Health Care Risk Sharing, Integration & Accountable Care – Part 13


Contractual Terms of Note and Basic Principles:  Provider-counsel should pay particular attention to the following issues, and the associated contractual terms:

  • Utilization Review Process and Associated Provider Requirements: Utilization review takes one of four forms depending upon the timing of review—Retrospective, Concurrent, Prospective and Case Management review: Retrospective review concerns an audit of a patient’s file after delivery is complete to determine the medical necessity of the line of treatment; Concurrent review this medical necessity contiguous with treatment; Prospective review requires review and authorization prior to delivery of the line of treatment; Case management concerns the coordination of care by either a primary care physician or case manager.  Payer’s utilization review plan should be summarized through the provider-payer contract. Optimally, the utilization review plan should be incorporated into the contract by reference.  Failure to summarize or incorporate the plan permits payer unrestrained ability to modify utilization review without any requirement to negotiate or seek the consent of provider.  Additionally, payers in this area general seek inclusion of exculpation clauses in response to liability concerns stemming from the review process.  These clauses permit payer, when acting in a utilization review capacity, to be relieved from liability for certain review actions.  Exculpation clauses in the area of utilization review should clearly define what liabilities are exculpated, clearly define utilization review roles, and specify the responsibilities of provider vis a vi payer in facilitating utilization review.  Language such that provider would be agreeing to abide by and accept the terms and conditions of Payer’s utilization review program leaves a provider exposed to utilization review liability.
  • Agreement Term, Evergreen (Renewal) Clauses and Termination Protocol: The term of the agreement, without-cause termination procedures, and automatic renewal provisions (evergreen clauses) should be clear, understood and mutually acceptable. Without cause termination provisions generally have the effect of providing contractual assurance to the parties for a length of time equal only to the length of time required for termination notice. Accordingly, a provider, and arguably a payer, should disfavor without cause termination provisions. Termination provisions should be included only to the extent that they would relieve a party from contractual obligations where it would be unreasonable or undesirable for such party to continue to engage in the relationship with inclusion of reparations, or termination protocol, to accommodate the reciprocating party—where one party is forced to carry-out undesirable obligations under the contract, consumers, and the businesses of both provider and payer, suffer.   Accordingly, counsel should openly discuss the potentially terminable factors and clearly address same through the contract.  Where manifestation of particular occurrences or events would work to make continued obligations under the contract undesirable, these occurrence or events should be particularly described.  Broad and vague statements, without elaboration, work only to cause business and legal uncertainty.  For instance, “Cause” and “Material Breach” should be particularly qualified in order to avoid potentially litigious disputes.

Multiple other clauses come into play in risk sharing contracting and will be discussed in future posts.  This article is part of a series of articles on risk sharing, integration and accountable care.