The Devil Is in the Details: Contracting With Managed Care

Consider the last time you wondered what your rights were as an in-network psychiatrist after a managed care company denied your claims. Chances are you are among the vast majority of providers who don’t even recall when they signed a managed care contract, let alone what the agreement states or where it is. And chances are you have very limited recourse.

In my legal practice, I frequently receive complaints from frantic psychiatrists hell bent on asserting mental health parity and due process violations, convinced that they or their patients have been wronged by managed care. As a general rule, their complaints center around improper denials of prescribed treatment, overly stringent utilization reviews, and demands for confidential patient records or for repayments of previously authorized claims—sometimes months or years after treatment has ended. All too frequently, they lament that their pleas for redress have landed on deaf ears.

The problem is that most managed care network agreements tend to be highly restrictive, one-sided contracts that offer minimal protection to health care providers. And most psychiatrists who join managed care networks pay little, if any, attention to the fine print when signing up. The consequences for entering into lopsided agreements without negotiating key terms other than reimbursement rates can be significant. For example, most managed care contracts contain binding arbitration clauses that preclude providers from publicly airing their grievances in courts or from initiating class actions. Faced with the prospect of having to pay not just their lawyers but for at least half the cost of private arbitrators, who can charge hundreds of dollars an hour, many practitioners simply throw in the towel the moment this harsh reality sets in. Adding insult to injury, arbitration is a process that does not always require arbitrators to follow the law or provide for the right to appeal. Additionally, final arbitration decisions generally remain private, such that culpable parties face little public scrutiny or fear of repeating their transgressions en masse.

Moreover, before permitting arbitration, many managed care agreements require providers to exhaust their administrative appeals within very short timeframes, sometimes within as little as 30 days from receiving adverse determinations. These appeals, however, may not necessarily afford providers much in the way of genuine recourse. For example, managed care contracts are not required to offer psychiatrists the rights to request utilization review files or mental health parity analyses in the same way that the Affordable Care Act and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 obligate health plans to respond to patient requests for information. Without being able to scrutinize critical data maintained by managed care companies, many provider appeals simply have no teeth.

Fortunately, there is a solution—and a pretty simple one at that. Since the law generally permits consenting parties to negotiate contract terms that do not violate public policy, nothing prevents psychiatrists from contracting for the same due process protections that the law already requires managed care companies to offer their patients. In other words, providers are completely at liberty to negotiate network agreements that call for the following:

All this isn’t to suggest that managed care companies will necessarily agree to the above terms. While providers with specialized skill sets or geographic exclusivity may enjoy greater negotiating leverage, all providers must be vigilant about what they agree to before entering into network contracts. Since providers do not typically enter managed care negotiations with counsel at their side (but might be well served to at least seek legal advice), it behooves professional associations to support their members by offering contracting consultations and to support uniform due process terms in managed care agreements. Obviously, uniformity of due process terms in managed care agreements will not only promote psychiatrists’ business interests, but also enhance their ability to most effectively advocate for the care of their patients, who are often the ultimate casualties of managed care gone awry. ■