How Does the Managed Care Contracting Process Work?

Most Americans have a health insurance plan that is considered a managed care plan. The high number of these plans makes managed care contracts attractive to healthcare providers of all kinds looking to offer their services to more patients.

The managed care contracting process can be intricate yet impactful. As such, it is important for operators to have a baseline of knowledge about the process as it can be very complicated for many healthcare providers to take on this challenge in-house.

In this article, we’ll walk through the basics of a beneficial contract and how you can make this process a smoother experience.


What Is a Managed Care Contract?

Managed care contracts are designed to keep costs low and quality of care high. A managed care contract outlines the constraints your facility can operate within when providing resident care. The terms you agree to as a healthcare provider affect how and to whom you deliver care. The details are essential. 

A managed care contract can involve either individual physicians or a multi-practice healthcare organization. Different types of managed care organizations include:

Integrated delivery organizations and systems

  • Independent physician/practice organizations
  • Group purchasing organizations 
  • Physician practice management companies
  • Accountable care organizations
  • Other management services organizations

What Are the Three Basic Models of Managed Care?

There are three main types of managed care plans:

  • Health maintenance organizations (HMO): These plans usually only pay for in-network care, and a primary care doctor coordinates any further care for enrollees.
  • Preferred provider organizations (PPO): A PPO offers financial incentives for in-network care but still pays a portion of out-of-network costs. 
  • Point-of-service (POS): With this plan, patients have the flexibility to choose between an HMO or PPO at different points of care.

These different models determine which patients you can admit, what the coverage is, and what services you can provide.

What Are the Key Elements of Any Managed Care Contract?

A managed care contract determines how providers can care for their patients covered by these plans. Your aim should be to obtain contracts that allow for the proper coverage level and length of stay, especially for post-acute and long-term care facilities. While there are many components to a managed care contract, the main elements are:

  • The nature of provider compensation
  • Covered and medically-necessary services
  • Standards and rules for choosing a care provider
  • Provisions to ensure prioritized preventative care
  • Quality improvement programs
  • Contract termination clauses

Knowing what terms are fair and effectively negotiating for beneficial terms requires industry expertise. Many providers outsource this part of the process to highly-specialized experts in managed care contracting like LTC Ally.

Read Case Study: Managed Care Contracting


How Do Managed Care Contracts Impact Healthcare Providers?

The managed care agreement directly impacts payment, record keeping, office organization, care procedures, and clinical decision-making. There will likely be specific guidelines for what medical services can be completed, when, how, and by whom. 

Since these contracts control various areas of care, it’s essential to obtain the most beneficial terms for your particular practice or organization. Some best practices for handling a managed care contract include:

  • Determining the cost of terms before evaluating proposed rates
  • Ensuring you’re able to meet contract requirements
  • Ensuring all agreements have similar care standards
  • Continuing to consult with contract experts and educate staff on guidelines

The Benefits of Managed Care Contracting Services

Many providers prefer to outsource their managed care contracting to experts. By outsourcing, you take the stress of understanding the complex regulations surrounding managed care off your staff. Instead, skilled professionals support your staff and patients throughout their care journey. 

Professionals in managed care contract services, like those offered at LTC Ally, include a review of existing care contracts you may be enrolled in to ensure rates and terms are adequate, and complete handling of the entire contract negotiation process. Our services also include training staff on changes to care and billing practices once contracts are finalized, so operations are united across departments.

How To Get Started with LTC Ally’s Managed Care Contracting Services

Since 2006, LTC Ally has helped providers obtain the most beneficial managed care contracts in the market. Our level of experience makes us uniquely familiar with the managed care space and are comfortable helping providers work within its constantly changing and complex regulatory structures. 

We’ve spent years perfecting our onboarding process, so we can start helping your practices accept more residents in less time. Contact us today and partner with dedicated professionals who have a passion for the healthcare industry and helping providers and their practices thrive.


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Founded in 2006, LTC Ally serves the long-term care industry with an unbound dedication to improving back office and financial operations. With a mission to reduce burdens and increase peace of mind, LTC Ally set out to revolutionize the way facilities handle their revenue cycle management. With a full suite of financial, case management, and contracting solutions for healthcare providers, LTC Ally is your partner in long-term care and skilled nursing.

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