Many times healthcare providers are placed in a difficult position in their contracted reimbursement relationships.

While the entire contract brings profitability and patients, one or two of the payers that have been afforded access become difficult, don't pay as negotiated or worse, argue that they can access the rate but are are not required to follow the other terms and conditions associated with the deal.

When this happens, it is time to take steps to protect your interest. However, without some specific language to terminate the bad actor from accessing your discount, you may be forced into a difficult position to choose to continue the abusive relationship or terminate the entire contract instead of just terminating the bad actor.
Often this happens with self-funded payers that operate a health benefit plan under ERISA for their employees. They argue that providers cannot enforce the terms of the agreement on them because they are not in privity of contract with the provider. This can be frustrating.

One snippet of language that I have used in contracts that will be shared beyond the signatory to the contract and will be share as part of a wrap network is as follows:

Plan’s liability for payment of claims for Participants covered under Self-Insured Groups is limited to the funds Plan receives from the Group for disbursement to Hospital pursuant to Plan’s contract with the Group. Hospital hereby acknowledges that it is accepting risk of non-payment from Plan in the event a Group fails to meet its obligations under the contract between Plan and Group, regardless of whether such failure is a result of insolvency or for other reasons. In the event a Self-Insured Group fails to make payment for Covered Services, Hospital shall, upon notice to Plan, cease to be bound by this Agreement with respect to servicing Self-Insured Groups, and may pursue payment for unsatisfied claims directly from said Group Participants. This Article shall not operate nor be construed to allow Hospital to seek or recover more than what is due under the terms and conditions of this Agreement for services provided prior to notice to Plan. Plan shall provide Hospital with the necessary information to implement this Article upon request by Hospital.

Always ask your corporate counsel to review this and other snippets for applicability and prior to your use, but offer up this rough draft as a directional example of what it is you are trying to accomplish.

There is one other, shorter version that I sometimes use, which appears below.

Plan grants to the Provider the right to selectively Terminate from the contract those Payer Groups that rent the network and demonstrate the inability to adhere to the provisions of the contract. Plan agrees to work with the Payer and Provider to resolve issues of non-payment within 30 days. Should Payer fail to pay, Provider has the right to bill the Member.

Retain your right to extricate yourself from bad deals. Don't just live with bad actors.  Put this issue on your contracting checklist so that you don't forget to include this discussion in both new and renewed payer and network agreements.

About the Author:

Maria K Todd, MHA, PhD is known around the world for her expertise and generosity in sharing ideas, techniques and practical tools with her colleagues in the industry. She is a leading health care industry consultant and described by clients and peers as a visionary and thought leader. Statistically, she is the leading trainer in managed care contracting worldwide.  Since 1989, she has lectured professionally through colleges, universities, seminar companies, publishers and non-profit professional associations as well as on-site private training classes for hospitals, medical groups, offshore revenue cycle business process organizations and pharmaceutical and medical device manufacturers. In total she has delivered more than 2600 managed care training classes and seminars to over 53,000 attendees and participants.  Every month the number grows higher and higher!

Conflict Disclosure: The author is a professional consultant and derives a substantial percentage of her income reviewing managed care agreements and advising hospitals, physicians and others on matters regarding managed care and contracted reimbursement. The author previously worked for a Health Plan in provider relations as a contract negotiator. The author has no other conflicts to declare. This disclosure accurate as of November 5, 2008.

Notice: Please remember that the opinions, and information contained in this document is that of the individual author.  These materials (1) do not constitute legal advice; (2) do not form the basis for the creation of any relationship; and (3) should not be relied upon without seeking specific legal advice with respect to the particular facts and current state of the law applicable to any situation requiring legal advice. These materials may only be reproduced with the prior written consent of Maria Todd.  These materials are provided with the understanding that the author is not rendering legal, accounting, or other professional advice or opinions on specific facts or matters, and, accordingly, such entities assume no liability whatsoever in connection with their use.

You can learn more about managed care contracting in Maria's latest book,The Managed Care Contracting Handbook, 2nd Edition (2009)

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