1 © P.R. Kongstvedt Chapter 3: The Provider Network Learning Objectives Understand the basic elements of payer-provider contracts Understand service areas and access standards Understand basic credentialing Understand the basic types of contracted healthcare professionals Understand the basic types of contracted healthcare facilities Understand the basic types of contracted integrated provider health care delivery systems Understand basic contracting for ancillary services Understand basic network maintenance 2 2 Payer and Provider Reasons for Contracting [Put Table 3 – 1 here] 3 Non-Negotiable Contracting Terms Required by Laws and Regulations No Balance Billing and/or Hold Harmless Compliance with Quality and Utilization Management programs Maintenance of clinical standards, licensure, malpractice insurance, etc. Maintenance and retention of records Non-discrimination requirements Compliance with privacy and security requirements Acceptance of minimum number of patients from plan Compliance with certain administrative requirements such as timely billing, access to records, addressing patient/member complaints, etc. Compliance with Other Party Liability processes 4 Contract Structure: Main Body vs. Appendices or Attachments Elements that rarely change are in the main body; e.g. descriptions of provider services and the health plan’s obligations Elements that often change are only referred to in the main body of the contract; actual terms are found in Appendices or Attachments Allow certain terms to be modified without having to open the entire contract up for renegotiation Actual payment terms and methods are almost always in an Appendix or an Attachment Payment methods often separated from the specific dollar amounts Payer may use one main contract body but use different payment Appendices for different products Risk-sharing may also be separate even from payment terms for same reason Any other non-payment terms that change from time to time 5 Service Areas and Provider Access Standards A service area is the specific geographic area in which a payer may sell certain products and services Indemnity health insurers, administrators of self-funded plans, and TPAs are able to sell their products and services anywhere in the entire state in which they are licensed HMOs are different The service area for an HMO depends on the geographic area of its network If the HMO cannot provide sufficient access to providers in an area, it cannot sell in that area either Access standards usually determined by drive times or zip codes Access standards differ by rural vs. urban, and by type of provider States vary on PPO access standards, but usually do not have them 6 The Professional Network 7Examples of Non-Physician Professionals who may Contract with PayersClinical Nurse Practitioners (CNPs)CNP MidwivesRespiratory therapistsPsychologist PodiatristsOptometristsClinical Social Worker Physical therapistsNutritionistsLicensed Profess.

1. 1
© P.R. Kongstvedt
Chapter 3: The Provider Network
Learning Objectives
Understand the basic elements of payer-provider contracts
Understand service areas and access standards
Understand basic credentialing
Understand the basic types of contracted healthcare
professionals
Understand the basic types of contracted healthcare facilities
Understand the basic types of contracted integrated provider
health care delivery systems
Understand basic contracting for ancillary services
Understand basic network maintenance
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2
Payer and Provider Reasons for Contracting
[Put Table 3 – 1 here]
3

2. Non-Negotiable Contracting Terms Required by Laws and
Regulations
No Balance Billing and/or Hold Harmless
Compliance with Quality and Utilization Management programs
Maintenance of clinical standards, licensure, malpractice
insurance, etc.
Maintenance and retention of records
Non-discrimination requirements
Compliance with privacy and security requirements
Acceptance of minimum number of patients from plan
Compliance with certain administrative requirements such as
timely billing, access to records, addressing patient/member
complaints, etc.
Compliance with Other Party Liability processes
4
Contract Structure:
Main Body vs. Appendices or Attachments
Elements that rarely change are in the main body; e.g.
descriptions of provider services and the health plan’s
obligations
Elements that often change are only referred to in the main body
of the contract; actual terms are found in Appendices or
Attachments
Allow certain terms to be modified without having to open the
entire contract up for renegotiation
Actual payment terms and methods are almost always in an
Appendix or an Attachment
Payment methods often separated from the specific dollar
amounts
Payer may use one main contract body but use different

3. payment Appendices for different products
Risk-sharing may also be separate even from payment terms for
same reason
Any other non-payment terms that change from time to time
5
Service Areas and Provider Access Standards
A service area is the specific geographic area in which a payer
may sell certain products and services
Indemnity health insurers, administrators of self-funded plans,
and TPAs are able to sell their products and services anywhere
in the entire state in which they are licensed
HMOs are different
The service area for an HMO depends on the geographic area of
its network
If the HMO cannot provide sufficient access to providers in an
area, it cannot sell in that area either
Access standards usually determined by drive times or zip codes
Access standards differ by rural vs. urban, and by type of
provider
States vary on PPO access standards, but usually do not have
them
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The Professional Network
7Examples of Non-Physician Professionals who may Contract
with PayersClinical Nurse Practitioners (CNPs)CNP
MidwivesRespiratory therapistsPsychologist
PodiatristsOptometristsClinical Social Worker Physical
therapistsNutritionistsLicensed Professional
CounselorChiropractorsAcupuncturistsCertified Alcohol and
Drug Abuse CounselorDentists, orthodontists and oral

4. surgeonsAudiologistsPsychiatric Nurse Practitioner or Nurse
PsychotherapistOccupational therapistsHome healthcare
providersMarital and Family Therapist Other rehabilitation
therapists
Although focus here is on physicians, the network includes all
contracted professionals who practice without the need for
physician direction, and who bill for their services
Does not typically include professions working for facilities or
in offices (e.g., nurses or other clinical personnel)
Adapted from Exhibit 3 – 1 in What They Are 4.
Hospital-Based Physicians (HBPs)
HBPs fall into one of five specialties:
Radiology
Anesthesiology
Pathology
Emergency Medicine
Hospitalist
Inpatients usually receive services from the first three, and
often all five types
Member has no choice in who provides a hospital-based service
Membed not likely to know whether the HBP is a participating
provider
HBPs often have monopoly-like negotiating power, and payers
usually pressure the hospital to get them under contract with the
payer
If HBP has not contracted with a plan, out-of-pocket cost can be
high
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AKA “RAPs”

5. Physician Credentialing
Relatively standardized sets of criteria for credentialing and
recredentialing physicians
The federal DataBank
National Practitioner Data Bank
Healthcare Integrity and Protection Data Bank
Credentials must be verified either by payer or by an accredited
credentialing verification organization (CVO)
Until 2009, HMOs performed on-site office visits for primary
care, OB/Gyn and high volume behavioral health providers; now
done only if identified concern
Re-credentialing occurs every three years, based on a subset of
the original credentialing data
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Common Types of Physician Contracting Situations
Individual physician
Traditional medical group
Group practice without walls (GPWW)
Independent practice association (IPA)
Faculty practice plans (FPP)
Specialty or Physician Practice Management Company (PPMC)
Management Services Organization (MSO)
Through a hospital or integrated delivery system (IDS) for
physicians employed by the system
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Common Types of Hospital Contracting Situations
Community-based single acute care hospitals
Multi-hospital systems
All or none
Tied to flagship facility

6. Number of hospitals in multi-hospital systems is larger than
number of free-standing acute care hospitals
For-profit national or regional chains
Specialized hospitals
Children’s hospitals
Other less common types such as eye and ear, women’s health
Physician-owned single specialty
Through an IDS
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Examples of Ambulatory Facilities in a NetworkAmbulatory
Procedure FacilitiesOtherAssociated with a hospitalBirthing
centersFree-standingCommunity health
centersIndependentDiagnostic imaging centersPhysician-
ownedSubacute care or skilled nursingEndoscopy
centersHospiceLithotripsy centersRetail health clinicsSurgical
recovery centersUrgent care centersRadiation oncology
centersOccupational health centersPain management
centersWomen’s health centers
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Examples of Ancillary Services
(Some Overlap with Facilities)
Laboratory
Imaging, such as
Routine radiology (X-rays)
Nuclear imaging
Computed tomography (CT)
Magnetic resonance imaging (MRI),
Magnetic resonance angiography (MRA)
Positron emission tomography (PET) scans
Cardiac testing, such as

7. Electrocardiography
Plain and nuclear stress testing
Cardiac nuclear imaging and other invasive imaging
Echocardiography
Holter monitoring
Other diagnostic testing
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Cardiac rehabilitation
Non-cardiac rehabilitation
Physical therapy (PT)
Occupational therapy (OT)
Speech therapy
Other long-term therapeutic services
Examples of Diagnostic Ancillary Services
Examples of Therapeutic Ancillary Services*
* Not considered ancillary services if part of an inpatient stay
Ambulance and Medical Transportation are a category of their
own
Credentialing of Facilities
Payers do not typically credential facilities
Rely on state licensure
Rely on accreditation agencies such as
Joint Commission (JCI)
The Healthcare Facilities Accreditation Program (HFAP)
Det Norske Veritas (DNV)
Accreditation Association for Ambulatory Health Care
(AAAHC)
The American Association for Accreditation of Ambulatory
Surgery Facilities Accreditation Program (AAAASF)
The Community Health Accreditation Program (CHAP)
The Accreditation Commission for Health Care (ACHC)
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8. Examples of Common IDSs and their Relationships with
Independent and Employed Physicians
[Insert Table 3 – 3 here]
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