Sharks in the managed care waters? Here’s contract lingo to add and nix
Sharks in the managed care waters? Here’s contract lingo to add and nix
Watch for these killer clauses in your contracts
Some contractual language should raise red flags for any provider. Here’s a list of classic clauses to watch out for — and items you’ll want included — in any managed care contract you negotiate, from the Model Managed Care Guide developed by the American Medical Association (AMA).
Provisions the AMA says you should try to remove from the contract:
• Silent PPO. Sample language: "Payer" is any entity that "has an obligation to provide medical services or benefits for such services to enrollees, or any entity that has contracted with the Company to use the Company’s PPO Plan." Potential danger: The definition is broad enough to allow an insurer to sell its provider network and its discounts to third parties without the contracted doctor’s knowledge — an arrangement known as a "silent PPO."
• All products. Sample language: "Company has and retains the right to designate Provider as a Participating Provider or non-participating provider in any specific Plan" and "Provider shall accept compensation in accordance with this Agreement for the provision of any Covered Services to Members of the Plan." Potential danger: This is an "all products" clause, which forces physicians to participate in all offerings by the plan. As a result, a provider may be forced to accept a capitated contract even if it does not have the volume or the means to handle capitation.
• General offsets. Sample language: "Provider agrees to authorize the Company to deduct monies that may otherwise be due and payable to the Provider from any outstanding monies that the Provider may, for any reason, owe the Company." Potential danger: The insurer can deduct money from its payments to doctors with no explanation, for instance after determining overpayment in a retrospective audit.
• Waiver from litigation. Sample language: "In the event of any litigation between the parties arising out of or related to the Agreement, the prevailing party shall be entitled to recover its legal costs." Potential danger: Physicians are deterred from bringing legal action to enforce their rights.
• Hold harmless. Sample language: "Provider agrees to indemnify and hold harmless and defend the insurer from all loss, damage, liability, and expense to any acts and omissions from the provider." Potential danger: If a legal action or investigation is brought against the physician, the physician will have complete responsibility for any costs the plan incurs, even if the physician is exonerated.
Here are items you want in the contract:
• Prompt payment. Unless specified, the HMO is not under any obligation to pay claims within a certain time frame. Suggestion: Require payment within 14 days for electronic claims and 30 days for paper claims, with a late payment penalty of the prime rate plus 3%. The plan should also be required to pay any claim "sufficient in detail" so that it is "able to reasonably determine the amount to be paid." The plan should be required to notify the doctor within 15 days of submission of incomplete claims and explain what’s missing, the AMA recommends.
• Retrospective audit limits. Potential problem: The HMO reviews claims that it paid as long as several years before and identifies some potential overpayments. It then deducts that amount from its next payment to the physician. To avoid this, add language to the contract specifying that the insurer must request additional information on a claim within 15 days of submission and all payments are considered final after 90 days.
• Downcoding. The problem: A plan can unilaterally change billing codes to lower payment levels without consulting the provider. Add this alternative language: "The company shall not adjust billing codes on a claim without first requesting additional documentation, and it must provide adequate notice before adjusting the code. "
• Medical necessity. The problem: The HMO can reserve the right to determine what treatments are medically necessary and will be covered by the plan. Alternative contract language: Define medically necessary services as those that a "prudent physician would provide to the patient to prevent, diagnose, or treat a condition. Such services and their duration should follow generally accepted standards of medical practice and should not be primarily for the convenience of the patient or doctor."
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