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By: Jason Brocks, Lexis Practice Advisor
This article discusses provisions for agreements between health plans and doctors, dentists, and other healthcare professionals who provide healthcare services to plan members. It is intended as a guide for attorneys representing health plans who are asked to draft, review, or negotiate a provider agreement with providers who wish to participate in the health plan’s provider network.
IT FOCUSES ON PROVIDER CONTRACTING FOR commercial plans and does not discuss provider agreements for Medicare Advantage or Medicaid managed care plans, which differ in substance from provider agreements for commercial plans. The article details provider network development and contracting, provider manuals, compensation, billing and payment, network participation, provider licensing and insurance, provider credentialing, maintenance of records, termination, and state contracting and filing requirements.
Health plans are responsible for building their own networks of healthcare providers to provide healthcare services to plan members. Health plans market themselves in part based on the total number of providers in their networks. However, from a state regulator’s and the health plan’s perspective, the sheer number of providers in the network overall is only part of the story.
Under state health insurance laws, health plans must maintain adequate numbers of primary care and specialty providers within defined geographic areas to assure that covered members will have access to necessary care. Health plans spend tremendous resources to manage the adequacy of their healthcare provider networks to remain in compliance with state regulations.
The provider agreement is at the core of health plan provider networks. Health plans enter into provider agreements with providers who participate in their provider networks. Sometimes these agreements are with individual providers, while other agreements are with groups of providers such as medical practices, which employ and bill on behalf of the individual providers. Providers who enter into agreements with health plans are commonly called participating, in-network, or network providers. Unfortunately, the health plan-provider relationship tends to be adversarial in nature and in that context, health plans and their attorneys routinely reference provider agreement provisions when disputes arise regarding a provider’s obligations as a participating network provider. The provider agreement should address the most commonly disputed issues and be written in clear, concise language understandable to the provider community.
As a preliminary matter, you should obtain a copy of the health plan’s provider manual. Provider agreements typically incorporate or reference the provider manual, which often contains detailed discussions of important matters such as credentialing process, claims submission, appeal rights, and maintenance of medical records. As part of the provider agreement drafting process, review the provider manual to make sure that it reflects the most recent legal and regulatory requirements as well as the health plan’s unique processes and procedures.
Health plans compensate providers for covered services provided to members under the terms of the provider agreement. Terms to be included in the provider agreement are set out below. They include information about compensation, billing, payment, network participation, provider licensing and insurance, provider credentialing, maintenance of records, termination, and state contracting and filing requirements.
Compensation, Billing, and Payment
The healthcare claims submission process and subsequent payment to providers are standardized across providers, but the amount of compensation paid to individual providers varies and is typically set out in an appendix to the provider agreement.
Participating providers agree to accept payment from the health plan for clean claims according to terms set out in the provider agreement. Clean claims are defined in the provider agreement, with the definitions most often taken directly from state insurance laws and regulations. It is good practice to set out the health plan’s process for handling incomplete claims in the provider agreement or at least to reference where a provider can find that information (for example, the provider manual).
A key point for participating providers is that they accept the agreed-upon payment amounts from the health plan as payment in full for all services provided to plan members. Providers may not balance-bill members for amounts beyond what the health plan pays to the providers for the services provided. In addition, providers agree to collect a co-payment from members, as required under the member’s applicable plan design.
The provider contract will set forth time frames within which a provider must file a clean claim with the insurer. Time frames are typically 120 days from date of service but can run up to one year after services are rendered. However, time frames must reflect state requirements. You should review applicable laws to confirm that the agreement does not hold providers to a time line that is too short and consequently in conflict with state law.
Claims submission is a topic of frequent disputes between health plans and providers. The agreement should specify how the health plan expects claims to be submitted. If the health plan prefers electronic claims over paper claims, then the agreement might require best efforts by providers to submit claims electronically. The agreement should clearly explain the process for submitting electronic claims, making it as effortless as possible for the providers, and provide any details such as electronic standards. The agreement should also set forth processes for submitting paper claims (often using CMS Form 1500), for when providers are unable to submit electronic claims for technical or other reasons.
For its part, the health plan must pay providers according to state prompt payment laws. The provider agreement must reflect the appropriate prompt payment time lines. If the health plan wants to retain the right to recoup money paid to providers for any reason (e.g., in the event of an overpayment by the health plan to the provider), the provider agreement should clearly set out that right and describe how the recoupment process might work.
The health plan may want the right to deduct any overpayment amounts from future payments due to the provider. If the health plan expects the provider to pay back any amounts owed if no future payments will be due to the provider, the provider agreement should specify how the repayments should be made. State laws limit how health plans can recoup so you should review the applicable state laws when drafting recoupment provisions.
Suspension of payment may also be necessary, if for example a provider is under investigation for suspected fraud or other reasons, and the agreement should explicitly state that.
Also, if the health plan maintains several networks intended for use in different plan designs, the provider agreement should indicate the specific networks in which the provider agrees to participate. Often, the networks are defined in an appendix but for ease of administration, and to avoid the need to amend the provider agreements when new networks are added, the main body of the agreement would indicate that the provider agrees to participate in the networks outlined in the appendix, as well as any other networks that the health plan may add from time to time.
Provider Licensing and Insurance
Provider agreements must require providers to maintain licenses to practice as a condition of participation in the health plan’s provider network. The agreements require continued provider licensing and reporting when their professional licenses are restricted, limited, sanctioned, or revoked.
The health plan should be aware of the timing of any reporting about license restrictions, limitations, suspensions, or revocations so that the health plan can make necessary decisions about provider termination, if necessary, depending on the gravity of the license limitations, sanctions, or revocations.
The health plan should also research its relevant state laws to determine whether it is required to terminate a provider within a certain amount of time after a provider’s license is restricted, limited, sanctioned, or revoked. If so, the reporting time lines in the agreement should take such timing into account.
The provider agreement should also set forth the minimum professional liability insurance that the provider should maintain.
Provider agreements should set out as a general principle the necessity of the provider’s compliance with any federal, state, local, or other applicable law, as well as the health plan’s own policies and procedures. Specific laws may be called out, such as the Health Insurance Portability and Accountability Act (HIPAA), as amended.
In addition to a state license and professional liability insurance, the health plan should also consider the following requirements:
Finally, the provider agreement should clearly list when the provider must notify the health plan—preferably immediately or promptly—of certain key changes in the provider’s personal or professional life that by their nature raise concerns about the health or safety of plan members. This allows for the health plan to make a quick decision about the provider’s continued participation in the health plan’s provider network. Key changes can include the following:
Health plans are responsible for credentialing and periodically recredentialing network providers. If a provider is not credentialed or re-credentialed, the provider cannot participate in the health plan’s provider network or would be terminated from the network, subject to any rights to cure any deficiencies. Successful credentialing and re-credentialing is a prerequisite to payment by the health plan.
The provider agreement should emphasize the need for the provider to participate in the credentialing process and continuously maintain credentialing. It should also incorporate by reference the health plan provider manual’s more detailed discussion of the health plan’s credentialing standards.
Maintenance of Records
Medical records are a vital part of a health plan’s operations, and the plans rely on their network providers to keep such records. The provider agreement should require providers to keep medical records of their patients in a manner that meets the standard of care for their profession (often reflected in medical professional responsibility rules among other places). Require providers to keep their medical records for at least 10 years, or for as long as required by applicable law. In addition to researching state laws and regulations on medical records retention, consult the health plan’s document retention policies and its compliance team for specific guidance on the adequacy of that time frame. Providers must also comply with any applicable medical record privacy and confidentiality laws, including HIPAA and state-specific rules.
Finally, the provider agreement should give the health plan specific rights to access medical records and other books and records relevant to the provider’s participation in the provider network. Such provisions typically permit a health plan to access that information at any reasonable time.
You might consider adding language such as “with reasonable notice to provider” and “during provider’s regular office hours” because providers sometimes balk at the otherwise broad access rights granted to health plans. This is one place where you can meet them halfway.
The provider agreement should explicitly list the most common reasons for termination by the health plan with applicable time frames for notice. Notice time frames vary but health plans generally prefer shorter time frames—if they separate from a provider, sooner is often better. However, the time frame should reflect the facts and circumstances.
Particularly important are the triggers for immediate termination. Common reasons for immediate termination are:
Mutual termination language should also be included in the agreement, with special consideration given to the health plan’s need for sufficient time to plan for the departure of a provider from its network. Health plans need to maintain adequate accessibility standards that may require them to replace a departing provider. The health plan will need time to recruit a replacement provider into the network, and that time frame should be incorporated into the termination language.
The provider agreement should also explain any appeal rights that the provider may have upon receiving notice of termination by the health plan (with references to the provider manual, as appropriate).
However, be careful not to create new rights to appeal a termination decision other than those to which the provider is entitled under law or that are set forth in the provider manual or other applicable health plan policies and procedures.
It should be noted that many states make it illegal for health plans to terminate or otherwise retaliate against network providers for actions that are intended to benefit their patients. Provider agreements should reflect these limitations. For example, under Pennsylvania law, provider agreements may not permit the health plan to terminate a provider for, among other things:
Whether or not state laws explicitly restrict a health plan’s termination rights with respect to the above provider behavior or similar behavior, it is generally advisable for a health plan to refrain from doing so because of the negative effects such actions would have on health plan-provider relations, member relations, and public relations. Provider agreements should reflect that approach.
State Contracting and Filing Requirements
Some states2 require health plans to include specific language as drafted by the health department or insurance department responsible for regulating health plan provider networks. Over time, the administrative agencies periodically amend or add to this language.
Consult the insurance department and health department of the state where the health plan is licensed to determine whether they require model provisions to be included in the provider agreement. Often this language is included as an appendix to the agreement. Some states require health plan provider agreements to be approved and filed in advance with the appropriate department. For examples, consider Maryland,3 Pennsylvania,4 and Washington.5 Also, if any provisions are changed, the health plan needs to file an amended agreement with the agency.
To avoid administrative agency-related delays associated with refiling amended documents, consider in advance whether the terms of the template agreement apply broadly and whether and how often the provisions may need to be changed.
It should be noted that states that require health plans to file their provider agreements statutorily define those documents as confidential and not subject to public inspection under state freedom of information laws. This additional level of protection can reduce (although not eliminate) a health plan’s concerns about losing a competitive edge from disclosure of proprietary elements of its provider agreements
Jason Brocks is a Content Manager for Lexis Practice Advisor, focusing on life sciences and healthcare. Prior to joining LexisNexis, Jason was senior corporate counsel for a family of companies including a pharmacy benefits manager and a vision benefits administrator.
To find this article in Lexis Practice Advisor, follow this research path:
RESEARCH PATH: Insurance > Assessing Claims and Coverage > Types of Insurance > Practice Notes
For additional insight into health plan network provider agreements, see
> HEALTH PLAN PROVIDER AGREEMENT ESSENTIALS CHECKLIST (COMMERCIAL - HEALTH PLAN)
RESEARCH PATH: Insurance > Assessing Claims and Coverage > Types of Insurance > Checklists
For a discussion on the impact of state health insurance laws on health insurance companies, see
> EXTRATERRITORIAL STATE REGULATION OF GROUP HEALTH INSURANCE POLICIES
For a checklist that serves as a starting point for health insurance legal and compliance risk assessment and management planning, see
> EXTRATERRITORIAL STATE REGULATION OF GROUP HEALTH INSURANCE POLICIES CHECKLIST
For information on how antitrust enforcers analyze proposed mergers between health insurance companies, see
> HEALTHCARE PROVIDERS AND INSURERS: DOJ APPROACH IN INSURER MERGERS AND ACQUISITIONS
RESEARCH PATH: Insurance > Advising on Business Transactions > Mergers and Acquisitions > Practice Notes
1. 28 Pa. Code § 9.722. 2. Such as in New York, N.Y. Comp. Codes R. & Regs. tit. 10, § 98-1.13. 3. Md. Code Regs. 31.12.02.13. 4. 28 Pa. Code § 9.722. 5. Wash. Rev. Code Ann. § 48.43.730.