Don't Give Insurers Your "Uninformed Consent"

Physicians, like patients, need the facts. Signing a contract without full documentation puts you at risk. Here's how to avoid it.

BY GIL WEBER, M.B.A.

For many years, I've been reviewing, analyzing and reporting to clients on their Provider Agreements. I've seen the good, the bad and the truly ugly contractual provisions many physicians agree to when they sign managed-care contracts. After so long, it's almost impossible for anything to render me speechless. Yet some contractual interactions between a physician and a payor are so basic, so utterly rudimentary, that when they don't happen, I'm left aghast.

No Copy (or an Ancient Copy) of the Provider Agreement On File

Surprisingly, often a client, particularly a new client, will call me expressing concern that revenues on some or many services seem to be different than expected. Or maybe the practice is experiencing many retroactive eligibility denials with associated take-backs or offsets against future payments. Whatever the reason, the practice needs help with an apparent contractual mess.

My response is always, "Send me a copy of the Provider Agreement and all exhibits, appendices, addenda and amendments. I need to see what should be happening so that we can respond appropriately to what is happening." That's when things get crazy and I feel as if I've suddenly gone down Alice's rabbit hole.

I know I'm in Alice's Wonderland when the response is "We can't find a copy of the contract in our files." Or, perhaps, I'm sent a Provider Agreement that was signed in 1996, and that 12-year-old contract comes to me without any exhibits, appendices, addenda or amendments.

In the first case, there is nothing I can do immediately for that client absent some documentation that tells me the terms of the deal. The client has to chase the paperwork. In the second case, I do have a snapshot of what the deal was when originally written — many years ago. But the current deal, based on changes made to the contract over the years, may be substantially different. And so I have some, but certainly far from everything, of what I need to advise. In both cases the practice is totally unprepared to understand what is happening, why it's happening and if it has a viable position to argue with the payor.

Politely Requesting (Demanding) the Contract

It is unforgivable for any practice to be involved in any managed care contract without a copy of its latest version in hand. That current version may mean the original, along with various associated attachments, etc., plus all amendments, or it may be an entirely new version that was issued to replace the original. Whatever the case, someone in the practice must be assigned the responsibility to clear out the cobwebs from the contract file drawer, determine what is and is not there and then obtain whatever is necessary to bring current every contract file.

To do that will mean sending a letter to every third-party payor for which no contract is on file and to every other payor for which the practice has a copy of the contract, but what if the deal was signed more than 2 or 3 years ago?

Now you're probably wondering why I suggest asking for copies of contracts that are found in your files and, in particular, why I include those contracts that are only a few years old. The answer is simple: Contracts change, and practices may not be aware that the deal as originally signed is not the deal now in place. And therein may be the root of the original problem. Payments might not be at anticipated amounts, or something has changed administratively because the contract was amended and nobody at the practice was aware that it had happened.

Figure 1. Sample letter requesting Provider Agreement.

So I offer here a sample letter you can use as a model to create another that is specific to your practice's needs. Note the simplicity of the request but also the specificity. You want a copy of the original contract and associated documents plus any and all changes (amendments) to the original contract, and you want a copy of the Notice (i.e., notification letter) that accompanied each amendment so that you can see what was said and done and when.

This last item, the Notice, is very important. While Provider Agreements typically say that the payor will provide the physician with advanced written notice of changes to the contract or to controlling policy documents, some contracts do not require this, even if a change will be material (meaning significant) to the practice. For example, I am currently reviewing a contract from a national payor that says, "<Name of payor> retains the right to amend this Agreement, the Provider Manual, the <name of payor> rate, any attachments or addenda, the Quality Improvement Program or Utilization Management Program, by making a good faith effort to provide notice to <name of provider> at least forty-five (45) days in advance of the effective date of the amendment."

Appreciate that once the amendment is in place the practice will be obligated to comply with and perform to any changes, so it could be disastrous not to know of a change(s). Thus, a "…good faith effort…" to notify the practice simply is not sufficient, and the payor must be required to provide actual notice and nothing less. (But this stipulation is a contractual discussion for another article at another time.)

Figure 1 shows a sample letter to request a copy of a Provider Agreement plus associated documents. Refine it with your attorney's assistance.

Politely Requesting (Demanding) the Complete Fee Schedule

Imagine yourself in this scenario. You want to buy a car, and you read an ad in the newspaper for a Lexus that sounds just like what you're looking for. So you drive over to the seller's home and the car is sitting in the driveway.

It looks quite nice on the outside — no major dings or scrapes to the paint. And the conversation goes something like this:

You: "Looks like a nice car. I'd like to take it to my mechanic to have it checked out."

Owner: "Oh, sorry, no. I can't let you take it away. But trust me. It's in great shape."

You: "OK, how about we take it for a test drive here in the neighborhood?"

Owner: "No, it has to stay here. But it's in great shape."

You (noticing that the car doors are locked): "Well, how about unlocking the doors so I can check it out inside?"

Owner: "Oh, sorry, no. But trust me. It's in great shape."

Are you going to sign a contract to buy this car without knowing critical details of its condition, and on a "trust me" from the owner? Of course you would not.

But then why do so many physicians sign Provider Agreements without a fee schedule, or with a partial fee schedule showing only a few CPT codes? Given what goes on in managed care, why would any physician sign a contract where the complete reimbursement terms are revealed only after the contract is signed or may not be revealed at all in their entirety?

Disingenuous, Utterly Disingenuous

I hear over and over again from physicians and administrators who tell me, "The payor won't send us the fee schedule. They tell us to submit 10 codes, and they'll give us the payments just for those." And to agree to that is simply nuts.

Now, intuitively you'd think that the parties to a contract have an absolute right to know the complete terms of the deal. Unfortunately as it relates to managed-care reimbursement terms, only some states (California, for example) require full disclosure. And remember that the law doesn't protect a party from signing an unfavorable contract — only from signing an illegal one. There is an important difference.

For example, if you sign a contract with a third-party payor that pays 65% of Medicare Allowable, you're likely stuck adhering to those terms. Even though it's going to be a financial loser, you are assumed to have made the decision based on careful thought. And though it may be a lousy deal, it's legal and you'll be compelled to perform until the contract terms allow you to terminate.

Figure 2. Sample letter re questing fee schedule.

However, you cannot be compelled to perform to an illegal contract. For example, if you signed a contract for the murder of a neighbor but the "hit man" backed out and would not do the killing, you cannot sue to require performance since the contract was for an illegal act and, therefore, is unenforceable.

So if you sign a managed-care contract without knowing how much you'll be paid for each and every service you will or might perform, then when you discover that it's a really bad deal, you're stuck for the term of the contract. And here's how that nightmare might unfold for your practice.

You provide service 670XX and are paid $1,300. Assume 670XX is not among the 10 payment codes you were provided by the plan. So your business office doesn't know if $1,300 is correct.

The next claim for 670XX comes back paid at $1,415, and then one comes in paid at $1,065. Now what is your staff supposed to do?

Was the $1,415 payment an overpayment, and should it actually have been only $1,300? Or was the actual amount supposed to be $1,415, in which case both other claims were underpaid? Or were you supposed to receive only the $1,065, in which case you're eventually going to get letters from the payor demanding refunds of the "overpayments" or else it will take back or offset the differences against future payments?

Without a complete fee schedule including 670XX, your staff has no idea which of these claims, if any, were properly paid. For all you know, when a health plan staffer states that $1,065 is correct, in truth $1,300 might be correct, or maybe $1,415. What a mess for your business office. But too bad: You signed the contract and now the chickens have come home to roost.

Figure 2 provides a sample letter to request a copy of the fee schedule. It can be adapted for use in your practice.

"Give Us Your Top 10 Codes and We'll Give You Those Fees"

So what if during the contracting preliminaries the payor says it will only give you reimbursement information for 10 codes or will only give you the fee schedule after the deal is signed because "the rates are proprietary and we only release them to contracted providers."

That is utterly disingenuous. The payor is saying in so many words, "If you're foolish enough to sign this deal without knowing what you're going to be paid, then we'll happily hold in reserve the ability to mess with you in any way we can." Ouch!

"Just Say No!"

These are words to live by when it comes to managed care contracting. When you're told that the fee schedule will be revealed only in part before the contract is signed, or not at all until after the contract is signed, just say, "No!" And then, with the assistance of your attorney, send a letter based on the sample below to the payor. Demand full disclosure upfront.

There can be no possible, legitimate reasons why a payor would refuse this information. Any excuses mean that the payor is showing you a big red flag and saying in so many words, "Take it or leave it."

Bottom line: Leave it! OM

Gil Weber is a nationally recognized author, lecturer and practice management/managed care consultant to physicians and industry. He can be reached at (321) 255-6018 or by e-mail at gil@gilweber.com. Also, visit his website at http://www.gilweber.com