The health care industry is one of the largest and most complex in the United States. According to data from the Centers for Medicare and Medicaid Services (CMS), total public and private U.S. health spending exceeds $4.1 trillion. Insurance providers play a huge role in health financing. Here, our Fremont business contract attorney highlights some of the key things to consider when negotiating managed care agreements.
What is a Managed Care Contract?
As a starting point, it is important to understand what a managed care contract is and how it works. A managed care contract is effectively an agreement between a medical provider (doctor, specialist, etc.) and a third-party entity. Through a managed care plan, health plan providers will enter agreements with medical facilities to provide care for members at reduced costs. There are a number of different specific types of managed care arrangements, including:
- Health Maintenance Organizations (HMOs);
- Preferred Provider Organizations (PPOs); and
- Point of Service providers.
A Managed Care Agreement is Not Cast in Stone: You Can Negotiate Key Terms
For doctors and other medical providers, there can be advantages to entering a management care agreement. However, similar to any other type of important commercial contract, the specific terms and conditions always matter. A proposed managed care contract is not set in stone. The terms are subject to negotiation. Negotiating an effective agreement requires understanding your needs and your risks. Some key provisions that are subject to negotiate include:
- Rates: Rates matter. As noted previously, managed care agreements generally provided lower cost services to members. When doctors and other medical practices enter these agreements, they need to be sure that the reimbursement rate is in their best interest.
- Claims Process: The language surrounding all aspects of the claim process should be carefully reviewed. Some key issues to look for include day-of cutoff, downcoding, no take backs, and withholding,
- Dispute Resolution (Arbitration Provisions): Disputes can happen within the context of a managed care agreement. A well-drafted agreement will generally have some sort of dispute resolution clause. For example, it may call for arbitration.
- Exit Options (Termination, Expiration): In a managed care agreement, it is also important to look at the exit options of each party. Does either party have the right to terminate the agreement? When will the contract expire? What happens after the date of expiration?
- Other Unfavorable Provisions: Finally, medical providers should also carefully look for other provisions that may be unfavorable. As an example, some managed care agreements contain language that gives the payor broad (or even unilateral) authority to amend the terms of the contract. This type of language generally needs to be removed.
If you are preparing to negotiate a managed care agreement, there are major advantages to consulting with an experienced attorney. A business lawyer who works closely with medical practices and health care facilities can negotiate, draft, and review your managed care contract to ensure that it is in your best legal and financial interests.
Contact Our California Business Lawyer for Medical Practices Today
A business law attorney with extensive experience, Lynnette Ariathurai works with companies and medical practices in the health care industry. If you have questions about negotiating a managed care contract, please contact our Fremont law office for a strictly confidential initial consultation.