In this issue, the series continues with the contract dissection that was initiated in the January/February issue of Decisions in Axis Imaging News. The discussion encompasses an examination of the operational and contractual issues in the party’s obligations and compensation sections.

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 deletions or changes have been made. 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.

The Parties’ Obligations

A. Services

1. Group, its Represented Physicians and Health Plan shall use best efforts to act in accordance with the terms of this Agreement and applicable Program Attachments and Program Requirements.? Group and its Represented Physicians shall accept the rates set forth in this Agreement as Exhibit B attached hereto and incorporated herein by reference as payment in full for all Covered Services provided to Participants pursuant to this Agreement.


1. Include the health plan in the requirement to act in accordance with its own agreement, or else it may be able to deviate from its own policy and not be in breach.

2. Insert “use best efforts” to mitigate exposure for damages related to any breach.

3. Specify where the fees are set forth in the agreement.

4. Annex the fee schedule with the “attached?” language.

5. Any reference to services should be referred to as “Covered Services” consistently throughout the document.

2. Group through its Represented Physicians shall provide Covered Services with the same standard of care, skill, and diligence customarily used by similar physicians in the community in which such services are rendered. Group and its Represented Physicians shall render Covered Services in the same manner, in accordance with the same standards, and with the same availability, as offered to other patients. Group and its Represented Physicians shall not differentiate or discriminate in the treatment of any Participant because of race, color, national origin, ancestry, religion, sex, marital status, sexual orientation, age, health status, or source of payment.

Comment: This is typical language for antidiscrimination and is usually required by the state and the Health Care Financing Admnistration (HCFA).

3. Group, and Represented Providers and Health Plan shall be bound by, and comply with, the provisions of applicable state and federal laws, regulations, current year National Committee for Quality Assurance (“NCQA”) credentialing and recredentialing requirements and Program Requirements. Group, and its Represented Providers and Health Plan shall use their respective best efforts to maintain all licenses and certifications required in order to perform the obligations set forth herein. Group and Represented Providers shall use best efforts to comply with the requirements of, and shall participate in, Utilization Management and Quality Management.


1. Include the health plan in the requirement to act in accordance with laws and maintain licensure, or else it may be able to deviate from its laws and lose its licensure and not be in breach of the contract.

2. Determine through written clarification what it means to “participate in Utilization Management and Quality Management.”

3. Insert “use best efforts to” mitigate exposure for damages related to any breach where the absolute of “shall?” wherever applicable.

4. Group shall use best efforts to establish and maintain a panel of physicians and other health care professionals adequate in size or composition and distribution, as determined by Health Plan, Group to accommodate the Covered Services required by Participants. Group must secure binding agreements with the Participating Provider Panel to provide Covered Services pursuant to this Agreement three (3) weeks prior to the Effective Date of this Agreement. In the event that Group has failed to do so, the Effective Date of this Agreement shall be delayed as mutually determined by Health Plan and Group.


1. Insert “use best efforts to” mitigate exposure for damages related to any breach where the absolute of “shall?” wherever applicable.

2. Health Plan should not dictate business policy in size, composition, or coverage concerns of a group practice.

3. Decision to delay start-up should be decided mutually by both health plan and group.

4. Determine if the effective date is signing date or implementation date when the contract goes into effect, or some other meaning.

5. Upon request, Group will provide Health Plan with the data elements set forth in Exhibit C (Credentialing Information) for each Represented Provider. Group further agrees to update Health Plan on any addition(s) to, or termination(s) of Participating Providers and any changes to Participating Provider data elements as soon as possible, but no less frequently than monthly. Group will not add any physician to its panel of Participating Providers except upon the terms and conditions established by Health Plan and upon prior written approval of which such approval shall not be unreasonably withheld. In addition, in recognition of Health Plan’s need to communicate changes in Participating Providers to Participants, Group shall not make any changes in the size, composition, or location of its panel of Represented Providers without first providing thirty (30) days’ advance written notice to Health Plan, whenever possible.


1. Group is required to have any new Participating Physician credentialed before treating patients. That is what the second sentence implies, but obtain written clarification that this is all it implies, and nothing else that would restrict growth of the practice and access to the agreement.

2. In lieu of “use best efforts to,” you may be able to say, “whenever possible.”

6. Group shall use its best efforts to maintain agreements with each of its Participating Providers requiring Participating Providers to comply with all of the terms and conditions of this Agreement to the extent applicable. The form of Group’s standard agreement with Participating Providers and any amendments thereto must be approved? reviewed in advance by Health Plan.


1. “To the extent applicable” adds ambiguity to the agreement, obtain clarification as to what is applicable or ask your attorney if you should omit the words altogether.

2. Health Plan should not have the power to approve internal business documents, but can ask to see them for compliance with the Physician Incentive Plan in the event that 25% or more of the reimbursement is at risk through capitation or withholds.

Legislative action to regulate physician incentive plans (PIP) was first enacted in the Omnibus Budget Reconciliation Acts (OBRA) of 1986 and 1987. In 1990, these laws were superseded by a new OBRA. Statutory authority for this regulation can be found in sections 1876(I)(8), 1903(m)(2)(A)(x), and 1903(m)(5)(A)(v) of the Social Security Act (the Act) and Part C of the Balanced Budget Act of 1997.

A final rule on PIP for Medicare and Medicaid Managed Care Organizations (MCOs) was published in the Federal Register on March 27, 1996. Corrected final rules were published in the Federal Register on September 3 and December 31 of 1996. PIP regulations are at 42 CFR 422.208/210 of the June 26, 1998 regulations that implement Part C.

7. For referrals, Participating Providers shall refer Participants to other Participating Providers for Covered Services except in the case of an Emergency or as otherwise described in applicable Program Requirements or as otherwise required by law.


1. Depending on who owns the health plan, this could present potential antikickback and Stark II concerns. Once you find out who has a financial interest in the health plan, obtain health law specialty advice.

2. Determine which Program Requirements are applicable through written clarification.

8. Represented Providers shall be credentialed and recredentialed in accordance with the procedures set forth in Exhibit 1-A to this Agreement.

Comment: Ensure that Exhibit 1-A is truly the credentialing policy and procedure and not some abbreviated document, and verify that this procedure is in accordance with NCQA requirements and nothing additional.

9. Group shall provide trained service personnel to answer questions and respond to complaints from Payors, Participants, Participating Providers, or Health Plan. Group shall promptly respond to all such inquiries and complaints within 24 hours of receipt unless an alternative agreement is reached between Group and Health Plan or the person(s) initiating the inquiry or complaint.


1. Define “trained” and who will design the training and conduct it and certify that the personnel are trained adequately.

2. Change 24 hours to a reference to workdays and define a workday by days of the week and hours, excluding holidays.

3. Ascertain why there is a reference to “promptly” and a stipulation of “24-hours” in the same sentence. Do they mean the same thing?

10. Health Plan shall establish and maintain a real-time system of Participant identification, communicate Program Requirements to Represented Providers, and identify Represented Providers to Payors and Participants.?? Providers may rely upon telephonic verification of eligibility. In the event refunds are due for claims paid for services rendered to ineligible Participants, Health Plan or applicable Payor shall seek restitution from the responsible party or Employer, in the event of reporting delays, or shall absorb the costs in the event of erroneous information supplied to Group or Participating Providers. Under no circumstances shall the Health Plan or applicable Payor have any right of offset against Group or any Participating Provider.

Comment:The suggested changes are self-explanatory. Remember to have legal counsel review and make any necessary changes to make the concept suggested here enforceable.

11. Health Plan shall contract, directly or indirectly, with Payors and shall cause such Payors who agree to pay Group in accordance with this Agreement for Covered Services rendered by Represented Providers.

Comment: Various attorneys have noted that unless there is a requirement using causal language, there may not be enforceability. Further, that if they paid no one, the Payor would not be in breach as the document was originally written. Remember to have legal counsel review and make any necessary changes to make the concept suggested here enforceable.

12. Health Plan shall, upon specific request by Group, identify the Payor(s) responsible for payment of Covered Services, not less than thirty (30) days prior to the Effective Date of any new Payor, or Service Agreement. In the event of any conflicting Payor Service Agreements, the fee schedule and any related discounts shall be processed in accordance with the logo identified on the most current Participant identification card. In the event of multiple logos affixed on the Participant identification card, the present negotiated rate that was negotiated directly with the provider shall prevail and be used to calculate allowable fees.

??? In the event that Health Plan desires to add any new Payor(s) wishing to make use of the Group and its Participating Physicians for Covered Services at negotiated rates, such use shall be upon Group’s prior review and acceptance. Acceptance or rejection of the new Payor shall be conveyed to Health Plan in writing within thirty (30) days of receipt of Health Plan’s submission of any documentation necessary for Group’s due diligence and review. Upon thorough review, Group shall not unreasonably refuse to accept new Payor(s). Reasons for refusal of such new individuals and organizations shall include, but not be limited to, the existence of ongoing contracts still in effect, Plans and Payors operating in the same market area who have already been declined by the Group within the last 2 years, and/or financial stability that is questionable in the Group’s sole and absolute discretion.

Comment: The changes are self-explanatory, and the addition is paramount to dealing with the silent PPO problem that has arisen in the industry. Since September 28, 1998, this addition has been easier to negotiate with health plans, subsequent to the decision rendered in HCA Health Services of Georgia, Inc v Employers Health Insurance Co. 1998 US Dist. LEXIS 15176 (US Dist Ct ND Ga 9/28/98), together with appropriate changes to the assignment clause as required Have your attorney re-write this as required to be enforceable in your state.

B. Compensation and Billing

1. Group shall receive payments for Covered Services as set forth in Program Attachment Exhibit B of this Agreement attached hereto and incorporated herein by reference. Compensation arrangements and rates are set forth in applicable Program Attachments

2. Group and its Represented Physicians shall use best efforts to comply with the limitations on billing Participants for Covered Services as set forth in applicable Program Attachments.


1. Peruse these Program Attachments or other documents to ascertain that such limits are placed only on Covered Services.

2. “Best efforts” language can help mitigate exposure to being sued for damages in the event you are terminated because erroneous bills were sent to the participant.

3. For any Covered Services that are reimbursed on a fee-for-service basis, Group shall bill according to the following:

a. Group shall submit claims on the appropriate claim form a HCFA 1500 or UB-92 standard claim form for all Covered Services within ninety (90) days of the date those services are rendered. Claims received after this ninety (90) day period may be denied for payment. Group shall submit claims to the location described in the applicable Program Requirements.


1. Narrow the claim form down to the form you use, if possible.

2. When claims will be denied for sure, “may” is a discretionary word.

3. Is 90 days enough?

b. In the event that Group shall bill for services using an electronic format, such format shall be compliant with ANSI ASC X.12 Electronic Data Interchange (EDI) protocols. In addition, Health Plan and Payors shall be Year 2000 (Y2K) compliant.


1. If not ANSI, perhaps the software protocols you have resident in your billing system should be stipulated, lest you be required to accommodate the payors’ potentially nonstandard software.

2. Y2K should be stated for the record as a warranty and guarantee.

c. In the event of unforeseen circumstances ( ie, loss of key billing staff, delayed computer conversions,? fires, floods, or other force majeure), Health Plan and other Payors shall grant a leniency of and additional 30-45 days upon written request.

Comment: This is not difficult to grant, but be prepared for the plan to ask for reciprocity.

d. Health Plan and other Payors shall grant one perfunctory leniency per Represented Provider/per year in which any claims previously denied for being presented in excess of timely filing limits may be reconsidered for payment.? Such claims shall not be granted leniency for dates of service in excess of one hundred eighty (180) days from the date of the leniency request.

Comment: This privilege will be more difficult and will require leverage, as it tampers with the IBNR settlements that the plan is required to file with the state.

e. Any amount under this Agreement shall be paid within thirty (30) days receipt? in accordance with [Your State] Statutes? (include citation(s)) of a complete claim, unless additional required information Is requested within the thirty (30) day period prescribed by Statute, or the claim involves coordination of benefits, except as otherwise provided in the applicable Program Attachments. An example of a clean claim shall be attached as Exhibit (XX) to this Agreement attached hereto and incorporated herein by reference.

Comment: Keep consistent with state statutes on all parts of this timely payment issue. Either look to statute for additional submission requirements and clean claim definitions or obtain an actual sample with the name and other patient particulars redacted, and annex the sample to the contract. Have your attorney review the wording on this to ensure enforceability.

4. The following provisions apply regarding coordination of benefits

a. Certain claims for services rendered to Participants are claims for which another payor may be primarily responsible under coordination of benefit rules. Group shall bill such claims to the primary payor when information regarding such primary payor is available, or upon designated Payor’s request.

b. When designated Payor is primary under applicable coordination of benefits rules, Payor shall pay benefits as set forth in this Agreement without regard to the obligations of any secondary payor.

c. When designated Payor is determined to be secondary to any other payor including Medicare, Payor will pay only those amounts which, when added to amounts payable to Group from other sources under the applicable coordination of benefits rules, equal one hundred percent of the Group’s reimbursement for Covered Services pursuant to this Agreement. Payor shall not be liable for any amount unless Payor has received Group’s claim for such secondary payment within ninety (90) days of the date when Payor is determined to be secondary. primary Payment is received.

d. Where another payor is primary under coordination of benefits rules, Group shall follow that payor’s billing rules.

Comment: Replace with your state statutes on coordination of benefits, if any.

5. Group may bill an individual directly for any services provided following the date the individual ceases to be a Participant. Designated Payor has no obligation under this Agreement to pay for services rendered to individuals who no longer are Participants.

Comment: This is stated for the record; however, you may want your attorney to write in an exception for when the plan gives you erroneous information during your verification of eligibility and benefits information, as provided in the previous section.

6. Group and Represented Providers shall provide Health Plan or its designee with reasonable access during regular business hours to all records maintained with respect to all payments received by Group and Represented Providers from Health Plan and other Payors for the Covered Services rendered under this Agreement. Health Plan or its designee has the right to conduct periodic audits of such records to determine if amounts have been properly paid. Health Plan shall provide Group with the results of any such audits and any amounts mutually determined to be due and owing as a result of such audits shall be promptly paid. This provision shall survive the termination of this Agreement for a period of one hundred eighty (180) days.


1. Be careful as this paragraph, left unchecked could facilitate an audit, even after the contract is terminated, to determine if any most favored nations(MFN)recoveries may be due.

2. Make sure that audits can only be performed on payments for Covered Services, and only monies from this Health Plan and its affiliates as paid under this contract may be audited. It usually renders the paragraph useless to the plan for purposes of MFN recoveries.

3. Place a reasonable time limit on post-termination audit capability and recoveries.

In the next edition we will examine medical records issues, term and termination, and the miscellaneous paragraphs that seem boilerplate (but are not) at the end of most contracts. This article is not intended to replace professional legal assistance and advice. It should be used with the intent to identify certain operational issues for which legally enforceable language should be considered for inclusion as advised by licensed counsel in your state.

NOTE: Four additional contract paragraphs cut due to space will be available online at when this issue appears. Next Issue: Medical records, compensation, term and termination, and reps and warranties.

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