96 Questions to Ask When Reviewing Managed Care Contracts

Definitions

• Are the important terms used in the agreement clearly defined?
• Is the list of definitions complete?
• Do any of the definitions allude to any unusual provisions or requirements; for example, reimbursement or utilization review?
• Do any of the defined terms take on a different meaning than generally found in other contracts; for example, beneficiary, day of service, subscriber or emergency?

Noncovered services

• Is the scope of services to be provided clearly defined? Are exceptions properly noted in the contract document itself?
• Are professional service exclusions clearly noted in the agreement (hospital only)?
• In places where services are not available, is it clear that the provider is not liable for transfer charges (hospital only)?

Verification of eligibility

• Is verification of eligibility required under the contract?
• Does the program include an easy means of identifying a patient as participating in a contracted program, for example, through a patient identification card?

Payment

• Is the payment method clearly defined? Are there per diems, diagnosis-related groups, California Relative Value Studies or Current Procedural Terminology?
• Can the payment method be easily adjudicated?
• Are there provisions for limiting provider risk, such as stop-loss provision or minimum payment thresholds (hospital only)?
• Are there late payment penalty provisions? If yes, are they easy to administer?
• Are billing requirements consistent with standard provider practice; that is, are there billing forms and procedures?
• Do payment provisions include a most-favored-nation clause (hospital only)?
• To what extent are payment provisions tied to utilization review requirements?
• Are service categories properly defined for purposes of payment, for instance, diagnosis-related groups or ICD-9?
• Are time restrictions included for billing?
• Are mechanisms included for expedited payment? If so, are they easy to use?

Payment and rate changes

• Does the term of the contract differ from the term applying to rates, for instance, automatically renewable versus 12-month contract for rates?
• Do the terms applying to rates extend beyond a 12-month period, such as, a 2-year rate guarantee?
• Are there "caps" on renegotiated rates; for example, Consumer Price Index-related or percentage maximum over the previous year's rate?
• Are renegotiated rates that are finalized after the contract renewal date applied retrospectively to claims generated since the contract renewal date?
• Are there provisions in the contract that enable providers to initiate rate changes during the term of the contract with proper notification?

Utilization and management procedures

• Is the basic utilization-management structure defined?
• Is the utilization-management administrator identified? Are procedures regarding adverse decisions and payment over adverse decisions clearly defined?
• In instances when utilization-management review is not delegated, are policies and procedures regarding record reviews and on-site reviews clearly defined? Are they reasonable from the standpoint of the provider?
• Is the provider obligated to any additional reporting requirements in connection with utilization- management? If yes, how extensive? Is the payor willing to compensate for extraordinary requirements?
• Are utilization-management requirements clearly discernible; for example, are they noted on the subscriber's identification card? Are utilization-management categories properly defined, such as concurrent or emergency admission?
• Can retrospective denials be imposed?
• Are there any utilization-management penalty provisions? If yes, how extensive?
• Is the utilization-management plan available for review?

Confidentiality

• Is confidentiality of contract and contract prices part of the agreement?
• Are all associated documents covered by a confidentiality clause?
• Are patient confidentiality-related requirements addressed in a manner consistent with the law?

Benefit plan incentives

• Are incentives to use the PPO included in the health benefit design?
• Are incentives to use the PPO greater than 10 percent?
• Does the benefit plan accompany the contract to evaluate incentive package, non-covered services, and plan competitiveness?
• Are there outpatient or second surgical opinion requirements? If yes, are they reasonable?

Coordination of benefits

• Are specific coordination-of-benefits provisions included in the contract?
• Do coordination-of-benefits provisions generally favor the payor or the provider?
• Do coordination-of-benefits provisions spell out the payor's payment obligations in instances where the payor is primary?

Termination

• Is the term of the agreement acceptable?
• Can the contract be terminated without cause?
• If the contract cannot be terminated without cause, are the reasons for cause clearly defined?
• Are the termination notice requirements reasonable (generally 60 days or fewer for PPOs)?
• If the termination notice requirements are more than 60 days, can the provider terminate on short notice for nonpayment of claims or breach of contract?
• Are there any extended care requirements attached to the termination notice? If yes, may the provider bill at full charge?
• May the provider initiate transfer of patients on termination of contract (hospital only)?
• Does the contract include breach provisions? If yes, are the reasons constituting a breach clearly defined?
• Under a breach, is the entire contract automatically terminated?
• Does the contract allow the payor or the provider a means of curing a breach without resorting to contract termination?
• Under a breach, can contract termination be accelerated over normal termination notice by either party?

Release of records/Right to audit and inspect

• Are policies and procedures for record requests properly defined?
• Are the requirements consistent with legal statutes and other standards, such as, federal, state or The Joint Commission?
• Are record-retention requirements any different from those applying to the balance of patients?
• Are the notification requirements reasonable?
• Are reasonable reimbursement provisions included for duplicating and transmitting records?
• Are any provisions included that indemnify the provider from liability for complying with a payor's record request?

Referral requirements

• Do referral requirements, if any, properly explain the provider's obligations as they relate to other contracting and non-contracting facilities?
• Does the contract specify which party is liable for payment of services on referral and payment of transportation, if applicable?
• Does the contract permit subcontracting for services?
• Does the contract permit a contracting provider to non-contracting provider?
• Does the contract in any way limit the provider from making the most appropriate referral?

Advertising and marketing

• What, if any, is the potential volume to be derived from the contract, both in terms of market share retention and expansion?
• Are payor marketing plans defined?
• Is the payor's use of providers' names appropriately restricted?
• Are provisions included to cease marketing the hospital in the event of termination?

Liability

• Does the contract impose any insurance requirements on the provider? If yes, are the limits and requirements reasonable?
• Does the contract impose insurance requirements on the payor? If yes, are the limits and requirements balanced with those required of the provider; that is, is there comparatively equal risk?
• Must the provider submit a certificate of insurance?
• Are there any notification requirements on change of insurance carrier or limits?

Indemnification or hold harmless provision

• Does the contract include an indemnification or hold-harmless provision? If yes, do these provisions apply mutually to both the payor and the provider?
• Is the indemnification or hold-harmless provision written in such a way so as to jeopardize liability coverage?

Assignment

• Is the agreement assignable or non-assignable?
• If the agreement is assignable, what limitations, if any, are placed on assignability?

Disputes under contract legal remedies

• Are legal remedies clearly defined?
• If arbitration is selected, are the procedures properly defined? Are the procedures consistent with the American Arbitration Association's Standard Rules of Arbitration?
• Is cost sharing on arbitration clearly explained?
• How binding is the arbitration decision?
• Are attorney's fees and costs addressed?
• If litigation is involved, is cost sharing clearly explained?

Notice requirements

• Are the notice provisions clear?
• Are the notice provisions similar for both parties?

Severability

• Are the contract terms severable?

Contract enforcement

• Is the contract interpreted under the provider's home state law?
• Is the location of the contract at the provider's or payor's location?

Disruption of services

• What are the provider's obligations if services are disrupted for any reason?

Third-party beneficiaries

• Does the contract clearly state that the terms of the agreement shall not extend to the benefit of any third party?

Other considerations

• What is the payor's track record concerning payment of claims? What is the payor's current financial position?
• Does the contract target a specific segment of the market not previously reached in other contracting opportunities?
• Can the providers bill their usual charges for non-covered services?
• Are non-covered services properly defined?
• How much business is the provider currently doing with the payor?
• Is contracting primarily directed toward market share retention, expansion, or both?
• Is the payor requesting any information considered proprietary in nature and not otherwise obtainable except from the provider?

Ms. Kehayes (nayak@eveia.com) is founder, managing principal and CEO of Eveia Health Consulting & Management, which is comprised of a team of seasoned professionals who are experts in reimbursement management, managed care contracting, and business management with a specialization in ASCs and surgical practices. Learn more about Eveia.