Managed Care Contracts: Watch Out for Definitions Section Pitfalls

Contract CWBy: Karina Gonzalez

One of the most commonly overlooked components of a managed care contract is the definitions section despite the fact that what is contained here will affect the contracted provider on a daily basis.  Contract terms that are too generic so that they are not clearly defined and understood as they relate to a particular area of practice can have a direct influence on clinical decision making.  A patient may need a higher level of care but be approved for a lower level only.  The provider knows that a patient may suffer if the level approved will not treat the illness or that the patient’s condition could deteriorate without a higher level of care.

Let’s take, for example, the definition of medical necessity in a contract. Who decides medical necessity?  Is it the provider or is it the managed care organization (MCO)?  Many contracts state that the term “medical necessity” relates only to the issue of reimbursement.  Further, that the approval or denial of a claim is “for reimbursement purposes only” and should not affect the provider’s judgment on whether treatment is appropriate to treat the illness, symptoms or complaints of the patient.  

A definition of medical necessity that clearly gives the provider the final decision on what is medically necessary for the patient will support the provider being able to advocate a better outcome.  Providers should advocate for their patients if the treatment is medically necessary from a clinical perspective and meticulously document the patient’s chart to support the need for a higher level of care.

MCOs make decisions about medical necessity that go unchallenged every day.  Providers should consider these key factors when reviewing a proposed contract: 1) Does the contract provide for a quick review, grievance or appeal process so that providers are in a position to challenge denial of authorizations for medically necessary treatment? 2) Does the contract provide for a peer to peer review process so that medical directors are reviewing medical necessity criteria from a clinical perspective and not only for reimbursement purposes? Keep in mind the accreditation standard of the National Committee for Quality Assurance provides that only a physician can make a denial.

Inaccurate definitions that are not clearly tailored for the provider’s practice can lead to outcomes which are not in the best interest of the provider or the patient.

One thought on “Managed Care Contracts: Watch Out for Definitions Section Pitfalls

  1. Pingback: HMO Patient Emergency Care Reimbursement | Florida Healthcare Law Firm Blog

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