June 1998 Bulletin

Read it now or weep later

"Because a lot of surgeons don't bring representation to the bargaining table, lawyers have to do a lot of cleanup"

If you want to avoid a bad contract, ask questions, read before you sign and get good legal advice.

By Sandra Lee Breisch

"Managed care contracts are a great opportunity-if you approach them with caution," notes Dick Hansen, a consultant who specializes in strategic planning.

But before physicians or group practices enter into a managed care agreement, Hansen, a member of Medical Group Management Association, warns, "Don't sign a contract from a position of weakness and fear. Rather from a position of strength which you can build your practice."

If you want to avoid a contract that restricts you like a straight jacket, ask questions, read the agreement before you sign it and get some good legal advice.

"Many physicians get into difficulty when they get nervous," says Alice G. Gosfield, a health care attorney and president of the Philadelphia-based Alice G. Gosfield and Associates, PC. "They think that they won't get any business and sign lousy contracts.

"Then what frequently happens is that they find out it's a lousy contract. It's a lousy plan. They're not getting paid regularly and instead of terminating the agreement, they hang on and hang on waiting to get paid and fall into a big black hole."

Gosfield, who lectures frequently on health law issues, continues, "Say you've signed a contract, didn't like certain provisions in it, crossed out those provisions, initialed them and sent them back to the managed care organization." Sounds legal enough. Or is it?

As simple as this scenario soundsówith or without attorney representation at the negotiating tableóoften, it's more complicated than you think. According to Gosfield, one of the typical questions physicians ask after signing a contract with these changes is, "Don't I now have an amendment to the contract?"

The answer is, "No, they [the managed care plan] have to agree to it as well," says Gosfield. "There has to be a meeting of the minds. Once you signed the contract you abide by what it says. You need a formal written amendment to the contract for it to mean anything."

Physicians who don't bring attorneys to the negotiation table usually end up later phoning their attorney or having a one- or two-hour meeting with their attorneyómany times, after they've signed the contract, notes Gosfield.

"Physicians really need to ask the right questions at the bargaining table," particularly if they don't have an attorney present, says Gosfield. She also advises physicians to bring a list of concerns and questions about the managed care contract they're thinking of signing.

But if physicians do plan to have legal representation, Gosfield recommends hiring a health care attorney who's reviewed a minimum of 15 contracts within the last six months. "Don't just go to any lawyer," she says. "Go to someone who is a health lawyer, who's read, written and analyzed managed care contracts.

"It's also perfectly legitimate to ask a lawyer how many of these deals he or she has done in a year. If they say, - less than five a year,' then you should find somebody who is more efficient and who may already have reviewed that managed care agreement in town."

For those who think the back part of the agreement is all boiler plate, better think twice, she warns. "Physicians hate this advice: 'Read the contract,'" Gosfield says. "Because a lot of surgeons don't bring representation to the bargaining table, lawyers have to do a lot of cleanup."

Be sure that the contract agreement is written expressly for the physician's particular affiliation such as a group practice-rather than a hospital or other entity, says Gosfield. She also points out a managed care contract requires a physician to abide by documents that are external to the contract such as utilization review, management systems, the MCO credentialing system, quality assurance system, the MCO provider manual and grievance system. "You can't tell what you agreed to if you don't get all of these documents," says Gosfield. "That happens uniformly in every one of these agreements, without question. Make sure the plan is willing to give you all of these documents prior to executing agreement."

Also, make sure all the blanks are filled in. "We have contracts sent to us that don't specify what the start date is, who needs to get notified, etc." Gosfield says.

What would cause physicians great problems in the contract, exposing them to great liability to the practice and personally? "If the contract says they agree to provide the highest possible quality of care," Gosfield says. "The law doesn't require you to provide the highest, only to provide the same level of care that is a similarly situated reasonable clinician of your type would have provided. So when the contract says - highest' you're holding yourself to a higher standard than what the law would require you to do."

Be wary of the indemnification clause that you agree to hold the managed care entity harmless and to pay all of the expenses, costs and damages that may go wrong with the agreement. "Your malpractice insurance doesn't cover that," warns Gosfield, "Potentially, you'll be giving them your vacation home. Never, ever sign an agreement that has an indemnification clause without having your malpractice carrier ensure you are covered for it."

Also, watch out for the detailed provisions in the agreement such as how many MCO product lines you are agreeing to participate in. "Some of them will say you agree to participate in anything we come up with," notes Gosfield. "Those are the bad ones. Others will say, - If we add a new product line, you can make the decision.' But some plans don't give you that choice."

Physician-patient communication and confidentiality are important. So, be careful about agreements where the MCO is asking you to give them confidential patient information. "You want a clause in the contract that says, - The patient's refusal to give consent to release information should not be construed as a physician's breach of contract,'" says Gosfield. "You want them to represent that they have a valid consent for you to give them patient information and that they will indemnify you if you are sued for breach of confidentiality."

One of the big issues is the "termination without cause" clause in the contract. Can the physician be terminated from the MCO or the network without cause? According to Rebecca Burke, attorney, at Washington, D.C.-based Powers, Pyles, Sutter and Verville, PC., this is one of the "most contentious issues" in managed care contracting.

Let's say there's been some quality concerns and complaints about the Physician Z and the MCO terminates the orthopaedic surgeon "without cause." Be aware that a "without cause termination" may be prohibited by state law or by accrediting organizations such as the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and National Committee on Quality Assurance (NCQA), if the organization is accredited by either of those bodies.

Explains Burke, "If the managed care organization is accredited by the JCAHO, there are certain requirements it must follow when terminating a physician which include appeal rights in some instances. In addition, state law may provide some protection. Further, physicians excluded by MCOs for issues related to competence or professional conduct may have due process rights under the federal Health Care Quality Improvement Act."

The Act requires HMOs to report certain types of negative actions to the National Practitioner Data Bank. If a doctor is terminated based on something that relates to his or her professional competence or quality of care, the physician needs to be aware that the data bank will be notified. This could affect his or her hospital staff privileges and ability to be credentialed by other MCOs in the future, notes Burke.

"One way to minimize risk associated with termination is to have a lengthy, detailed initial contract," says Burke. "Second, and even more important, is to limit or prohibit terminations 'without cause.' In addition, you need to be careful about how a 'for cause' termination is defined, and make sure you are not assuming risk for things over which you have little or no control."

One example that Burke cites involves an MCO that may want to terminate a physician who does not meet utilization guidelines. "You may want to include a provision that protects you in the case of events beyond your control such as an unusually complicated case mix," Burke says.

Further, adequate notice should be required for both termination and non-renewal.

"In addition, when a contract is terminated, you should be able to continue to treat patients who need your services and receive payment from the MCO until it has arranged for medically appropriate referrals of patients," says Burke.

"You have to worry about post-termination obligations such as: Will you agree to serve patients still in the hospital? Will you agree to continue to treat patients that were under your care for 90 days after a post-surgical period? Will you agree post-termination to provide services to any patient for whom premium was paid during the time you were under the contract?"

It's very important, notes Hansen, for physicians to develop a strategic plan which involves a review of the health care environment in which they practice. "This should include a critical look at your strengths, weaknesses, opportunities and threats-in light of the mission and values of the physicians in your practice. Once you've done that, you can develop goals that will propel you successfully into the future and make you a winner in today's competitive market."

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