Managed Care Contracting

Successful negotiation of managed care contracts is an integral part of business for physicians and physician group practices. The long-term success of a practice often hinges on the contractual provisions of a managed care contract, which affect payment, standard operating procedures, confidentiality practices, as well as clinical decision-making.

To avoid common contracting mistakes, successful negotiation with a managed care organization (MCO) requires both thorough preparation and careful attention to the specific terms of the contract. Because of the magnitude of what is being undertaken, no managed care contract should ever be signed unless and until the contract has been carefully reviewed by an experienced managed care contracting attorney.

Concierge Healthcare Attorneys, LLC has more than three decades of experience in healthcare law working directly with physicians. We act as your partner to review and successfully negotiate managed care contracts.

Best Practices for Physicians When Reviewing & Negotiating Managed Care Contracts

#1: Avoid Boilerplate Definitions

 

Boilerplate definitional provisions can raise serious issues and concerns. For example, precisely what the “covered services” encompass is critical since the physician will agree to deliver them, and perhaps, be financially responsible for them. The “covered services” should be listed explicitly in an exhibit to the contract.

 

#2: Insist on clear compensation provisions

 

The managed care contract often does not clearly set forth the compensation to be paid to the physician for covered services. Managed care contracts often provide that reimbursement will be made pursuant to the MCO’s fee schedule “then in effect,” or pursuant to a fee schedule attached to the contract that lacks specificity. reimbursement. Separate schedules should be attached to the managed care contract identifying the exact compensation that is to be paid by the MCO for each covered service.

­­­The following reimbursement provisions should be included in a managed care contract to guarantee prompt and fair reimbursement:­­

  • Uncomplicated procedures for efficiently obtaining from the MCO a binding adv­­­anced verification of a patient’s enrollment 24 hours a day, seven days a week, and 365 days of the year.
  • Coding standards or requirements prohibiting bundling and/or down-coding by the MCO.
  • Claim submission procedures and deadlines, together with a process for obtaining from the MCO a binding confirmation of claim receipt.
  • A clear definition of a “clean claim” that places the burden on the MCO to timely return of any allegedly insufficient claim with a written description of the purported deficiency, as well as a clear statement that the MCO’s failure to return any purportedly deficient claim in a timely fashion will be deemed “clean claim.”
  • A “prompt payment” provision specifying a certain number of days the MCO has after claim submission to make payment on clean claims, and providing a penalty for untimely payments.
  • A “coordination of benefits” provision providing that MCO is obligated to make payments, unless the MCO can timely document that it is secondary.
  • Subrogation Rights provision that binds the MCO to pay physician’s claims, notwithstanding the pursuit of subrogation rights against potentially responsible third parties.

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#3: Look for Clarity that Medical Necessity Is a Physicians Discretion

 

Managed care contracts will limit reimbursement to “medically necessary” services, which can be subjective based on the person who defines “medically necessary.” Therefore, physicians need to ensure that “medically necessary” boils down to a clinical decision at the physician’s discretion and not the medical director or another person at the MCO.

 

#4: Ensure the Named Policies and Procedures are Attached

 

Policies and procedures change over time, and a managing care contract needs to specify that amendments to them are not bindin­g without the physician’s written consent. In addition, the current policies and procedures should be attached to the contract for review, creating the opportunity for a thorough analysis and preventing MCOs from holding physicians to policies and procedures that change unilaterally at will.

 

#5:  Review Termination Terms

 

Contracts often are drafted by the MCO to allow for termination of a physician “for cause” (e.g., loss of licensure) or “without cause.” A physician must determine whether “termination without cause” is acceptable. In any event the physician should demand due process rights and a dispute resolution procedure. We also recommend outlining that continuation of care post-termination will be paid for by the MCO should the physician be required to continue delivering care after the effective date of termination.

 

#6­: Insist on Mutual Indemnification Provisions

 

The contract should contain mutual indemnification provisions requiring the physician and the MCO to each indemnify ­­and “hold harmless” the other for ­­liabilities arising as a result of their respective conduct.

 

Consult with a Lawyer to Discuss Your Managed Care Contracting

 

Enter your managed care contracting with confidence. Schedule your consultation with Concierge Healthcare Attorneys, LLC online or call (312) 804-1739 to discuss your managed care contracting needs.