Managed Care Contract

Managed Care Contract

Drafts the contract governing the legal and operational relationship between a managed care organization (MCO) and a healthcare provider for delivery of services under managed care plans.

Prerequisites

1. Party information — MCO: legal name, entity type, state of incorporation, insurance license number, accreditation (NCQA/URAC/AAAHC). Provider: legal name, entity type, NPI, license numbers, DEA registration, board certifications, practice addresses
2. Existing agreements — prior contracts, fee schedules, credentialing materials, provider manual
3. Payment terms — FFS rates (% of Medicare or proprietary schedule) or capitation PMPM rates with risk adjustment methodology
4. Regulatory context — applicable state managed care statutes; whether contract covers commercial, Medicare Advantage, and/or Medicaid managed care lines of business
5. Network parameters — provider participation category (PCP, specialist, hospital, ancillary), geographic service area, panel size limits

Output Structure

Article I: Parties & Recitals

• Effective date: execution date, calendar date, or regulatory approval date
• State whether new agreement or amendment/restatement of prior agreement
• Recitals: MCO authority under state insurance law, provider qualifications, mutual intent, regulatory framework

Article II: Definitions

Article III: Network Participation & Service Delivery

Access Standards:

• Define provider participation category, service scope, referral obligations, geographic area, panel limits
• Care coordination: inter-provider communication, referral facilitation, transition coordination

Credentialing Checklist:

• Active, unrestricted state license(s)
• Board certification (or eligibility with timeline)
• DEA registration (if prescribing controlled substances)
• Professional liability insurance: $1M–$3M occurrence / $3M–$5M aggregate; carrier A- or better (A.M. Best); tail coverage if claims-made
• Notify MCO within 10–30 days of: license restriction/loss, Medicare/Medicaid exclusion, felony conviction, board sanctions, malpractice judgments above threshold

Clinical Standards:

• Comply with MCO clinical practice guidelines — guidelines inform but do not override independent medical judgment
• Medical records: HIPAA-compliant; MCO access for UM/QA/audit; retain 6–10 years per state law

Article IV: Payment & Claims

Fee-for-Service:

• Fee schedule as exhibit — specify basis (e.g., "[X]% of Medicare PFS")
• Annual update mechanism: Medicare rate changes, new CPT/HCPCS codes, renegotiated rates

Capitation:

• PMPM rates by age band, gender, geography, or HCC risk scores
• Panel assignment: prospective (member selection) vs. retrospective (plurality of care)
• Mid-month enrollment: pro-rated or monthly reconciliation

Claims Submission:

• Forms: CMS-1500/837P (professional); UB-04/837I (institutional)
• Timely filing: 90–180 days from date of service (exceptions for retroactive eligibility, COB)

Payment Timelines:

• Clean claims paid within 30–45 days per state prompt payment law
• Late payment interest: 10%–18% APR per state statute
• Specify whether additional information requests suspend prompt payment clock

COB & Adjustments:

• Provider bills primary payers first (Medicare for dual-eligibles, commercial, auto/workers' comp)
• Recoupment procedures for overpayments, duplicates, ineligible members

Payment Disputes:

• Remittance with standard CARC/RARC codes; dispute window 30–90 days
• Escalation: medical director review → executive review → formal dispute resolution
• Address retroactive eligibility termination liability

Balance Billing:

• Prohibited for covered services (except copay/coinsurance/deductible)
• Permitted for non-covered services only with advance written member consent

Article V: Quality Assurance & Utilization Management

Quality Program: HEDIS measure reporting; CAHPS survey participation; clinical outcome tracking; peer review under state protection statutes.

Prior Authorization: Required for elective inpatient, outpatient surgical, advanced imaging, specialty medications, DME, out-of-network referrals.

• Denials by physicians/licensed practitioners using MCG, InterQual, or MCO medical policies
• Appeal: 30–60 days to submit; expedited within 72 hours for urgent; external IRO review per ACA/state law
• Provider assumes financial responsibility for services rendered without required prior authorization

Audits: On-site with 10–30 days notice; provider cooperates (records, facility, staff); findings may trigger corrective action or recoupment.

Article VI: Term, Renewal & Termination

Term: 1–3 years initial; auto-renewal for 1-year terms unless 90–180 days written non-renewal notice.

Without Cause: 90–180 days written notice; MCO notifies affected members.

For Cause (30 days or immediate): License loss/suspension; Medicare/Medicaid exclusion (Section 1128 SSA); uncured material breach; fraud/misrepresentation; failure to maintain insurance; felony conviction; conduct threatening member safety.

Automatic Termination: Provider death/disability (individual); dissolution/bankruptcy; MCO loss of state insurance license; mutual agreement.

Post-Termination:

• Transitional care: 90 days active treatment; through delivery + postpartum; extended for life-threatening conditions
• Claims deadline: 60–90 days post-termination
• Return MCO property; surviving obligations: payment, record retention, PHI confidentiality

Article VII: HIPAA & Data Protection

• PHI exchange permitted for treatment, payment, healthcare operations without patient authorization; minimum necessary standard applies
• Both parties execute BAAs with subcontractors per HIPAA Omnibus Rule
• Breach notification within 24–72 hours; risk assessment per HIPAA 4-factor test; breaching party bears costs
• Security safeguards: administrative, physical, technical per HIPAA Security Rule; encryption at rest and in transit
• Data retention: 6–10 years per state law; return/destroy PHI on termination (except legally required retention)

Article VIII: Indemnification & Insurance

Mutual Indemnification: Each party indemnifies for its negligence, willful misconduct, breach, or legal violations; includes duty to defend.

Scope Distinction:

• Provider: malpractice, negligent treatment, failure to obtain informed consent, improper PHI disclosure — applies even if MCO UM decisions also alleged, provided provider conduct was proximate cause
• MCO: UM decisions, coverage determinations, payment denials, credentialing decisions, network termination

Insurance Minimums:

Carrier A- or better; claims-made require tail coverage; MCO as additional insured; insurance minimums do not cap indemnification.

Article IX: Dispute Resolution

• Exceptions: injunctive relief for irreparable harm; medical necessity disputes via UM appeals; small claims below threshold
• Governing law: state where provider practices or MCO domicile
• Member rights to external review, regulatory complaints, and court claims preserved regardless of contract ADR

Article X: General Provisions

• Amendments: Written, signed by both authorized representatives
• Assignment: Prohibited without consent (not unreasonably withheld); exception for mergers where successor assumes all obligations
• Notices: Written; certified mail, overnight courier, or personal delivery
• Independent Contractor: No employment, partnership, or agency; each responsible for own employees and taxes
• Entire Agreement: Contract + exhibits + provider manual; hierarchy: main contract > exhibits > provider manual
• Survival: Indemnification for statute of limitations period; confidentiality 3–5 years; payment until resolved

Regulatory Compliance:

• Anti-Kickback Statute (42 U.S.C. § 1320a-7b) [VERIFY]
• Stark Law (42 U.S.C. § 1395nn) [VERIFY]
• False Claims Act (31 U.S.C. §§ 3729–3733) [VERIFY]
• ACA prohibition on provider gag clauses
• State insurance laws (network adequacy, prompt payment, UM, provider termination)

Execution

• Signature blocks with authority representation; electronic signatures valid per E-SIGN/UETA
• Attach exhibits: fee schedule, covered services list, credentialing requirements, prior authorization forms

Guidelines

1. Jurisdiction-specific: Verify state managed care statutes, prompt payment laws, and insurance filing requirements — timelines and interest rates vary by state
2. Line of business: For Medicare Advantage, incorporate 42 CFR Part 422 [VERIFY]; for Medicaid managed care, 42 CFR Part 438 [VERIFY] and state Medicaid agency requirements
3. Accreditation alignment: Ensure contract terms satisfy NCQA/URAC standards if MCO holds or seeks accreditation
4. Anti-Kickback safe harbors: Structure payment to fit personal services safe harbor (42 CFR § 1001.952(d)) [VERIFY] — fair market value, commercially reasonable, written, specifying services
5. Do not include specific payment rates without client instructions — use placeholders
6. Do not draft as if representing both parties — maintain drafter's perspective
7. Balance billing prohibition must be explicit and unambiguous — required by most state laws and CMS for government programs
8. Transitional care obligations are often statutorily mandated — verify minimum periods under applicable state law