What Can Happen if Unfair, Bad Faith, Ambiguous, Ill-Defined, Unethical, or Voidable Provisions in Fee-For-Service and Value-Based Contracts Go Unchallenged?
Value-Based Contract are experimental. They require collaboration as well as transparent shared values, objectives, controls, and key indicators of success. Unfair, bad faith, ill-defined, unethical or voidable provisions compromise outcomes, quality of care, as well as the financial stability of Providers. Further, unfair, bad faith, or voidable contract provisions create legal and compliance risk, imbalance in contractual power, and have detrimental impact on contractual values and objectives. When this happens, Healthplans and Provider practices cease to collaborate. When Healthplans “game” providers, Providers will begin to “game” the Healthplan back in self-defense or defense of their patients.
When contract policies attempt to force compliance, providers will find a way to overcome what Healthplans are trying to stop. They won’t resort to a law-suite. Providers avoid conflicts with Healthplan because Healthplans have greater resources and power differential is so high.
When Healthplans create measures to control Providers’ or a patients’ access to care, the measures are less reliable and valid. Providing ethical informed consent to patients for measurement can have a chilling effect on patients. Providers can ethically find ways to justify extending services which Healthplans want to curtail. They can also limit their practice case-mix severity to exclude patients who require a level of care and other resources the Provider Practices do not have.
Rather than collaborate and manage contracts for the shared benefit of stakeholders, Healthplans historically audit providers using tactics which may include intimidation, coercion, and threats of clawbacks, as penalties for non-compliance.
For more information see:
Five Types of Psychotherapy Audits.
https://www.mentorresearch.org/psychotherapy-practice-audits
Allowing unfair, bad faith, ambiguous, unethical or potentially voidable provisions in value-based contracts to go unchallenged undermines the goals of value-based care, which in Oregon are to (1) use evidence-based practices, (2) provide patient-centered care, (3) increase quality and improve health at an appropriate cost.
Provider practices, Healthplans, and Legislators must work collaboratively to ensure that contracts are fair, clear, and aligned with the principles of ethical and high-quality care. By doing so, they can create a more sustainable and trustworthy healthcare system that benefits all stakeholders. Contracts which are created in bad faith, unfair, ambiguous, unethical, or ill-defined, are potentially voidable in a court of law. Providers avoid conflicts with Healthplans.
For more information see:
Why do Providers Avoid Conflicts with Healthplans?
https://www.mentorresearch.org/why-do-provider-avoid-conflicts-with-healthplans
By addressing unfair, bad faith, ambiguous, unethical or potentially voidable provisions provisions in value-based contracts through clear legislative measures and fair contract language, Healthplans can ensure a more equitable and transparent relationship with providers. This, in turn, enhances the quality of patient care, promotes trust, and ensures the sustainability of value-based care models.
Negative Effects When if Unfair, Bad Faith, Ambiguous, Ill-Defined, Unethical, or Voidable Provisions In Fee-For-Service and Value-Based Contracts Go Unchallenged?
1. Compromised Quality of Care
Incentive Misalignment: Ambiguous or unfair provisions may create misaligned incentives, leading providers to prioritize cost-cutting over patient care quality. This can result in suboptimal patient outcomes and reduced quality of care.
Reduced Provider Engagement: When providers feel that contracts are unfair or exploitative, their engagement and motivation to provide high-quality care can diminish, negatively impacting patient experiences and outcomes.
Compromised Care: Providers may cut corners or avoid offering certain services due to inadequate reimbursement, negatively impacting patient care.
Access Issues: Providers may limit the number of patients they see under such contracts or withdraw from value-based care arrangements altogether, reducing patient access to necessary services.
2. Financial Instability and Strain for Providers
Unpredictable Reimbursement: Ambiguous contract terms can lead to unpredictable reimbursement rates, making it difficult for providers to manage their finances and invest in quality improvements.
Increased Financial Risk: Unethical or bad faith provisions may shift excessive financial risk onto providers, potentially leading to financial distress or bankruptcy, especially for smaller practices.
Unfair Compensation: Ambiguous or unfair provisions can lead to underpayment for services rendered, placing financial strain on providers.
Increased Administrative Burden: Unclear contract terms can result in significant administrative burdens as providers try to interpret and comply with vague requirements, diverting resources from patient care.
3. Ethical Concerns
Compromised Integrity: Ethical dilemmas may arise if providers are pressured to meet targets that conflict with patient care best practices, leading to potential harm or substandard care.
Erosion of Trust: Continued use of unethical contract provisions can erode trust between providers and Healthplans, as well as between patients and the healthcare system.
4. Legal and Ethical Risks
Compliance Issues: Providers may inadvertently violate regulatory requirements due to unclear contract provisions, leading to legal penalties and reputational damage.
Ethical Dilemmas: Providers may face ethical dilemmas if contract terms force them to choose between meeting contractual obligations and providing the best possible care to patients.
5. Erosion of Trust
Provider-Plan Relationships: Trust between providers and Healthplans can be severely damaged when contracts are perceived as unfair or exploitative. This can hinder collaboration and the effectiveness of value-based care initiatives.
Patient Trust: Patients may lose trust in the healthcare system if they perceive that financial interests are prioritized over their care due to unfair contract provisions.
6. Barrier to Innovation and Improvement
Resistance to Value-Based Models: Providers may become resistant to adopting value-based care models if they have experienced unfair contracts, slowing down the transition from fee-for-service to value-based care.
Stifled Innovation: Financial instability and legal concerns can stifle innovation and the implementation of new, evidence-based practices aimed at improving care quality and efficiency.
Specific Examples and Case Studies:
1. Case Study: Ambiguity in Reimbursement Models
A study published in the Journal of the American Medical Association highlighted how ambiguous value-based contracts led to disputes over payment calculations, resulting in delayed reimbursements and financial strain for providers. (1)
2. Legal Cases:
Legal cases involving bad faith provisions often result in significant financial and operational burdens for providers. For instance, the case of United States ex rel. Druding v. Care Alternatives demonstrated how unclear contract terms and bad faith practices led to extensive legal battles and financial penalties. (1)
Legislative Solutions to Regulate Healthplans
1. Transparent Contracting Requirements:
Plain Language: Legislation should mandate that all Healthplan contracts be written in plain language to ensure providers fully understand the terms and conditions.
Disclosure of Terms: Require clear disclosure of all terms, including reimbursement rates, performance metrics, and penalty clauses, to prevent ambiguity.
2. Fair Dealing and Good Faith Clauses
Good Faith Negotiations: Require Healthplans to engage in good faith negotiations with providers, ensuring contracts are fair and equitable.
Fair Dealing Obligations: Mandate that contracts include explicit fair dealing obligations to prevent Healthplans from taking advantage of providers.
3. Dispute Resolution Mechanisms
Independent Arbitration: Establish independent arbitration mechanisms for resolving disputes between providers and Healthplans, reducing the need for costly litigation.
Timely Resolution: Ensure that disputes are resolved in a timely manner to minimize disruption to provider operations and patient care.
4. Ethical Standards and Oversight
Ethics Committees: Require Healthplans to establish ethics committees to review contract provisions and ensure they meet ethical standards.
Regulatory Oversight: Strengthen regulatory oversight to monitor compliance with ethical standards and contract fairness, with penalties for non-compliance.
Healthplans must create an Ethics Point Portal for secure and anonymous reporting of concerns related to contract practices and policies. Reports may be anonymous, or an individual may self-identify.
The Certified Internal Auditor (Independent CIA) shall oversee this Ethics Point Portal.
The independent CIA will have transparent communication of audit findings, promoting a culture of openness and accountability.
A reasonable concern or allegation submitted through the ethics point portal requires automatic review by the Independent CIA. If the concern is reasonable and appropriate, an investigation, analysis, finding, and mitigation plan will be conducted. The results will be provided to the Healthplan’s Board (or Board’s designated Audit Committee).
The findings and Healthplans response shall be published on an online public platform.
Disputes resolution options include mediation first and arbitration second. Civil suit is an option if the Healthplan is acting in bad faith.
5. Whistleblower Protections
Individuals reporting non-compliance or unfair, bad faith, unethical or potentially voidable practices are protected from retaliation.
Independent CIAs are not bound by Healthplan attorney-client privilege, ensuring they can report findings appropriately without constraints.
Examples of Regulations or Contract Language
1. Mandatory Audit and Transparency Clauses
Audit Rights: "The Provider shall have the right to audit the Healthplan’s records related to this Agreement, including reimbursement calculations and performance metric assessments, to ensure transparency and accuracy."
Disclosure Requirements: "The Healthplan shall disclose all terms related to reimbursement, performance metrics, and penalties in a clear and understandable manner prior to contract execution."
Independent Certified Internal Auditor: “The Healthplan shall retain the services of an Independent Certified Internal Auditor.”
2. Fair Reimbursement Clauses
Fair Payment Terms: "The Healthplan agrees to reimburse the Provider at rates that reflect the fair market value for services rendered, based on mutually agreed-upon performance metrics and quality measures."
Timely Payment: "The Healthplan shall ensure timely payment of all claims within 30 days of submission, provided all necessary documentation is complete."
3. Good Faith and Fair Dealing Provisions
Good Faith Clause: "Both parties agree to act in good faith and with fair dealing in all aspects of this Agreement, ensuring that the interests of patients, providers, and the Healthplan are fairly represented and upheld."
Non-Retaliation: "The Healthplan shall not retaliate against the Provider for raising concerns or disputes regarding contract terms or performance metrics."
4. Independent Review and Arbitration
Independent Arbitration: "Any disputes arising under this Agreement shall be resolved through binding arbitration conducted by an independent third party, with costs shared equally by both parties."
Timely Resolution: "All arbitration proceedings shall be conducted in a timely manner, with a final decision rendered within 60 days of the initiation of arbitration."
Recommendations for Addressing Unfair, Bad Faith, Unethical or Potentially Voidable Contract Provisions
1. Clear Contract Language
Ensure that contracts are written in clear, unambiguous language, specifying the conditions under which provisions can be voided and the process for challenging such voiding.
2. Stakeholder Engagement
Engage providers, payers, and regulators in dialogue to develop fair and balanced contract terms that protect the interests of all parties and promote trust and collaboration.
3. Legal Review
Providers should seek legal counsel to review contracts and identify voidable provisions. Legal experts can help negotiate more favorable terms and ensure that providers’ rights are protected.
4. Regulatory Frameworks
Advocate for stronger regulatory frameworks that limit the use of voidable provisions in healthcare contracts, ensuring that such terms are fair, transparent, and justifiable.
5. Education and Training
Educate providers about their rights and the implications of contract terms. Training can empower providers to identify and challenge unfavorable provisions proactively.
6. Ethics Point Program
An ethics point program, often referred to as an ethics reporting system, is a mechanism that organizations use to allow employees, stakeholders, and other interested parties to report unethical behavior, compliance issues, or any other concerns anonymously and confidentially. These programs are designed to promote a culture of integrity, accountability, and transparency within organizations.
References
(1) https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics/
DISCLAIMER and PURPOSE: This discussion document is intended for training, educational, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.
For more information see: https://www.mentorresearch.org/disclaimer-and-purpose