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.