A key service MAG provides for its clients is the negotiation of contracts with HMOs and PPOs. The contracts MAG negotiates on behalf of its clients usually involve some level of financial risk sharing between the health plan and the IPA/PHO. These contracts generally provide that, if the IPA/PHO's spending for a contract year is less than the total fund allocation (budget), the IPA/PHO will share in the surplus.
The negotiation of health plan contracts involves assessment of various risk models to determine which would be most beneficial for the particular client. Doing so involves analyzing historical data for IPA/PHO physicians, as well as making projections of future performance.
Among the major issues usually addressed in an IPA/PHO contract are the following:
- Funding levels for the specialty, hospital and pharmacy funds
- Withhold levels on PCPs, specialists and hospitals
- Upside and downside limits on financial risk
- Fee schedule for physicians
- Hospital compensation
- Termination
- Obligation of health plans to provide reports and claims data
- Restrictions on use of IPA/PHO physicians in health plan marketing
- Amendments
- Liability insurance
MAG also negotiates utilization and cost targets for its clients. The targets are often in the following areas:
- Admissions per 1,000 covered lives
- MRIs/CTs per 1,000 covered lives
- ER visits per 1,000 covered lives
- Ambulatory surgery cases per 1,000 covered lives
- Generic prescribing rate
In addition to negotiating contracts with health plans, MAG also represents clients in contract negotiations with hospitals, specialists, and other providers.
Health Plan Contract Management