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The typical provision in the contract reads:
"Providers shall provide Health Plan or its designee with reasonable access during regular business hours to all records maintained with respect to all payments received by Providers from Health Plan and other Payers for any services rendered. Health Plan or its designee has the right to conduct periodic audits of such records to determine if amounts have been properly paid. Health Plan shall provide Provider with the results of any such audits and any amounts determined to be due and owing as a result of such audits shall be promptly repaid to Health Plan. This provision shall survive the termination of this Agreement."
Discussion
Most providers are familiar with this sort of language and have seen an "access to books, records and papers" provision in each of their contracts. However, this particular language has a few subtleties that can cause lots of problems with reimbursement, retroactive charge backs, refund requests, most favored nation implications, confidentiality with other health plan information, and eternal administration headaches. The way this paragraph is written, it should be labeled a "License to Make Your Life Miserable" clause.
Let us dissect it sentence by sentence: "Providers shall provide Health Plan or its designee with reasonable access during regular business hours to all records maintained with respect to all payments received by Providers from Health Plan and other Payers for any services rendered."
First, there should be limitation here that the plan may only inspect those related to "Covered Services". The plan has no business knowing about non-covered services. That is about as nosey as looking in someone's medicine cabinet. Patients have a right to expect that their health plan should not be able to audit their medical records without cause, and if the Plan did not pay for the services, the plan has no right to look at the related medical records. Under HIPAA for example, we might exceed the "minimum necessary" rule to share information about services that the Health Plan did not pay for.
Second, the end of the sentence should read "any Covered Services rendered to a Health Plan member". This would at least limit the inspection to Plan members and not the universe of services rendered to anyone at anytime. As an extra measure, and to protect one from the threat of breach of all one's other Payer's confidentiality terms, some reference to the ability to redact information about other plans is necessary. I typically add, " Notwithstanding the foregoing, Provider shall be entitled to redact all terms relating to the reimbursement or other financial arrangement between Provider and other plans with which Provider has a relationship."
Many problems arise if one does not limit this paragraph. Let us assume, for example, that one has a contract with Payer "A" that contains a "most favored nations" provision. The provision, often strategically located many pages away from this right to access provision, requires that one warrant to Payer "A" that all of the rates, terms, and benefits granted by Provider herein are lower than the rates, terms, and benefits being offered by Provider to any other similar company in the service area by contract for services provided under this agreement for like uses. The provision further states that if during the term covered by this Agreement, Provider enters into arrangements with any other company concerning the similar services provided hereunder which provides greater benefits or more favorable terms or rates with respect to the obligations of Provider or rights of the other Plan(s), this Agreement shall thereupon be deemed automatically amended to provide a 5% advantage to Plan "A".
At this point, we must re-examine the sample language to find that at the end of the paragraph, it states that the provision "shall survive the termination of the agreement" with no limitation as to how long it survives. Conceivably, one could be bound by this provision and its requirements, years after the termination of the contract with Payer "A". In essence, five or seven years after termination of the contract, Payer "A" could return with a request to inspect records and present the Provider with a bill for the difference for the 5% advantage, and could argue that the reason they inserted this language in in the first place was because they had every intention of returning years later to enforce it.
As one reviews the sample provision in context with the other provision elsewhere in the contract, one understands completely why the initial provision left out the words "Covered Services" or any limitation to review only their own records. One also become painfully aware that termination of the contract does not "kill" the provision unless a limit on the time frame of the provision is established or one removes the last sentence completely. It also becomes clearly evident why the second sentence reads " Health Plan or its designee has the right to conduct periodic audits of such records to determine if amounts have been properly paid." At first glance, one could question, " Plan "A" knows what it paid us; why would they need to send a representative here to conduct an audit?" The answer as we saw above, is that the subject of the audit was not what Plan "A" paid, but the right to examine what all the other payers paid. This further demonstrates why one needs to have a redaction provision inserted, or all the other contracted payers one does business with would have reason to terminate their contracts with the Provider.
We are almost done. The next to the last sentence, "Health Plan shall provide Provider with the results of any such audits and any amounts determined to be due and owing as a result of such audits shall be promptly repaid to Health Plan," raises my eyebrows a bit. First, the tone implies that Plan "A" assumes that it would find money it is owed in the audit process. Second, it assumes that one would agree with the plan's findings or the need for mutual agreement, and just pay the amount requested without question. That's downright offensive! Second, what if the audit findings indicate that the plan owes the provider money? This sentence does not provide for mutuality, only for the provider to pay the plan. It should be changed to reflect a need for mutual agreement that the money is actually due and owing and the sentence be revised to read "repaid to the party due the money" instead of "repaid to the Health Plan".
Finally, this brings to mind one other section of the contract that must be examined. Many contracts give the Health Plan the right to offset any money that the plan determines should be returned by charging the amount against future claims payable. Current arguments to remove the offset privilege include: (a) the lack of an audit trail, (b) the fact that it is often done without mutual agreement that the amount being claimed is correct, (c) that the plan often takes the offset several times, leaving the provider the headache of sorting out where the same offset was taken repeatedly on more than one claim, (d) that offsets should only be taken as a last resort if the provider did not pay the amount that was mutually agreed within a certain time frame, and (e) that it should only be taken as an offset from a future claim from the same patient.
About Maria Todd
Maria K Todd, MHA PhD is the leading trainer in managed care contracting worldwide. Since 1989, she has lectured professionally through colleges, universities, seminar companies, publishers and non-profit professional associations as well as on-site private training classes for hospitals, medical groups, offshore revenue cycle business process organizations and pharmaceutical and medical device manufacturers. In total she has delivered more than 2600 managed care training classes and seminars to over 53,000 attendees and participants.
It's no secret....Maria offers private consultation and contract analysis to clients on an hourly or project basis. She offers a managed care checkup service to analyze and comment on one contract for a flat fee of $3500. For more information, please call 877.MariaTodd toll free. or contact her via email
The Managed Care Contracting Handbook, 2nd Edition (2009)
http://www.mariatodd.com
The typical provision in the contract reads:
"Providers shall provide Health Plan or its designee with reasonable access during regular business hours to all records maintained with respect to all payments received by Providers from Health Plan and other Payers for any services rendered. Health Plan or its designee has the right to conduct periodic audits of such records to determine if amounts have been properly paid. Health Plan shall provide Provider with the results of any such audits and any amounts determined to be due and owing as a result of such audits shall be promptly repaid to Health Plan. This provision shall survive the termination of this Agreement."
Discussion
Most providers are familiar with this sort of language and have seen an "access to books, records and papers" provision in each of their contracts. However, this particular language has a few subtleties that can cause lots of problems with reimbursement, retroactive charge backs, refund requests, most favored nation implications, confidentiality with other health plan information, and eternal administration headaches. The way this paragraph is written, it should be labeled a "License to Make Your Life Miserable" clause.
Let us dissect it sentence by sentence: "Providers shall provide Health Plan or its designee with reasonable access during regular business hours to all records maintained with respect to all payments received by Providers from Health Plan and other Payers for any services rendered."
First, there should be limitation here that the plan may only inspect those related to "Covered Services". The plan has no business knowing about non-covered services. That is about as nosey as looking in someone's medicine cabinet. Patients have a right to expect that their health plan should not be able to audit their medical records without cause, and if the Plan did not pay for the services, the plan has no right to look at the related medical records. Under HIPAA for example, we might exceed the "minimum necessary" rule to share information about services that the Health Plan did not pay for.
Second, the end of the sentence should read "any Covered Services rendered to a Health Plan member". This would at least limit the inspection to Plan members and not the universe of services rendered to anyone at anytime. As an extra measure, and to protect one from the threat of breach of all one's other Payer's confidentiality terms, some reference to the ability to redact information about other plans is necessary. I typically add, " Notwithstanding the foregoing, Provider shall be entitled to redact all terms relating to the reimbursement or other financial arrangement between Provider and other plans with which Provider has a relationship."
Many problems arise if one does not limit this paragraph. Let us assume, for example, that one has a contract with Payer "A" that contains a "most favored nations" provision. The provision, often strategically located many pages away from this right to access provision, requires that one warrant to Payer "A" that all of the rates, terms, and benefits granted by Provider herein are lower than the rates, terms, and benefits being offered by Provider to any other similar company in the service area by contract for services provided under this agreement for like uses. The provision further states that if during the term covered by this Agreement, Provider enters into arrangements with any other company concerning the similar services provided hereunder which provides greater benefits or more favorable terms or rates with respect to the obligations of Provider or rights of the other Plan(s), this Agreement shall thereupon be deemed automatically amended to provide a 5% advantage to Plan "A".
At this point, we must re-examine the sample language to find that at the end of the paragraph, it states that the provision "shall survive the termination of the agreement" with no limitation as to how long it survives. Conceivably, one could be bound by this provision and its requirements, years after the termination of the contract with Payer "A". In essence, five or seven years after termination of the contract, Payer "A" could return with a request to inspect records and present the Provider with a bill for the difference for the 5% advantage, and could argue that the reason they inserted this language in in the first place was because they had every intention of returning years later to enforce it.
As one reviews the sample provision in context with the other provision elsewhere in the contract, one understands completely why the initial provision left out the words "Covered Services" or any limitation to review only their own records. One also become painfully aware that termination of the contract does not "kill" the provision unless a limit on the time frame of the provision is established or one removes the last sentence completely. It also becomes clearly evident why the second sentence reads " Health Plan or its designee has the right to conduct periodic audits of such records to determine if amounts have been properly paid." At first glance, one could question, " Plan "A" knows what it paid us; why would they need to send a representative here to conduct an audit?" The answer as we saw above, is that the subject of the audit was not what Plan "A" paid, but the right to examine what all the other payers paid. This further demonstrates why one needs to have a redaction provision inserted, or all the other contracted payers one does business with would have reason to terminate their contracts with the Provider.
We are almost done. The next to the last sentence, "Health Plan shall provide Provider with the results of any such audits and any amounts determined to be due and owing as a result of such audits shall be promptly repaid to Health Plan," raises my eyebrows a bit. First, the tone implies that Plan "A" assumes that it would find money it is owed in the audit process. Second, it assumes that one would agree with the plan's findings or the need for mutual agreement, and just pay the amount requested without question. That's downright offensive! Second, what if the audit findings indicate that the plan owes the provider money? This sentence does not provide for mutuality, only for the provider to pay the plan. It should be changed to reflect a need for mutual agreement that the money is actually due and owing and the sentence be revised to read "repaid to the party due the money" instead of "repaid to the Health Plan".
Finally, this brings to mind one other section of the contract that must be examined. Many contracts give the Health Plan the right to offset any money that the plan determines should be returned by charging the amount against future claims payable. Current arguments to remove the offset privilege include: (a) the lack of an audit trail, (b) the fact that it is often done without mutual agreement that the amount being claimed is correct, (c) that the plan often takes the offset several times, leaving the provider the headache of sorting out where the same offset was taken repeatedly on more than one claim, (d) that offsets should only be taken as a last resort if the provider did not pay the amount that was mutually agreed within a certain time frame, and (e) that it should only be taken as an offset from a future claim from the same patient.
About Maria Todd
Maria K Todd, MHA PhD is the leading trainer in managed care contracting worldwide. Since 1989, she has lectured professionally through colleges, universities, seminar companies, publishers and non-profit professional associations as well as on-site private training classes for hospitals, medical groups, offshore revenue cycle business process organizations and pharmaceutical and medical device manufacturers. In total she has delivered more than 2600 managed care training classes and seminars to over 53,000 attendees and participants.
It's no secret....Maria offers private consultation and contract analysis to clients on an hourly or project basis. She offers a managed care checkup service to analyze and comment on one contract for a flat fee of $3500. For more information, please call 877.MariaTodd toll free. or contact her via email
The Managed Care Contracting Handbook, 2nd Edition (2009)
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Valerie McClain, MHA
As most “right to inspect” contract language allows payers unfettered access to a provider’s books and records, Maria’s article clearly discusses the implications of this language and identifies several scenarios that could occur if this language is not carefully negotiated.
This article provides a good and clear analysis of this contract language. The article is a must read for anyone who negotiates contracts with health plans or other MCOs.