Harmony Healthcare International (HHI) Blog

Avoid Lost Revenue by Understanding Your Managed Care Contracts


Managed Care Organizations are quickly becoming substantial components of the skilled nursing reimbursement system.  We are noticing a trend in facilities where key players have limited or no access to the specifics of different Managed Care contracts that were negotiated for the facility. 

It is often the case that each building negotiates an individual contract with area MCO providers where the language, provisions, exclusions and rates may be significantly different for every facility.  We recommend that facilities develop policies and procedures to communicate to key department staff (i.e. Admissions, Therapy Director, Billing Department) the specific details of the most recent contracts to ensure appropriate utilization of the facility's resources. 

Most often the hospital discharge staff obtains the initial authorization for the beneficiary transfer to the skilled nursing facility.  It is then the accepting facility’s responsibility to reach out to the MCO to obtain additional authorization for the service.  Since the hospital has limited information regarding each facility's contracts, we also recommend that the SNF develop processes to ensure that the MCO is informed early as to the level of care and intensity of services that the beneficiary requires as well as to ensure timely authorization for changes in the level of care as the beneficiary's needs evolve.

Managed Care contracts often contain exclusions for certain medications or procedures.  It is important that these exclusions are communicated to avoid lost revenue.  The SNF should develop policies and procedures to ensure that the billing is accurate and reflects the actual level(s) of service delivered during the billing period.  These policies should also ensure that any contract exclusions are identified prior to billing. 

Facilities may wish to review each negotiated MCO contract and develop a spread sheet located in a common drive that includes the following information:

Name of MCO


Green HMO

Contact Person/Phone/

Sam Jones:  Case Manager


Sally Smith


Rate Level and Type

Level 1:  .5 hours of therapy/ day up to 5 days/week. Skilled Nursing 7 days/week for monitoring, etc...

Level 2:  1.5 hours of therapy/day up to 6 days/week.  Skilled Nursing

Level 3:  3 hours of therapy/day up to 7 days/week.  Nursing services including Wound care......



Rules per Medicare PPS


X-rays, CT scans, Chemotherapy



Provide updates every 5 days.....



Medicare Part C, Medicare Advantage organizations, were originally told by CMS that they would receive an "informational" edit for Skilled Nursing Facility (SNF) encounters submitted without HIPPS billing codes until December 1, 2013. At which time "informational" edits would subsequently change over to "reject" edits, preventing the plans from submitting those encounters. However, the latest CMS memo delays that December 1, 2013, deadline to July 1, 2014. The "informational" edits for HIPPS codes will remain in place until that time.

Skilled Nursing Providers should do the following to prepare for this transition:

  • Work with your software systems vendors to ensure that their systems be revised to include HIPPS codes on the claims.
  • Contact Medicare Advantage plans to determine what specifically is required related to including the HIPPS code on claims.

Please note that Medicare Advantage organizations and other entities are still required to submit HIPPS codes if they have them. In addition, CMS reminded plan sponsors that HIPPS codes must be submitted in the 837-Institutional format.  Medicare Advantage organizations and other entities should communicate this change to skilled nursing facilities.  Harmony (HHI) notes that SNFs are being required to submit Medicare PPS HIPPS codes which require the facility to follow the traditional Medicare PPS schedule to generate these required codes. In addition, we have also seen a significant increase in Additional Documentation Requests (ADR) and subsequent denials based on non-compliance with the PPS schedule for these Managed Care products.

We remind facilities that PPS MDS assessments completed for this purpose, whether required by the Managed Care Organization or not, are not allowed to be transmitted through the QIES system. For example, the OBRA Admission assessment must be completed separately from the 5 day MDS completed for Managed Care billing purposes.  This will ensure that the Admission assessment is transmitted and the 5 day Managed Care assessment is not transmitted.

Harmony (HHI) recommends that facilities follow the traditional Medicare PPS schedule unless otherwise notified in writing by the Managed Care Organization.  In addition, facilities should develop a system for review of current Managed Care contracts to ensure that the facility is accurately reimbursed for the services rendered to each of the MCO's beneficiaries.  This should also be completed annually as well as when changes to the contract are made.

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Topics: Documentation, Reimbursement, Managed Care

Kris Mastrangelo, OTR/L, LNHA, MBA


Kris Mastrangelo, OTR/L, LNHA, MBA

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