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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Non-Competition/Non-Solicitation

A non-competition or non-solicitation provision typically restricts a party's ability to do business with others in the same field. In a managed care contract, such a provision may affect a psychologist's ability to contract with other MCOs, or may affect a psychologist's ability to continue patient relationships with members of the contracting MCO after the contract is terminated, or both. Read the provision carefully to determine whether it addresses other MCOs or patients. If it addresses MCOs, it probably restricts the psychologist from contracting with the MCO's competitors during the period of the contract and therefore may be very disadvantageous. Such provisions are not uncommon in "exclusive" arrangements, whereby the psychologist or group of mental health providers agree to arrange for all necessary care for a specified group (or all) of the MCO's patients in return for a special pricing arrangement. However, in most individual provider contracts with MCOs, such a provision is not acceptable.

Also, read carefully any provisions addressing restrictions on future relations with members of the MCO. They could interfere with providing care to patients who establish a relationship with you. It is not unreasonable for the MCO to refuse to pay the psychologist for treatment rendered to members of the MCO after the termination of the psychologist's contract with the MCO. It is unreasonable, however, to prohibit the psychologist from continuing a professional relationship with members of the MCO. Indeed, it could be unethical patient "abandonment" to cease services to a patient who needs them immediately, simply because the psychologist is no longer a participating provider in a plan.

If the MCO is a PPO or offers a POS option, the psychologist should determine whether the contract would prohibit the psychologist from receiving payment from the MCO as an out-of-network provider after the contract terminates and the psychologist is no longer a participating provider. If the contract prohibits such payment, this may be a serious disadvantage for the psychologist because patients would be faced with the choice of continuing treatment and having to pay 100% of cost, or going to virtually any other psychologist and receiving at least some level of coverage from the MCO. Ideally, the contract would permit continued payment on an out-of-panel basis, at least until care can responsibly be transferred to another provider or plan.

The non-competition and non-solicitation provisions in the contract should allow the psychologist, at minimum, to (1) notify patients of the termination of the psychologist's relationship with the MCO, and (?) continue treating members of the MCO if the psychologist does not bill the MCO (but instead, with consent, bills the patient).

Amendments to the Contract

The contract should address how its terms can be amended and what notice must be provided to the parties of the contract. Typically, the psychologist will have no right to modify the contract, but the MCO will be empowered to amend it. The psychologist should ensure that the contract requires the MCO to notify the psychologist of any amendments before they can become effective. Ideally, the psychologist should have the right to reject the amendment. If the contract allows the psychologist to terminate the contract without cause upon 30 days written notice and the MCO must give the psychologist 30 days notice of any amendments, the psychologist can be assured that he or she can at least terminate the contract if the MCO wants to impose an unacceptable change; this gives the psychologist at least some bargaining power. If the amendment notice period is shorter than the termination notice period, the psychologist can ask that they be made the same length, or will have to decide whether he or she is willing to suffer through a changed contract term for the extra 15 or 30 days until the contract can effectively be terminated.

If the contract does not allow the psychologist to reject the amendment or to terminate the contract with­out cause, check the termination provisions for the bases the psychologist can use to terminate the contract. To avoid being forced to comply with onerous changes, the psychologist should ensure that, at minimum, the contract allows the psychologist to terminate if a "material" change is made to the terms of the contract.

PATIENT RECORDS AND CONFIDENTIALITY

Gag Clauses

Some HMO contracts say, in essence, that providers should not "bad mouth" the plan to patients. This issue of "gag clauses" has received much attention in the last year. In fact, at least 17 states have enacted laws that prohibit MCOs, and sometimes any insurer, from restricting contracted providers' discussions with patients regarding appropriate treatment.2 The publicity regarding this issue has forced MCOs to remove many of the most egregious gag clauses from their provider contracts. However, "gag clauses" take many forms, and many MCOs still have contract provisions that restrict a provider's discussion of the MCO, its procedures, or its benefits. Some of the most difficult "gag" clause issues arise in the context of discussing mental health treatment decisions with patients. Above all, a psychologist will want to remain free -- indeed, may have a legal and ethical duty -- to advise the patient of the risks and benefits of alternative treatment options. Psychologists should look carefully for such provisions, and attempt to have any unreasonable restrictions on professional communications removed. Following are two examples of provisions that may not appear to be obvious gag clauses, but may result in a restriction on a provider's discussions with patients.

Loyalty provisions are still common. Such provisions require the provider to "be supportive of the procedures and philosophy of the MCO" or to "portray the MCO in a positive light to members and the public." Some are even more specific, authorizing the MCO to terminate the contract if the provider makes disparaging remarks about the MCO. Psychologists who are subject to such contract terms risk legal action or termination of their contract, or both, if they explain an inherent bias the MCO has against covering mental health treatment -- or if they merely complain to the patient (or in public) about the failure of the MCO to make coverage decisions or payment for services in a timely fashion. Mental health providers often find themselves in the position of having to explain why a patient's MCO doesn't cover mental health care as generously as the patient's prior health insurance -- an explanation that may convince the patient to disenroll and inform the MCO that the psychologist explained how indemnity insurance "is better." Some MCOs' contracts still appear to prohibit such conversations between the provider and patient. Whether such restrictions on a provider's speech are legally enforceable is not entirely clear. Psychologists should attempt to delete such provisions.

If a loyalty provision is in the managed care contract, psychologists may want to consider offering an alternative provision such as the following: "Provider and MCO agree not to make unreasonably disparaging comments regarding the other party in communications with members or the public. As the term is used in the preceding sentence, "disparaging comments” shall not include explanation to a patient of treatment options, or coverage or payment limitations, nor explanation of procedures such as prior approval and utilization review for medical necessity. Such a provision offers the MCO comfort that a contracting psychologist will be a "loyal" business partner by not "unreasonably" disparaging the MCO. However, even this vague standard creates some risk that a psychologist's off-hand comment or legitimate dispute with an MCO will be construed as "unreasonable" and a contract violation by the MCO.

Proprietary information restrictions are in most contracts. Such provisions routinely prohibit either party (the MCO or the psychologist) from revealing to anyone else any "proprietary" or confidential information of the other party. Although a proprietary information restriction may not seem problematic, in practice it may interfere with patient conversations regarding the MCO's payment arrangements or medical review policies. Many MCOs consider their payment arrangements unique and proprietary, particularly if they have competitors that would be eager to learn the details. Similarly, MCOs often consider their internal policies regarding medical necessity, experimental treatments, and pre-certification authorization to be proprietary. Two problems result: (1) the psychologist may not be aware that something is proprietary" if the contract does not list the information that can not be disclosed, and (2) even if the psychologist knows certain information is proprietary, the psychologist may believe it is irresponsible not to inform the patient of the information. This is particularly true for mental health clinicians, given the unique issues of trust and transference in psychotherapy. Despite the public distaste for gag clauses in general, some restrictions on disclosure of proprietary information probably are not unreasonable. At minimum, the psychologist should ask for clarification of what information is considered "proprietary" under the contract.

The gag clause in the contract may state that the contract will terminate if the psychologist violates the restriction. Most contracts, however, are not so clear. Instead, many contracts give the MCO a right to terminate the contract "without cause" -- usually upon 30 or 60 days written notice to the provider. As a result, the MCO may take the position that it can sue the psychologist for breaching the gag clause, and terminate the contract. The result could be that the psychologist is denied all future payment, and may be forced to sue the MCO to get payment for services rendered. (In fact, MCOs rarely sue providers, but they do use those clauses as a deter­rent.) Even if the MCO refuses to remove a particular gag clause, the psychologist may be able to get some clarification from the MCO (preferably, of course, in writing) about the meaning of the contract term, and perhaps some reassurance.

Confidentiality

MCOs typically require their members to sign a very general confidentiality release form (sometimes called a "waiver") that states that the MCO can review any information from any provider of medical services who has rendered care to the patient. Sometimes such releases are limited to "information necessary to administer coverage." Although standard in the insurance industry, such blanket, advance releases have been challenged in court and sometimes have been found invalid. The issue of when and for what purposes an MCO can access patient-specific information, including patient files, is the subject of a Congressional legislative effort, which may result in a uniform federal rule. Currently state laws should protect a provider that relies on an apparently valid release, but psychologists should be aware that such general confidentiality waivers do not always afford total protection. Far example, a patient may become irate when he finds out that his employer's health plan knows he has been receiving mental health or substance abuse treatment, and may sue the psychologist for breach of confidentiality. Despite the fact that the psychologist may convince a judge that she reasonably relied on the MCO's general confidentiality waiver when she turned over her files to the MCO, the psychologist may have been forced to expend the effort and cost of litigating the issue. continued

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