Negotiating The Maze Of Insurance Contracts
I can remember the days of the first managed care organization (MCO) contracts. Typical comments ranged from “Where do I sign and did I sign up before Dr. Smith down the street?” to “Who has time to read these things? I get my UCR fees anyway.” I have tried to target many of the most common items I overlooked in the past. Granted, in some cases, you will not be able to negotiate some items but you should still know what you are getting yourself into.
Before you even get into the finer details of a particular contract, you need to keep in mind that the contract was developed and written by the insurance company’s lawyers. Needless to say, it was written for their benefit. Therefore, it is especially important that you review it thoroughly and have a strong understanding of the contract. If you have doubts or concerns, seek out the help of colleagues and attorneys.
When reviewing these contracts, I have found it very helpful to start with a table of contents and take a close look at the following sections.
Cover The Essential Elements Of The Contract
• Review the parties and notice any “all products” clauses. This clause defines the players. Many of the MCOs offer multiple products such as HMO, PPO, EPO, Medicare, Medicaid, etc. Be aware that if you agree to be a provider for one of these products, you may be agreeing to provide all of these services. It is not uncommon to find this in MCO contracts. Until recently, this was common in Texas for Aetna. To you, it may mean that by signing up for a plan that pays 200 percent of Medicare and may give you 20 new patients per month, you have also accepted one that pays 75 percent of Medicare and fills your office with 20 new patients per week.
• Be clear on the contract definitions. Nearly every managed care contract has a definition section. From my own experience, I know this is overlooked in reviewing the contract but can be very important. This is often where the terms of medical necessity and covered service are listed. Just be sure everyone is speaking the same language.
• Scrutinize the policy and procedures manual. It is not uncommon for a contract to include additional information by merely referring to it in “the agreement.” This additional information (the notorious “policies and procedures”) may include some very important information. You need to get a copy of that policy and procedure manual before you sign the contract. You likely won’t have time to read it cover to cover but a skim would be helpful.
• Ensure mutual understanding on the effective dates. Most contracts stipulate that the agreement will not be effective until credentials are approved and both parties have executed the agreement. Whatever the case, make sure the effective date is noted in the contract. Don’t provide services prior to the effective date unless you have a clear understanding, in writing, with the MCO on how you will be reimbursed for the services. Otherwise, can you say “service for free”?
• Be aware of the “hold harmless or indemnification” provision. This is one of those things that can be financially dangerous to you. It’s a provision you should fight but in reality, you may have to accept it if you want the contract. Simply put, this means that if you are sued and the MCO is brought into this for whatever reason, you are responsible for its costs.
What is the most common situation that would trigger such a provision? If you and the company are sued for a service you provide and there is a settlement/judgement by/against both of you, the MCO will then turn to you and ask for that amount of money. You should check with your own liability carrier to see if you are covered for this. Also be sure that there is a reciprocal “hold harmless” clause to protect you. If you and the MCO are sued for the MCO’s mistake and there is a judgment/settlement against both of you, then the MCO’s insurance will reimburse you and your carrier for any loss. Then again, the best route to go is that each party pays its own way.