Getting to Know the Dispute Resolution Provisions in your Payor Contracts

The dispute resolution provisions in a contract are often skipped over during negotiations, either because the parties negotiating the contract don’t understand them or because the managed care company actively discourages changes to these provisions because they will require the dreaded review by “legal.” 

It is worthwhile to review the dispute resolution provisions in detail and to make sure your staff understands them and follows them. If problems arise in your relationship with the managed care company, a thorough set of dispute resolution provisions can make the difference between a quick resolution or a protracted, expensive process that leaves the provider feeling ill used.

Spelling Out the Dispute Resolution Process

There are many issues to be dealt with in any dispute resolution section. It must define what formal and informal processes will be used to resolve the dispute, how many levels of appeal will be allowed, what remedies will be allowed (or foreclosed), whether alternate dispute resolution processes such as arbitration or mediation will be encouraged or required, or whether the matter can be decided by a judge or a jury. Typically, the provider will want to maintain as much flexibility as possible, so that it may make the best tactical decision when a dispute arises. The managed care company on the other hand, recognizes that in most cases, it will not be viewed sympathetically in a courtroom. In addition, managed care plans have lately been the subject of class action lawsuits by providers. So the managed care plans will try very hard to foreclose the provider’s access to court and to a jury.

Typically, the managed care company’s procedure manual will describe the company’s internal dispute resolution processes.  There may be different processes for member grievances, member payment appeals, provider payment appeals and provider grievances. You should know which procedures apply to which types of issues. The managed care company’s contract will almost certainly require the provider to “exhaust” these internal processes before resorting to external dispute resolution. Many states have passed laws imposing requirements on managed care company provider-appeal procedures.

Texas, for example, requires the following:

“Each contract under a preferred provider benefit plan between an insurer and a physician or other practitioner or a physicians' group must have a mechanism for resolving complaints initiated by an insured, a physician or other practitioner, or a physicians' group.” Tx. Ins. Code § 1301.055.

The law requires the complaint resolution mechanism to provide for “reasonable due process” including establishing a review panel of providers acting in an advisory role.

New Hampshire law imposes requirements on the appeal process available to claimants and their representatives. NH RSA § 420-J:5.

Evaluating dispute resolution contract language

Although this is no substitute for a second level of review by your attorney, the following are some questions to help you begin evaluating contract language for dispute resolution.

1. For each form of grievance or appeal is the time limit for raising a disputed issue long enough to allow you to realistically identify and frame the issue for filing a complaint? If informal dispute resolution is allowed, are other deadlines (such as for requesting arbitration) extended while the informal processes proceed?

2.  For each form of grievance or appeal how many levels of internal appeal does the managed care company provide?

3.  Is each level of appeal heard by a decision-maker who was not involved in the original decision and does not report to someone who made the original decision or decided the issue on appeal?

4.  Are you permitted to present additional information as part of the appeal processes? At each level of the appeal?

5.  Once internal appeal processes are exhausted, does the contract require alternate dispute resolution processes?

6.  Are any required alternate dispute resolution processes suitable for the foreseeable types of disputes you will have? Does the contract specify that they will be held in a location that is convenient for you, your attorney and potential witnesses?

7. Does the contract specify an external review or dispute resolution service to be used? If so, are you familiar with the organization’s rules and procedures? Its track record of decisions?

8.  Are alternate dispute processes encouraged or mandated before you can file in court?

9.  Are you able to appeal the result of the dispute resolution in a court, either at the end of the internal processes or at the end of the external processes?

10.  Are you able to combine your dispute with other providers facing the same issue?

11.  Are the provisions allocating the costs of the dispute resolution process fair?

12.  Does the contract attempt to limit the remedies you can have if you win? Can an arbitrator award interest on delayed payments?

13.  Does the contract require you to keep the existence of the dispute and / or its outcome as confidential?

Spending the time to study the dispute resolution section of the contract can benefit you in two ways: You’ll be familiar with the payor’s processes before a dispute arises. In addition, those familiar with your operations can ask for practical changes so the appeal procedures are more suited to your organization.

Source: Robin Fisk, Esq., Principal, Fisk Law Office, Ashland, NH