SURVIVING THE MINEFIELD OF MANAGED CARE CONTRACTING By Clifford Stromberg, Rosemary Ratcliff and Julie Mathews Schuetze of the Law Firm of Hogan & Hartson, Washington, D.C. Edited by Judy E. Hall, Ph.D. Originally published in January 1997

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Disputes have arisen regarding credentialing inquiries into providers' prior use of alcohol or drugs. Some take the position that such inquiries are a violation of the Americans with Disabilities Act ("ADA"), on the ground that drug dependence is a "disability" that should not penalize a person in job-related decisions. (Of course, current substance abuse could be a valid criterion for non-selection). If a psychologist is asked to provide information about current or past use of alcohol or drugs and believes his or her answers may jeopardize participation with the MCO, the psychologist should consider seeking legal advice regarding whether the inquiry complies with the ADA and how to respond. Of course making an issue of drug use may also trigger further inquiries on related subjects, or result in non­-selection.

Credentialing Information

After receiving a psychologist's application, the MCO will seek verification of certain information. NCQA requires that MBHOs verify at least the following with appropriate primary sources: current, valid, active licensure; clinical privileges in good standing at the institution designated as the primary admitting facility; a valid DEA or CDS certificate (if the provider prescribes medications); education; board certification (if appropriate); work history; current adequate malpractice insurance; and professional liability claims history, including claims resulting in settlements. NCQA MBHO Standard CR 3. MCOs and MBHOs may check with certain recognized monitoring organizations, such as the state licensing board or the National Practitioner Data Bank, and may check for prior sanctions by Medicare or Medicaid.

NCQA also requires MBHOs to conduct an initial visit to the office of applicants to review such issues as the physical accessibility and adequacy of the facility in which the care is provided (including private offices) and the adequacy of clinical record keeping practices. See NCQA MBHO Standard 6.

Although provider participation decisions usually are not based on only credentialing information, a provider will probably be excluded if the applicable information cannot be verified. Of course, if the lack of verification is caused by an uncooperative primary source, such as a licensing agency or graduate school that refuses to provide the necessary information, the MCO may request the psychologist's assistance, and should not exclude the psychologist for this reason alone. An MCO also may exclude a psychologist based on a history of liability claims or a problematic work history. Practice requirements also vary. Psychologists may ask an MCO for their credentialing criteria; some will provide them while others are reluctant to do so. Often, they will decline, believing that such standards are part of their proprietary business information.

Recredentialing

Although not all MCOs require current psychologists to be recredentialed, recredentialing probably soon will become routine for all MCOs. Typically, recredentialing occurs every two years and includes reverification of the information obtained during the credentialing process. The office visit may be more rigorous, as an MCO may want to review the record keeping for its members. In addition, MCOs increasingly are tracking information for each provider, such as data on member complaints and satisfaction, compliance with the MCO's quality improvement activities, utilization management experience, and clinical record keeping practices. MCOs frequently review such information at the time of recredentialing, and may use it to determine whether a psychologist can continue to participate in the MCO, or to negotiate a different payment arrangement. If an MCO finds some deficiency, it may condition continued participation on the provider's agreement to obtain continuing education, participate in mentoring or supervision, or comply with a plan for improvement. Whether the MCO legally can set such conditions will depend upon the legal terms of the contract between the provider and the MCO, but usually contract non-renewal is a permitted sanction for failure to comply. (Many MCO contracts allow the MCO to terminate "without cause.") Some state laws offer providers some protection by prohibiting arbitrary termination without some minimal "due process," such as notice of the reasons and an opportunity to respond.

KEY CONTRACT PROVISIONS

Scope of Services and Coverage

The contract usually states that the psychologist agrees to render "covered services" to MCO members or enrollees (i.e., patients). The term "covered services" typically means those health care services that are medically necessary and that patients are eligible to receive by virtue of their employer's contract with the MCO. When reviewing this description of covered services, the psychologist should ensure that the contract specifies the scope of covered services the psychologist is expected to provide, and that he or she is licensed or certified to render the services described in the contract. Otherwise, the psychologist runs the risk of agreeing to perform services that are not within the scope of the psychologist's license or abilities. For example, if the contract requires coverage of hospital services, the psychologist either must hold hospital privileges or arrange for services by another panel provider. One solution is to ask that the services be limited to the psychologist's area of specialty, or to "mental health services within the scope of psychologist 's license, training and current practice."

The contract should specify the hours of coverage that the psychologist must be available to render covered services, and the geographic location in which the psychologist promises to provide services. Psychologists particularly should be aware of provisions requiring immediate, constant, or 24-hour access to all services, as many psychologists may not be able to satisfy these standards. Group practices are typically better equipped to provide 24-hour coverage; however, an individual practitioner may be able to comply through an agreement with existing MCO providers by developing a rotating on-call schedule, or by maintaining an answering service and/or beeper system that allows patients to contact the psychologist at any time.

Representations

The psychologist and the MCO generally give representations" and "warranties" (which really just
mean promises) to each other in the managed care contract. A party attests to the truth of specific facts concerning the party and the party's business. It is essential that the psychologist understand the content of what he or she is representing to the MCO in the contract. For example, a managed care contract may require a psychologist to attest that he or she has a specific certification, such as a license to practice psychology or a sub-specialty. Do not attest to any untrue or inaccurate facts. Making an inaccurate representation typically constitutes a breach of the contract, which gives the MCO the right to deny payment to the psychologist -­even for covered services provided to the MCO's members -- and to sue the psychologist for breach, fraud or other claims.

Typically, the contract will require both parties to represent that they are in compliance with all laws and have all permits and licenses necessary to perform the services required by the contract. Psychologists should ensure that the contract covers only the state in which the psychologist is licensed, and must avoid inadvertently agreeing to provide services in a neighboring state in which the psychologist does not hold a license. Usually, if a psychologist only renders services in his or her state of licensure, no licensure issue will arise from treating residents of another state who visit the psychologist's office.

Psychologists also often are asked to represent that they hold all required insurance and are not currently a party to any licensure proceedings or other similar action (e.g., state board or criminal investigation). You should consider whether the managed care contract requires you to represent that you have disclosed any legal action that is pending or "threatened" against you. Such terms are vague, and might require disclosure of any ongoing disputes with current or past patients. If the contract contains such a general representation, the psychologist may want to insert language that clarifies that the provision only applies to written complaints or to complaints filed in court or with a licensing board.

A psychologist often must represent that all information provided in the psychologist's application to become an MCO participating provider is true and correct. To avoid minor inaccuracies or errors creating a legal breach or defect, the contract should just say that all "material" information in the application (e.g., that the psychologist has a current license to practice psychology) is correct. If he/she is off by one year in the stated date of completing an internship or working in a prior job, that may not be "material."

A managed care contract may require the psychologist to update any information provided in the application if that information changes. Such a provision results in an ongoing obligation of the psychologist to notify the MCO, which may be difficult or burdensome, depending upon what information the psychologist has provided in the application. Usually, the updating should only apply to important information that changes, such as practice location or licensure status.

Assignment

Most managed care contracts allow the MCO to assign (i.e., transfer) the contract to another party (often an "affiliate" of the MCO). Conversely, managed care contracts generally do not permit the psychologist to assign the contract to another professional. This is not surprising, since the contract is for the services of the particular psychologist, and that individual had to meet important criteria, such as in the credentialing process, to become a participating provider. Nevertheless, it is important to be aware of assignment provisions, especially if the psychologist contemplates forming a group, or selling his or her practice, with the managed care contract as an asset of the practice. In this case, transfer of the contract might not be completely impossible, but extra time will be needed to negotiate with the MCO the transfer of the contract and the new provider or group members must be credentialed. continued

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