In this issue, the series continues with the managed care contract dissection that was initiated in the January/February issue of Decisions in Axis Imaging News. The discussion encompasses medical records, terms and termination, compensation, and miscellaneous obligations. Suggested additions to the text or revisions will appear in italics. Deletions will be demonstrated with strike-throughs, with the author’s comments under each indented paragraph where required. As always, this does not serve as legal or other professional advice and competent professional counsel should always be sought prior to making decisions about contract analysis and revisions.

C. Records

1. Health Plan, Group, and its Represented Physicians agree that clinical records of Participants shall be regarded as confidential and agree to comply with all applicable federal and state laws and regulations regarding such records. This provision shall survive the termination of this Agreement.

Comment: This statement of agreement assumes that you are aware of, understand, and will follow these regulations and laws explicitly. To sign off on this agreement means that you give a good faith promise that you promise to comply with all of them under penalty of breach.

2. Group and its Represented Physicians shall maintain and furnish such records and documents as may be required by applicable laws, and regulations and Program Requirements. Group and its Represented Physicians shall cooperate with Health Plan to facilitate the information and record exchanges necessary for Quality Management, Utilization Management, peer review, or other programs required for Health Plan operations.

Comment: Add in the statutory citation related to medical records copy fees and the price per page for such copies.

3. Group and its Represented Physicians shall provide Health Plan or its designee with reasonable access during regular business hours to specified clinical and medical records of Participants maintained by Group and its Represented Physicians for the period required by applicable law, and at any time thereafter that such access is reasonably required in connection with a Participant’s health care. This provision shall survive the termination of the Agreement.

Comment: It will be necessary to determine who this designee will be and their training and their commitment to patient confidentiality. It might be a good idea to have them sign a nondisclosure on any records or films reviewed. Also, determine if they are an independent contractor or a salaried employer of the plan in the event of a lawsuit, as to captain of the ship doctrines. Limit access and commitments to archive old records to the period prescribed by laws or regulations — nothing more!

4. Designated Payor shall indemnify and hold harmless Group for any claim by a Participant for breach of confidentiality resulting from Group’s compliance with this section.

Comment: A great paragraph in case you are sued for compliance with the above three paragraphs!

5. Group and its Represented Physicians shall cooperate with Health Plan in the development and maintenance of statistical data, records, and procedures in support of Quality Management, Utilization Management, and other applicable Program Requirements.

Comment: What does it mean to cooperate in development and maintenance of data and procedure? This could get expensive and preoccupy several staff members and physicians from their regular duties to comply with this. The activities need to be cost-analyzed before blanket agreement is given to this paragraph.

D. Participant Grievance

Group and its Represented Physicians shall use best efforts to cooperate with Health Plan in the implementation of its Participant grievance procedureGrievance Procedure and shall use best efforts to assist Health Plan in taking appropriate corrective action. Group and its Represented Physicians shall use best efforts to comply with all final determinations made by Health Plan pursuant to such grievance procedure. Within 5 working days of receipt of a complaint or grievance, Group or Represented Physician shall provide Health Plan with a written response.

Comment: Always look for due process, confidentiality of responses, and the ability to have legal counsel represent you in such matters, and only promise to use your best efforts to comply with mandates delivered by the plan.

E. Insurance and Liability

1. Throughout the term of this Agreement, Group shall maintain at Group’s expense general and professional liability coverage in a form and amount acceptable to Health Plan. Group shall require each Represented Physician to maintain such coverage(s) in a form and amount acceptable to Health Plan. Group shall give Health Plan certificates of insurance (C of I) (i) evidencing the coverage(s) described herein upon request and (ii) naming Health Plan as the certificateholder to ensure that the carrier will not cancel, modify, or terminate the coverage unless it provides thirty (30) days’ prior written notice to Health Plan. In addition, Group shall give Health Plan thirty (30) days’ prior written notice of cancellation, modification, or termination of any such insurance(s). Group shall give Health Plan prompt written notice of any claimssettlements against Group’s or any of its Represented Physicians’ liability coverage.

Comment: The first sentence is speaking about officers and directors and errors and omissions coverage of the medical group, while the second sentence speaks to individual professional liability insurance. Have the amounts and type of coverage stipulated in the contract, and changes made only via amendment. If the insurance carrier agrees to give the plan notice of cancellation or modifications in coverage, consider deletion of the fourth sentence, as it may be redundant, and finally on the last sentence, consider agreement to notice the plans on public record settlements or judgment, but not claims or confidential settlements.

2. Group shall notify Health Plan immediately of the final adverse determination of any complaint, inquiry, investigation, or review with or by any licensing or regulatory authority peer review organization, hospital committee, or other committee, organization, or body which reviews quality of medical care which complaint, inquiry, investigation, or review directly or indirectly, evaluates or focuses on the quality of care provided by Group or its Represented Physicians either in any specific instance or in general.

Comment:?Too blue sky — consider the revision below:

Group shall notify Plan within one working day of the issuance of any formal charges against the Group by any governmental agencies, the Joint Commission on Accreditation of Healthcare Organizations, or any other licensing or accreditation organization, which would, if sustained, materially impair the Group’s ability to comply with its duties and obligations pursuant to this Agreement.

3. Neither party hereto shall be liable for defending or for the expense of defending the other party, its agent, or employees, against any claim, legal action, dispute resolution, or administrative or regulatory proceeding arising out of or related to such other party’s actions or omissions under this Agreement. Neither party hereto shall be liable for any liability of the other party, its agents, or employees, whether resulting from judgment, settlement, award, fine, or otherwise, which arises out of such other party’s actions or omissions under this Agreement. This provision shall survive the termination of this Agreement.

Comment: This is often referred to as “Each Responsible for Own Acts” language and is different than mutual indemnification, as seen below:

F. Indemnification

Each party agrees to indemnify, defend, and hold harmless the other, its agents, and employees from and against any and all liability or expense, including defense costs and legal fees, incurred in connection with claims for damages of any nature, including but not limited to bodily injury, death, personal injury, property damage, or other damages arising from the performance of or failure to perform, its obligations under this Agreement, unless it is determined that the liability was the direct consequence of negligence or willful misconduct on the part of the other party, its agents, or employees. This provision shall survive the termination of this Agreement.

Comment: It is interesting to see both paragraphs in one contract, “Each Responsible” and “Indemnification,” as they are juxtaposed. It is highly likely that indemnification was stricken but not removed in favor of the “Each Responsible for Own Acts,” but it creates a contracting dilemma — as neither carries more weight than the other. A great lesson in proofreading!

G. Inspections

Upon reasonable notice and at reasonable hours, Health Plan or its agents may inspect Group’s or Represented Providers’ premises and operations to ensure that they are adequate to meet Participants’ needs based on Health Plan’s Site Review Credentialing Criteria, attached hereto and incorporated herein by reference.

Comment: If you are held responsible to any such criteria, it should be provided to you in advance of the signing of the contract.

H. Representations

Comment: This section should always be approached with the “best efforts,” “best of ?knowledge,” “best of ?ability” language, as indicated.

1. Group and each Represented Physician represent and warrant that the information set forth in the Health Plan Physician Application or other application furnished to Group is true and correct to the best of their knowledge. Group shall promptly notify Health Plan of any changes in the information contained in any Represented Physician’s Application within thirty (30) days of such change, whenever possible.

2. Group represents and warrants that only Represented Physicians will be allowed to provide Covered Services.

Comment: The word only is problematic here, as technicians, nurses, etc, would not be able to be involved in direct patient care the way it is written.

3. Group represents and warrants that it is authorized to act on behalf of its Represented Physicians and will provide evidence of authority upon request.

Comment: This may have some antitrust implications depending on how the group is structured.

4. Group shalluse its best efforts to encourage compliance withallwill provide evidence of Represented Physicians’ agreement to abide by the terms of this Agreement upon request.

Comment: Do not agree to language that is not possible to enforce or make good on a promise — the above being a perfect example — you cannot control others’ behavior or provide evidence that someone else read and understood something.

5. Health Plan makes no representations or guarantees concerning the number of Participants it can or will refer to Group under this Agreement.

Comment: If this was the case, there would be no discussion of steerage discounts, etc.

6. Health Plan will make best effort to market Represented Physicians to client payors. Group shall have first right of review and right of refusal on any and all marketing documents that identify the Group specifically.

Comment: Always require right of refusal and right of review when anyone else is going to speak for you or market you or your services — to ensure no unnecessary liability exposures for unrealized marketing promises, etc.

I. Confidentiality

The parties that, as a result of this Agreement, each may have access to certain trade secrets and other confidential and proprietary information of the other. Each party shall hold such trade secrets and other confidential and proprietary information including the terms and conditions of this Agreement, in confidence and shall not disclose such information either by publication or otherwise to any person without the prior written consent of the other party except as may be required by law and except as may be required to fulfill the rights and obligations set forth in this Agreement. With respect to Health Plan, such confidential and proprietary information shall include, without limitation, the Program Attachments and Program Requirements. This provision shall survive the termination of this Agreement.

Notwithstanding the foregoing, Group shall be permitted to submit any Explanation of Benefits (EOB) or other such payment advice or voucher to another secondary source of payment solely for the purpose of coordination of benefits. Any other use shall be construed as a material breach of this provision.

Comment: Without this addition, you may be violating every contract you presently have when you submit EOBs for coordination of benefits to secondary payors, as you are disclosing the rates of the first payor.


A. Independent Contractor Relationship

1. This Agreement is not intended to create nor shall be construed to create any relationship between Health Plan and Group other than that of independent entities contracting for the purpose of effecting provisions of this Agreement. Neither party nor any of their representatives shall be construed to be the agent, employer, employee, or representative of the other.

2. Nothing in this Agreement, including Group and its Represented Physicians’ participation in the Quality Management and Utilization Management process, shall be construed to interfere with or in any way affect Represented Physician’s obligation to exercise independent medical judgment in rendering health care services to Participants.

3. Group represents that each medical staff member has the requisite training and education to make all decisions related to patient care and shall exercise independent medical judgment with respect to all such matters. Health Plan shall not interfere with any medical staff member’s independent medical judgment with regard to treatment or utilization issues. Any payment or absence of payment for services shall not constitute an opinion or affirmation by Health Plan that the services or procedures recommended or rendered by a member of medical staff are, are not, were, or were not medically appropriate, but only that the service or procedure was not a Covered Service.

B. Term of Agreement

This Agreement shall begin on the Effective Date and shall continue from year to year thereafter, unless terminated as set forth below. The parties shall meet not less than xxxx (x) months prior to the anniversary date to renegotiate any terms and conditions necessary to keep this Agreement current with market conditions.

C. Termination

1. For Cause. Group or Health Plan may terminate this Agreement at any time for cause. Cause for termination includes, but is not limited to, the following:

a. Material failure of Health Plan or other Payor when acting as Payor, to make required payments to Group.

b. Any material change or alteration by Health Plan of Program Requirements if such action is unacceptable to Group, providing that Group gives Health Plan notice of rejection of such action within sixty (60) days of receipt by Group of Health Plan’s notice concerning the change or alteration.

c. Any material misrepresentation or falsification of any information submitted by Group or Represented Providers to Health Plan.either Party.

d. Nonpayment of Represented Providers by Group for Covered Services rendered by Represented Providers.

e. Material breach of this Agreement by either party.

f. Failure by Group to maintain contracts with the Required Represented Provider Panel.

g. A material adverse change in Group’seither party’s financial condition.

h. Habitual neglect or continued failure by either party to perform its duties under this Agreement.

i. Enactment of state or federal legislation which renders this Agreement illegal or which significantly decreases the value of continuing this Agreement to either party.

j. Failure of Health Plan to maintain licenses or certifications required to operate in conformity with this Agreement, or to comply with applicable laws, regulations, or Program Requirements.

k. Initiation of bankruptcy proceedings by or against either party, with the exception of reorganization under Chapter 11 of the United States Bankruptcy Code.

l. Failure by Group or its Represented Providers to maintain licenses required to perform duties under this Agreement, or to comply with applicable laws, regulations, or Program Requirements.

m. Commission or omission of any act or any conduct or allegation of conduct for which Groupeither party is disciplined by any licensing regulatory, professional entity or any professional organization with jurisdiction over Group or Represented Providereither party.

n. Failure of Group or Represented Providereither party to maintain required liability coverage protection.

o. Commission or omission of any act or conduct by Group or Represented Providereither party that is detrimental to Participant’s health or safety.

Any occurrence under paragraphs (h) through (o) above shall be grounds for immediate termination. Termination for any other reason set forth above shall be upon thirty (30) days’ prior written notice unless said reason for termination is cured to the satisfaction of the person giving such notice within said thirty (30) day period.

2. Without Cause. This Agreement or any individual Program Attachment to this Agreement may be terminated at any time without cause or prejudice upon one hundred twenty (120) days’ prior written notice by either party. Termination of any individual Program Attachment will not have the effect of terminating the entire Agreement, and all remaining Sections and Program Attachments of the Agreement will remain in full force.

At the election of the Health Plan, this Agreement and any individual Program Attachment to this Agreement shall remain in full force and effect as to the Participants in the Group panel at the time of the termination notification until Health Plan’s provision for the assumption of such services by another provider for a maximum 30 days. In the event that such assumption of services is delayed by Health Plan or applicable Payor for any reason and Participants cannot be safely transferred to another Participating Provider, Health Plan or applicable Payor shall compensate Group and/or its Represented Physicians at the rate of one hundred percent (100%) of billed charges for the period extending beyond the 30 days post-termination.

D. Rights and Obligations Upon Termination

Upon termination of this Agreement for any reason, the rights of each party hereunder shall terminate, except as provided in any Program Attachment to this Agreement. Any such termination, however, shall not release Group, its Represented Physicians, or Health Plan from obligations under this Agreement prior to the effective date of termination.

E. Assignment and Delegation of Duties

Neither Health Plan nor Group may assign duties, rights, or interests under this Agreement unless the other party shall so approve by written consent of which such consent shall not be unreasonably withheld.

F. Use of Name

Group agrees that Health Plan may include descriptive information relating to Group and its Represented Providers in literature distributed to existing or potential Participants, Participating Providers, and Payors. Such information shall include, but not be limited to Represented Providers’ names, office telephone numbers and addresses, specialties, board certifications, and hospital affiliations. Group’s use of Health Plan’s name or Health Plan Affiliates names, or any other use of Group’s or its Represented Providers’ names by Health Plan, shall be upon prior written approval or as the parties may agree.

Comment: What if there is a material error? Or an omission? There is no penalty stated here. Not being included in a directory could cause you business.

G. Interpretation and Venue

The validity, enforceability, and interpretation of this Agreement shall be governed by any applicable federal law and by the applicable laws of the stateyour state in which Group and its Represented Physicians are licensed and have rendered Covered Services.

Venue shall be designated as the government seat for the city, county, and state of the Group’s domicile.

Comment: Keep venue and governing law in the state where the licenses of the physicians are held.

H. Amendment

1. Health Plan or Group may amend this Agreement and Program Attachments by providing prior written notice via certified mailUnited States Mail, postage prepaid, certified, return receipt requested to the named party in the notice section. Failure of the other party to object in writing to any such proposed amendmentWritten acceptance or rejection shall be conveyed to the amending party within sixty (60) days following receipt of notice and shall constitute acceptance thereof. Notification of rejection of any proposed amendment means that this Agreement shall remain in force without the proposed amendment.

Comment: Avoid “failure to object” language and formalize the method of notice of any amendment to the contract.

2. In the event that state or federal law or regulation should change, alter, or modify the present services, levels of payments to Health Plan, standards of eligibility of Participants, or any operations of Health Plan, such that the language, terms, benefits, and conditions of this Agreement must be changed accordingly, then upon notice from Health Plan, Group shall continue to perform services under this Agreement as modified.

3. Except as provided above, amendments to this Agreement shall be agreed to in advance in writing by Health Plan and Group.

I. Program Attachments

The Program Attachments hereto are a part of this Agreement and their terms shall supersede those of other parts of this Agreement in the event of a conflict.

Comment: “Supersede” is a dangerous word. Make sure you are aware of any conflicts in the two documents as the other documents you may not possess could contain some “gotchas.”

J. Entire Contract

This Agreement together with all Program Attachments, Schedules, Exhibits, Manuals, Memorandums, and other writings attached hereto and incorporated herein by reference contains all the terms and conditions agreed upon by the parties, and supersedes all other agreements, express or implied, verbal or written, regarding the subject matter.

Comment: This paragraph needs to include all documents you are counting on to make a decision to sign. Failure to do so means that they are not included in the contract and may be treated as hearsay.

K. Notice

Any notice required hereunder shall be in writing and shall be sent by United States mail, postage prepaid, certified, return receipt requested, to Health Plan and Group at the address set forth below:

Comment: Make sure there is an address in this place if it says “below.”

L. Enforceability and Waiver

The invalidity and unenforceability of any term or provision of this Agreement shall in no way affect the validity or enforceability of any other term or provision. The waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

Comment: Without the second sentence, a breach may become the standard in a new behavior by either party.

M. Captions and Construction

The captions used as headings of the various paragraphs hereof are for convenience only, and the parties agree that such captions are not to be construed to be part of this Agreement or to be used in determining or construing the intent or context of this Agreement.

In WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the Effective Date.

Effective DATE:___________________



This concludes the standard managed care agreement.

Maria K. Todd [[email protected]]is president and CEO of HealthPro Consulting Consortium Inc, a Denver-based national consulting firm specializing in managed care and integrated delivery system concerns.