Practice Economics

Be aware of ‘gotcha’ clauses in managed care contracts


 

EXPERT ANALYSIS FROM THE PHYSICIANS LEGAL ISSUES CONFERENCE

References

CHICAGO – Too often, physicians sign managed care contracts without negotiating or truly understanding all the terms. The complex clauses – or lack thereof – can come back to bite doctors in the form of delayed payments, sudden policy changes, and termination woes, health law attorney Mark S. Kopson warned at conference held by the American Bar Association.

To avoid these unwelcome surprises, prepare for contract discussions well before the conversation starts, Mr. Kopson advised.

Planning and proactive effort can protect the physician's position in managed care contract negotiations, Mark S. Kopson said. Alicia Gallegos/Frontline Medical News

Planning and proactive effort can protect the physician's position in managed care contract negotiations, Mark S. Kopson said.

“Don’t go into any negotiation unless you know two things. The first is what your starting position will be and, equally if not more important, is what is your ultimate line in the sand?” said Mr. Kopson, who practices in Bloomfield Hills, Mich. “If you go in there not knowing those answers, you’re liable to give away the store or not get what you really need.”

One major “gotcha” is an insurer that does not reveal upfront that it is not the actual payer, Mr. Kopson said. Some national companies that enter into contracts with doctors are basically network aggregators that negotiate price discounts but then sell the network to the health insurance marketplace, he explained. Physicians later realize their contract states that the company is not responsible for paying claims and that the doctor does not have a contract directly with the payer.

“This is a really big issue that I’ve been seeing more and more frequently,” Mr. Kopson said at the meeting. “If you don’t have a direct contract with the payer, you have the possibility of not being able to force payment obligations against the responsible party.”

Specify in your contract that the plan must require the payer to pay, he said. That way, if a payer fails to pay, the plan has breached its contract obligation.

Contract terms that involve medical necessity also can lead to frustration if not properly negotiated. In some cases, the fine print states that medical necessity will be determined by the plan’s medical director or otherwise will be ultimately decided by the payer. Instead, include language specifying that a treating physician’s professional opinion will be entitled to great deference if medical necessity comes into question, Mr. Kopson said.

The process surrounding clean claims is often overlooked by physicians during contract negotiations, he added. The “gotcha” occurs when a plan retains full control over how contested claims are handled.

“If you don’t adequately address this in the contract, you wind up with the payer taking multiple bites of the apple,” Mr. Kopson said.

Make sure to clarify parameters for how long insurers have to request additional information about a claim and whether they must pay a portion of the claim that is being contested, he advised. Include a firm time line of when payers must complete their review and address payment after the requested information is provided.

Another critical issue: changes to the contract. In some cases, doctors enter into a contract with a plan and then the plan decides some details aren’t working out and makes changes. The physician later learns that the contract language allowed the plan to make unilateral changes. In other instances, a plan institutes new products and doctors learn that they had only a certain timeframe to opt out.

To avoid these situations, specify during contract negotiations that policies in conflict with the contract are prohibited, that contract changes can only be made bilaterally, and that unless you directly opt-in to new products, you will not participate.

Mr. Kopson encouraged physicians to have a solid exit strategy in their contracts and to ensure terms regarding contract termination are clearly understood. Clearly defined criteria around “cause” for termination are imperative, he said. Additionally, if a plan alleges a termination breach, require it to send a written notice to a specific person/title and ensure that the notice also is provided to counsel.

The bottom line: To avoid trouble later, strongly negotiate at the start of a managed care contract, Mr. Kopson said.

“If you don’t ask, if you don’t negotiate it in there, you’re not going to have that weapon,” he said.

agallegos@frontlinemedcom.com

On Twitter @legal_med

Recommended Reading

AMA launches online tool to help address physician burnout
MDedge Hematology and Oncology
AMA HOD: Delegates back ICD-10 reprieve, but gun proposals draw fire
MDedge Hematology and Oncology
Obama calls opposition to ACA subsidies ‘cynical’
MDedge Hematology and Oncology
ABIM changes exam score report, updates MOC exam blueprint
MDedge Hematology and Oncology
AMA HOD: Delegates advocate medical service, health system reforms resolutions with little debate
MDedge Hematology and Oncology
ICOO: Massachusetts governor takes on opioid epidemic
MDedge Hematology and Oncology
VIDEO: How should you respond to a possible privacy breach?
MDedge Hematology and Oncology
AMA HOD: Preconception care, reducing opioid abuse are top issues
MDedge Hematology and Oncology
New drugs saw ‘unprecedented’ spending growth in 2014
MDedge Hematology and Oncology
Feds grant more time to submit Oncology Care Model applications
MDedge Hematology and Oncology