential of increased government scrutiny.  Medicare Advantage, new ACO arrangements and many commercial contract payments are based on the patient’s diagnosis.  However, the rules for determining one diagnosis over another are newly evolving with regard to outpatient services, having traditionally been used only to determine inpatient payments.  Further, once the diagnosis is determined, the provider will need to consider best practices for evidencing treatment and follow-up for the diagnosis.

The lack of clarity regarding payment also spills over into both government and non-government contracts.  Oftentimes contracts fail to specify what coding requirements apply or who is responsible for overpayments found either in plan or government audits.  

Finally, with the building of networks, sometimes providers are left out or choose to opt out.  Payment for out-of-network providers can be complicated and trigger lawsuits.  There also is a California statute with vague language mandating payments for emergency services based on reasonable and customary charges.

Important Safeguards to Consider:

Assess and improve coding and documentation guidance provided as part of outpatient and inpatient shared risk arrangements.

Review the payment provisions in managed care contracts and know the weaknesses and where further negotiation is needed in the coming contract year.

Think about any non-contracted providers receiving payments and how to demonstrate that payments are reasonable.