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April 9, 2001

Emory Healthcare to revamp
HMO contracts

By Sylvia Wrobel


Over the past two years, all Emory Healthcare (EH) managed care contracts have been renegotiated according to a strategic plan laid out two years ago.

The most significant change, according to Managed Care Director Patrick Hammond, is that nearly all EH doctors now participate in each and every contract. Previously, many of the contracts were part of “horizontal specialty networks,” managed care language for when insurance companies subcontract with Emory for only one or two physicians in a given specialty. Good for some doctors, maybe, but not necessarily good for the ones left out—or for the system as a whole.

Using an “all or none” policy as well as other criteria, EH eliminated more than 40 contracts. About half of all managed care opportunities presented to Emory today are turned down for the same reasons. But having 90 good contracts—as opposed to 130 or more that don’t always fit overall objectives—appears to be working well, Hammond said. Managed care gross revenue and reimbursement rates have increased significantly.

The major overhaul was the charge of a contract pricing team, one of a series of system-wide decision-making teams established last year by EH President John Fox to improve overall performance and increase the ability to move quickly and decisively across the entire system. Chaired by Hammond, the team includes both physicians and administrators.

The team is working with each of the 28 specialties to develop and fine-tune a contract template. This template will identify key issues for individual sections and doctors, as well as for different hospitals, and will serve as a guideline to the contract team—ensuring that contracts are never cookie cut.

“We need the direct involvement of each medical specialty in determining our contracting parameters,” Fox said. “Each specialty has its own coding and contracting nuances that need to be included in any managed care strategy that strives for strong performance for our physicians.

The process not only is making certain sections get their special needs heard, it also is enabling them to address the realities of today’s market. That’s been helpful in creating a sense of a collaborative process between the sections and the managed care office.

Thomas Aaberg, director of the Emory Eye Center, enthusiastically agreed for ophthalmology to be the first section to participate in the template process.

“I thought it was very important for us to customize contracts in order to do what is financially necessary for the department—and not find ourselves in contracts that were financially debilitating,” he said.

Aaberg asked ophthalmologist Theresa Kramer to oversee the project for the Eye Center because she had long been a vocal proponent of shaping contracts for specific sections.

“As far as I am concerned,” Kramer said, “this whole process has been a momentous advance in how the University deals with the onslaught of managed care. If the managed care companies accept [our] template, we anticipate we will eliminate about 30 percent of our front-end function problems—things like pre-certifications and referrals—thus decreasing the number of denials on the back end.

“Finally, the managed care office did a market analysis to ensure that the Eye Center maintains its competitive position both in the Atlanta and the national market,” Kramer added. “I believe there are very few comprehensive projects that will result in this scope of change and the multitude of benefits that the template contract will yield.”

Urology is currently going through the template process. “One of urology’s primary objectives in working with this project was to see if our managed care contracts could take more account of the complexity of many of the patients we see,” said department chair Fray Marshall, citing complicated bladder operations on older patients who may have other illnesses.

“A single operation for such a patient can take more than eight hours, and the patient may be in the hospital for 10 days and require postoperative nursing instruction in the use of catheters far longer than the usual 90 days covered by most managed care contracts,” Marshall said. “Reimbursement doesn’t always reflect these things, and as a consequence many urologists lose interest in them, meaning more and more such complicated cases arrive at Emory. Our goal is to provide these and all our patients the best care possible, but we also need to work out a reimbursement schedule that will let us maintain our high level of care.

“As doctors,” Marshall added, “we are very appreciative of all the managed care efforts because we don’t have the time or expertise to conduct lengthy, difficult negotiations with the managed-care industry.”


Back to Emory Report April 9, 2001