News From Our Perspective

Navigate the Healthcare System with Ease

Jul 2015

6 Red Flags in Healthcare Contracting!

As a health care provider, it is never a bad idea to scrutinize the language proposed by your managed care payor in order to determine whether its inclusion is in your best interest. Remember, as a general rule, any language introduced into a proposed contract or amendment by a payor is highly suspect and generally works to your disadvantage!

Here are 6 Red Flags that every provider should be aware of and avoid if possible when contracting with health plans:

  1. Independent Review Organization (“IRO”) provisions: In one word: NEVER! Never, never, ever. These IRO provisions were introduced by payors to make disputing a payor’s final decision regarding the medical necessity of services rendered costly and, in many cases, difficult to overcome. In a nutshell, many of the IRO language provisions allow for the payor to unilaterally determine whether and how much they pay for medical services a provider render to patients. More on the topic here.
  1. Overly broad, vague, or ambiguous provisions/language: If you read a contract provision and do not understand what you just read, there is a major problem. Always be a “devil’s advocate” when reading a provision. Look for language that may be interpreted more than one way. Have multiple people from different departments read the contract. When more than one person reads a contract, it brings a different perspective to the interpretation of the words in the provision.
  1. Unilateral waiver of all legal remedies for failure to timely comply with contractual obligations: Payors began slipping this ‘trip-wire language’ into contracts with more regularity in the 21st Century. They know that the law of averages will catch up with providers when they shorten time frames for the provider to do things, while at the same time increase the number of claims they deny or underpay. A provider more concerned with rendering care to patients might be more prone to miss a deadline, for example, by untimely responding to a frivolous denial by a payor wherein many cases, the tardiness is excusable and no articulable prejudice is caused to the payor. Why should a provider be barred from having a neutral third-party review a disputed payment simply because an appeal was a few days late? Furthermore, these doomsday provisions rarely visit the same waiver against the payor who fails to act within a specified time period.
  1. Attorneys’ fees and costs to the prevailing party: This is yet another road block to pursuing legal action against a payor. It is a scare tactic to ward off providers from pursuing non-payments and underpayments. Having each party bear its own costs and attorney fees is enough.
  1. Meet and Confer provisions that exclude anyone but high level provider executives or preclude legal representation during a proceeding: Imagine having to go to an IRS audit with no attorney and CPA to defend you. Well, that is exactly what payors are seeking with provisions that bar any outside counsel on disputed claims. Given the complex nature of the payor-provider relationship to begin with, it is far better to have competent legal representation that provides the outside voice of reason and vast knowledge of contract law.
  1. Multiple addresses to submit appeal letters: Depending on the type of plan or level of appeal in this electronic age, is surprisingly still an issue that exists. However, there are payors who still have multiple claims processing centers for their different products (HMO v. PPO) and impose harsh penalties on providers who fail to mail the ‘hard copy’ claim to a different address. On the other hand, when a payor mails a denial letter to the wrong provider address, the payor expects that the provider will forward the correspondence to the proper department. Again, what is good for the goose should be good for the gander.

Tune in for more red flags from the Law Offices of Stephenson, Acquisto & Colman.



Our Partners Have a Combined Legal Experience of Over 100 Years

Meet our experts