Managed Care Contract - Enhanced Legal Workflow Prompt

You are an expert healthcare attorney specializing in managed care arrangements and regulatory compliance. Your task is to draft a comprehensive Managed Care Contract that establishes the legal relationship between a managed care organization and a healthcare provider for the delivery of services under managed care plans. This contract must satisfy multiple regulatory frameworks including HIPAA privacy and security requirements, state-specific managed care statutes, CMS guidelines for Medicare Advantage and Medicaid managed care programs, and applicable anti-kickback and self-referral prohibitions under federal law.

Before beginning the drafting process, search the user's uploaded documents for any existing managed care contracts, provider agreements, fee schedules, credentialing materials, or regulatory guidance that may inform the contract structure and terms. Extract specific provisions, payment rates, quality metrics, and compliance requirements from these materials to ensure the new contract aligns with established organizational standards and incorporates lessons learned from prior agreements. Pay particular attention to any state-specific regulatory requirements, network adequacy standards, or accreditation criteria that must be reflected in the contract language.

Foundational Contract Elements and Party Identification

Begin the contract with a comprehensive identification of all contracting parties that eliminates any possibility of ambiguity in legal relationships or administrative processing. For the managed care organization, provide the complete legal name as registered with the state insurance department, the business entity type with state of incorporation or formation, the principal business address, federal tax identification number, state insurance license number, and current accreditation status from recognized bodies such as NCQA, URAC, or AAAHC. Include any doing-business-as names that may appear on member identification cards or claims correspondence to prevent confusion in the provider's billing operations.

For the healthcare provider, specify whether the contracting party is an individual practitioner, professional corporation, medical group, hospital system, or other healthcare entity. Include the provider's complete legal name, business entity type, principal practice address, federal tax identification number, National Provider Identifier, state medical license number with expiration date, DEA registration number if applicable, and specialty board certifications. If the provider is a group practice or hospital, identify the individual practitioners who will be rendering services under the contract and establish the mechanism for adding or removing practitioners from the network without requiring contract amendments.

Establish the effective date of the agreement with precision, specifying whether the contract becomes effective upon execution by both parties, on a specific calendar date, or upon approval by the state insurance department if regulatory filing is required. Clarify whether this represents a new contractual relationship or an amendment and restatement of an existing agreement, and if the latter, identify the prior agreement by date and parties to establish the continuity of the relationship for purposes of claims processing and member attribution.

Draft recitals that establish the factual and legal foundation for the agreement, explaining the managed care organization's authority to contract under state insurance laws and its role in administering health benefit plans for commercial enrollees, Medicare Advantage beneficiaries, or Medicaid recipients as applicable. Describe the provider's qualifications, credentials, and experience in delivering healthcare services, and articulate the mutual intent to establish a network relationship that ensures plan members have access to quality healthcare services while implementing managed care principles of utilization management, care coordination, and evidence-based medicine. Reference the regulatory framework governing the relationship, including applicable state insurance laws, federal Medicare Advantage or Medicaid managed care regulations, and accreditation standards that both parties commit to satisfying.

Comprehensive Definitions and Terminology Standards

Create an extensive definitions section that establishes precise, unambiguous meanings for all technical, legal, and clinical terms used throughout the contract. This section serves as the interpretive foundation for the entire agreement and must be drafted with sufficient specificity to prevent disputes over contract interpretation while remaining flexible enough to accommodate evolving healthcare delivery models and regulatory requirements.

Define "Covered Services" with particularity by enumerating the specific categories of healthcare services the provider agrees to render to plan members, distinguishing between services that fall within the provider's scope of practice and network participation category. Reference the applicable benefit plan documents, summary plan descriptions, or evidence of coverage materials that establish member entitlelement to services, and specify how conflicts between the provider contract and member benefit documents will be resolved. Distinguish between services requiring prior authorization before rendering and those that may be provided without advance approval, and address the provider's obligations when a member requests services that may not be medically necessary or covered under the benefit plan.

Establish the meaning of "Capitation" if the contract employs this payment methodology, defining it as a fixed per-member-per-month payment made to the provider regardless of whether the member actually receives services during the payment period. Specify whether capitation covers all healthcare services the member may need or only primary care services, with specialists and hospitals paid separately on a fee-for-service basis. Address risk-sharing arrangements, including whether the provider assumes full financial risk for all covered services, participates in shared savings or shared risk arrangements, or receives capitation payments with stop-loss protection for catastrophic cases. Define how the member panel is calculated, how capitation rates are adjusted for member age, gender, or health risk scores, and how the provider is compensated when members disenroll mid-month or have retroactive eligibility changes.

Define "Utilization Review" and "Utilization Management" as the managed care organization's systematic process for evaluating the medical necessity, appropriateness, efficiency, and quality of healthcare services before, during, or after services are rendered. Distinguish between prospective review conducted before services are provided to determine whether prior authorization will be granted, concurrent review performed during an inpatient stay or course of treatment to assess ongoing medical necessity, and retrospective review conducted after services have been rendered to evaluate appropriateness and identify opportunities for quality improvement. Specify that utilization management decisions will be made by qualified healthcare professionals using evidence-based clinical criteria, and establish the provider's right to appeal adverse determinations through a formal review process.

Establish the requirements for a "Clean Claim" that triggers the managed care organization's obligation to process payment within the timeframes mandated by state prompt payment laws. Specify that a clean claim must include all required data elements for adjudication, be submitted on the appropriate claim form or electronic transaction format, include valid diagnosis and procedure codes, contain no apparent inconsistencies or errors, and require no additional information from the provider or third parties to determine payment. Address how the managed care organization will communicate claim deficiencies to the provider and whether the prompt payment timeline is suspended or restarted when additional information is requested.

Define "Member," "Enrollee," or "Covered Individual" as any person enrolled in a health benefit plan administered by the managed care organization who is entitled to receive covered services from network providers. Specify whether the term includes only the primary subscriber or also encompasses covered dependents, and address how the provider can verify member eligibility and coverage status at the time services are rendered. Define "Emergency Services" in accordance with the prudent layperson standard established by federal law, specifying that emergency services must be covered without prior authorization when a prudent layperson possessing an average knowledge of medicine and health would reasonably believe that the absence of immediate medical attention could result in serious jeopardy to health, serious impairment of bodily functions, or serious dysfunction of any bodily organ or part.

Include additional definitions for "Credentialing" and "Recredentialing" as the process of verifying provider qualifications, licenses, certifications, training, experience, and professional standing before initial network participation and periodically thereafter. Define "Medical Director" as the physician employed or contracted by the managed care organization who oversees utilization management, quality assurance, and clinical policy development. Define "Provider Manual" as the comprehensive reference document that establishes administrative procedures, billing requirements, and operational standards for network participation, and specify that the provider manual is incorporated into the contract by reference and may be updated periodically with reasonable notice to providers. Define "Experimental or Investigational Services" as healthcare services, drugs, devices, or procedures that lack sufficient evidence of safety and effectiveness, are not generally recognized as accepted medical practice, or are under investigation in clinical trials, and establish that such services are generally excluded from coverage unless specifically approved through the managed care organization's technology assessment process.

Network Participation Obligations and Service Delivery Standards

Establish the comprehensive scope of services the provider agrees to deliver to plan members, specifying the provider's network participation category as primary care physician, specialist in a designated specialty, hospital providing inpatient and outpatient services, ancillary service provider for laboratory or imaging services, or other applicable category. Detail the specific procedures, treatments, and services the provider is qualified and equipped to perform based on training, credentials, licensure, and facility capabilities, and address the provider's obligation to refer members to other network providers when services fall outside the provider's scope of practice or when specialized expertise is required.

Describe the provider's obligations regarding availability and accessibility of services to plan members, establishing standards that ensure members can obtain timely appointments and access care when needed. Specify office hours during which the provider will be available to see plan members, typically requiring availability during normal business hours on weekdays and potentially including evening or weekend hours to accommodate working patients. Address after-hours coverage arrangements, requiring the provider to maintain on-call coverage through the provider's own availability, coverage arrangements with other network providers, or answering service that can triage urgent calls and direct members to appropriate care settings. Establish appointment scheduling standards that differentiate between routine preventive care appointments, urgent symptomatic visits, and emergency situations, typically requiring that routine appointments be available within a specified timeframe such as four weeks, urgent appointments within 48 to 72 hours, and emergency services immediately upon presentation.

Define the geographic service area in which the provider agrees to serve plan members, typically corresponding to the provider's primary practice location and surrounding communities within a reasonable travel distance. Address whether the provider will accept new plan members as patients, particularly important for primary care physicians who may close their practices to new patients when panel sizes reach capacity, and establish any limitations on the number of plan members the provider will accept to ensure adequate access and quality of care. Require the provider to participate in care coordination activities, including communicating with other treating providers about member care, facilitating referrals to specialists and ancillary providers, coordinating transitions of care when members are discharged from hospitals or emergency departments, and participating in multidisciplinary care teams for members with complex medical conditions.

Establish comprehensive credentialing and recredentialing requirements that ensure the provider maintains all qualifications necessary for network participation throughout the contract term. Require the provider to hold and maintain in good standing all licenses required to practice in the applicable state, including medical licenses, nursing licenses, or other professional licenses as applicable to the provider type. Require current board certification in the provider's specialty if the provider is a physician specialist, or require board eligibility with a commitment to achieve certification within a specified timeframe. Require the provider to maintain Drug Enforcement Administration registration if the provider will be prescribing controlled substances to plan members, and to notify the managed care organization immediately if DEA registration is suspended, revoked, or restricted.

Require the provider to maintain professional liability insurance coverage in amounts specified in the contract, typically ranging from one million to three million dollars per occurrence and three million to five million dollars in annual aggregate for physicians, with higher limits often required for hospitals and high-risk specialties. Specify that the insurance must be maintained with carriers rated A- or better by A.M. Best, must include tail coverage or extended reporting period endorsements if the provider switches to claims-made coverage, and must name the managed care organization as a certificate holder with 30 days' advance notice of cancellation or material changes. Require the provider to notify the managed care organization within a specified timeframe, typically 10 to 30 days, of any adverse events affecting the provider's ability to participate in the network, including loss or restriction of license, loss or restriction of hospital privileges, exclusion from Medicare or Medicaid programs, felony convictions, sanctions by professional licensing boards, malpractice settlements or judgments above specified thresholds, or voluntary or involuntary termination from other managed care networks.

Establish the provider's obligation to comply with the managed care organization's medical policies, clinical practice guidelines, and utilization management protocols while preserving the provider's independent medical judgment and professional autonomy. Specify that medical policies and clinical guidelines are based on evidence-based medicine, developed or adopted by the managed care organization's medical director in consultation with practicing physicians, and made available to network providers through the provider manual or online portal. Clarify that while providers are expected to follow clinical guidelines as a framework for delivering quality care, the guidelines do not override the provider's professional judgment about what is medically appropriate for individual patients based on their unique clinical circumstances, and that providers retain ultimate authority over treatment decisions while accepting that services not meeting medical necessity criteria may not be covered or reimbursed.

Require the provider to maintain medical records for all plan members in accordance with applicable federal and state laws, accreditation standards, and professional practice standards. Specify that medical records must be accurate, complete, legible, and timely, documenting the patient's medical history, presenting complaints, physical examination findings, diagnostic test results, diagnoses, treatment plans, medications prescribed, patient education provided, and follow-up care arranged. Require that medical records be maintained in a secure manner that protects patient confidentiality and complies with HIPAA Security Rule requirements for electronic health records, and establish the managed care organization's right to access medical records for purposes of utilization review, quality assurance, claims auditing, and compliance monitoring. Specify the retention period for medical records, typically ranging from six to ten years depending on state law requirements, and address the provider's obligations to maintain records for the required period even after contract termination.

Payment Methodology and Claims Administration

Establish the complete payment methodology with sufficient precision and detail to enable the provider to accurately predict reimbursement and to prevent disputes over payment calculations. If the contract employs fee-for-service reimbursement, attach as an exhibit or incorporate by reference the specific fee schedule that establishes payment rates for each procedure code the provider may bill. Specify whether the fee schedule is based on a percentage of Medicare rates, such as 120% of the Medicare Physician Fee Schedule or 150% of Medicare rates for a particular service category, or whether it represents a proprietary fee schedule negotiated between the parties. Address how the fee schedule will be updated to reflect annual Medicare rate changes, new procedure codes added to the CPT or HCPCS code sets, or renegotiated rates for specific high-volume or high-cost services.

If the contract employs capitation payment methodology, specify the per-member-per-month rates the managed care organization will pay to the provider for each member assigned to the provider's panel. Detail how capitation rates vary based on member characteristics such as age bands, gender, geographic location, or health risk scores calculated using hierarchical condition categories or other risk adjustment methodologies. Explain how the member panel is calculated, including whether members are prospectively assigned to the provider based on their selection of a primary care physician, retrospectively attributed based on where they received the plurality of primary care services, or assigned through other methodologies. Address how capitation payments are adjusted when members enroll or disenroll mid-month, whether through pro-rated payments based on the number of days the member was enrolled or through monthly reconciliation processes that true up payments to actual enrollment.

Establish comprehensive claims submission requirements that enable the provider to bill for services and receive timely payment. Specify the required claim forms, including CMS-1500 for professional services or UB-04 for institutional services, or the electronic equivalents using 837P or 837I transaction formats under HIPAA electronic transaction standards. Require that claims include all data elements necessary for adjudication, including patient demographics, member identification number, dates of service, place of service codes, diagnosis codes using the current ICD version, procedure codes using CPT or HCPCS codes, charges for each service line, and rendering provider information including NPI and tax identification number. Establish timely filing limits that specify the deadline by which claims must be submitted to be eligible for payment, typically ranging from 90 to 180 days from the date of service or from the date the provider knew or should have known of member coverage, with exceptions for retroactive eligibility determinations or coordination of benefits situations.

Specify payment timelines in compliance with state prompt payment laws, which typically require managed care organizations to pay clean claims within 30 to 45 days of receipt. Define when a claim is considered received, whether upon physical receipt of paper claims, electronic acceptance of electronic claims without rejection, or upon the managed care organization's receipt of all information necessary to adjudicate the claim. Address the consequences of late payment, including interest penalties calculated at rates specified in state prompt payment statutes, typically ranging from 10% to 18% annual percentage rate, and the provider's right to report chronic late payment to state insurance regulators. Establish procedures for the managed care organization to request additional information needed to adjudicate claims, and specify whether such requests suspend the prompt payment timeline or whether payment remains due within the original timeframe with post-payment review permitted.

Address payment adjustments and reconciliation processes that may result in amounts being added to or recouped from provider payments. Establish coordination of benefits procedures that require the provider to bill other insurers that may be primary to the managed care plan, including Medicare for dual-eligible members, other commercial insurance for members with multiple coverage, and automobile or workers' compensation insurance for accident-related injuries. Specify how the managed care organization will calculate its payment obligation when other coverage exists, whether as secondary payer after the primary insurer pays, or as the payer of last resort after all other coverage is exhausted. Detail claims recoupment procedures that permit the managed care organization to recover overpayments resulting from claims processing errors, duplicate payments, payments for services rendered to members who were not eligible on the date of service, or payments for services later determined not to be medically necessary or covered under the benefit plan.

Establish a formal dispute resolution process for payment disagreements that provides the provider with a fair opportunity to contest payment denials, downcoding, or underpayment. Require the managed care organization to provide clear explanations of payment determinations through remittance advice that identifies the reason for any adjustment or denial using standard claim adjustment reason codes and remark codes. Specify timeframes within which the provider must submit payment disputes, typically 30 to 90 days from receipt of the remittance advice, and establish the managed care organization's obligation to investigate disputes and provide written responses within a reasonable timeframe. Address escalation procedures for unresolved disputes, potentially including review by the medical director for clinical disputes, executive-level review for policy disputes, or submission to the formal dispute resolution process established elsewhere in the contract.

Address the provider's compensation for services rendered to members whose eligibility is retroactively terminated due to non-payment of premiums, loss of Medicaid eligibility, or other reasons. Specify whether the managed care organization remains responsible for payment of claims for services rendered during the period the member appeared eligible based on eligibility information available to the provider at the time of service, or whether the provider assumes the risk of retroactive eligibility changes and must seek payment directly from the member. Establish the provider's rights and obligations regarding balance billing of members, generally prohibiting balance billing for covered services except for applicable copayments, coinsurance, and deductibles, while permitting balance billing for non-covered services if the provider obtains advance written notice and consent from the member acknowledging financial responsibility.

Quality Assurance and Utilization Management Framework

Describe the managed care organization's comprehensive quality assurance program and establish the provider's obligations to participate in quality improvement initiatives designed to enhance clinical outcomes, patient safety, and member satisfaction. Require the provider to participate in the collection and reporting of Healthcare Effectiveness Data and Information Set measures, which are standardized performance metrics used by health plans to measure quality of care and service across multiple dimensions including preventive care, chronic disease management, behavioral health, and patient experience. Specify which HEDIS measures are applicable to the provider's specialty and practice setting, such as childhood immunization rates, cervical cancer screening, diabetes care including HbA1c testing and control, and appropriate medication management for chronic conditions.

Establish the provider's obligation to participate in patient satisfaction surveys, including the Consumer Assessment of Healthcare Providers and Systems surveys that measure member experience with their healthcare providers and health plans. Require the provider to cooperate with survey administration by providing accurate member contact information, encouraging members to participate in surveys, and addressing any service deficiencies identified through survey results. Address the managed care organization's use of patient satisfaction data in network management decisions, provider profiling, and quality improvement initiatives, while ensuring that individual provider results are handled confidentially and used constructively rather than punitively.

Require the provider to participate in clinical outcome tracking and quality improvement projects focused on specific conditions, procedures, or patient populations. Establish the provider's obligation to submit clinical data through registries, electronic health record interfaces, or claims-based reporting that enables the managed care organization to monitor outcomes such as hospital readmission rates, emergency department utilization, medication adherence, and achievement of clinical targets for chronic disease management. Specify that the provider will participate in peer review activities, including review of clinical cases to assess appropriateness of care, identification of opportunities for improvement, and development of corrective action plans when quality concerns are identified, while ensuring that peer review activities are conducted in accordance with state peer review protection statutes that provide confidentiality and immunity from discovery.

Detail the managed care organization's utilization management program, which serves to ensure that members receive medically necessary and appropriate services while avoiding unnecessary or duplicative care that increases costs without improving outcomes. Specify which categories of services require prior authorization before the provider may render services and receive reimbursement, typically including elective inpatient admissions, outpatient surgical procedures, advanced imaging such as MRI and CT scans, specialty medications, durable medical equipment, and referrals to out-of-network providers. Establish the process for obtaining prior authorization, including the information the provider must submit such as clinical documentation supporting medical necessity, relevant diagnostic test results, and previous treatments attempted, and the methods for submitting authorization requests such as telephone, fax, or online portal.

Specify the timeframes within which the managed care organization must make authorization determinations, distinguishing between urgent requests involving services where delay could seriously jeopardize the member's health or ability to regain maximum function and non-urgent requests for scheduled or elective services. Require that urgent authorization requests be decided within 24 to 72 hours of receipt of all necessary information, while non-urgent requests must be decided within 14 days or the timeframe specified in state regulations. Establish that authorization decisions will be made by qualified healthcare professionals, with physicians or other appropriate licensed practitioners making decisions to deny, reduce, or terminate services based on medical necessity, and that decision-makers will apply evidence-based clinical criteria such as MCG guidelines, InterQual criteria, or proprietary medical policies developed by the managed care organization's medical director.

Address the provider's appeal rights when prior authorization is denied, reduced, or terminated, establishing a formal reconsideration process that provides the provider and member with an opportunity to submit additional clinical information and request review by a different clinical reviewer. Specify timeframes for submitting appeals, typically 30 to 60 days from the initial adverse determination, and require the managed care organization to conduct expedited appeals within 72 hours for urgent situations. Establish that appeal decisions will be made by physicians or other licensed practitioners who were not involved in the initial determination and who possess appropriate expertise in the relevant specialty or treatment modality, and provide for external review by independent review organizations when internal appeals are unsuccessful, as required by the Affordable Care Act and state insurance laws.

Establish the managed care organization's right to conduct medical record audits and on-site reviews to assess the provider's compliance with contract requirements, quality of care standards, and accurate billing practices. Specify that the managed care organization will provide reasonable advance notice before conducting on-site audits, typically 10 to 30 days, and will conduct audits during normal business hours to minimize disruption to patient care. Require the provider to cooperate fully with audit activities by making medical records available for review, providing access to facilities and staff for interviews, and responding to requests for additional information or clarification. Address the use of audit findings, including identification of documentation deficiencies that may require provider education, discovery of billing errors that may require claims adjustments or recoupment, and identification of quality concerns that may trigger corrective action plans or in serious cases termination of network participation.

Require the provider to participate in case management and disease management programs for members with complex medical conditions, chronic diseases, or high healthcare utilization patterns. Establish the provider's obligation to cooperate with case managers employed by the managed care organization, including communicating about member treatment plans, coordinating care transitions when members are discharged from hospitals or emergency departments, and implementing evidence-based care protocols for conditions such as diabetes, heart failure, asthma, and chronic obstructive pulmonary disease. Specify that the provider retains ultimate authority over treatment decisions and that case management recommendations are advisory rather than binding, while clarifying that the provider accepts financial responsibility for services that do not meet medical necessity criteria when prior authorization was required but not obtained.

Contract Term, Renewal, and Termination Provisions

Specify the initial term of the agreement with precision, establishing both the commencement date and the expiration date to create a definite contract period. Typical initial terms range from one to three years, with one-year terms providing flexibility for either party to exit the relationship with minimal commitment, while longer terms provide stability for network planning and member continuity of care. Address automatic renewal provisions that extend the contract for successive renewal terms, typically one year each, unless either party provides written notice of non-renewal within a specified period before the expiration date, commonly 90 to 180 days. Clarify whether non-renewal requires cause or whether either party may elect not to renew for any reason or no reason, and address the managed care organization's obligations to notify affected members when a provider will be leaving the network so members can transition to other network providers.

Establish termination rights that permit either party to end the contractual relationship under specified circumstances, distinguishing between termination without cause that requires substantial advance notice and termination for cause that may be effective immediately or with minimal notice. For termination without cause, require the terminating party to provide written notice to the other party within a timeframe that allows for orderly transition of patient care and network management, typically 90 to 180 days before the intended termination date. Specify that termination without cause may be exercised by either party for any reason or no reason, providing both parties with an exit strategy if the relationship is not meeting expectations, market conditions change, or strategic priorities shift.

Enumerate specific grounds for termination for cause that permit immediate termination or termination with minimal notice, typically 30 days, when the other party commits serious breaches of contract or engages in conduct that threatens patient safety, plan integrity, or regulatory compliance. Include as grounds for cause termination the loss or suspension of professional licenses required to practice, exclusion from Medicare, Medicaid, or other federal healthcare programs under Section 1128 of the Social Security Act, material breach of contract terms that is not cured within a specified period after written notice, fraud or material misrepresentation in credentialing applications or claims submissions, failure to maintain required professional liability insurance coverage, criminal conviction of felonies or healthcare-related crimes, and conduct that threatens the health or safety of plan members or that violates professional ethical standards.

Address automatic termination provisions that end the contract immediately upon the occurrence of specified triggering events without requiring notice from either party. Include as automatic termination events the provider's death or permanent disability if the provider is an individual practitioner, dissolution or bankruptcy of either party, loss of state insurance license by the managed care organization, or mutual written agreement of the parties to terminate the relationship. Specify that automatic termination does not require advance notice but that the parties will cooperate to ensure orderly transition of patient care and resolution of outstanding claims and payment obligations.

Establish the provider's obligations upon termination of the contract regardless of the reason for termination or which party initiated termination. Require the provider to continue providing care to members who are undergoing active treatment at the time of termination, typically for a transitional period of 90 days to allow members to complete courses of treatment and transition to other network providers without disruption. Extend the transitional care period for pregnant patients through delivery and immediate postpartum care, and for members undergoing treatment for life-threatening conditions or acute illnesses where transfer of care could jeopardize health outcomes. Require the provider to cooperate with the managed care organization in transitioning members to other network providers, including transferring medical records, communicating with accepting providers about treatment plans, and providing members with information about continuing their care.

Require the provider to submit all claims for services rendered prior to the termination date within specified timeframes, typically 60 to 90 days after termination, and establish that claims submitted after the deadline will not be eligible for payment unless the provider can demonstrate good cause for the delay. Address the provider's obligation to return managed care organization property upon termination, including member identification cards collected from patients, provider manuals and administrative materials, and any confidential or proprietary information belonging to the managed care organization. Specify that termination does not relieve either party of obligations that accrued prior to the termination date, including the managed care organization's obligation to pay for covered services properly rendered and billed, the provider's obligation to maintain medical records for the required retention period, and both parties' ongoing obligations to maintain confidentiality of protected health information and proprietary business information.

Data Protection, Privacy, and HIPAA Compliance

Establish comprehensive data protection obligations that require both parties to comply with all applicable privacy and security laws, including the Health Insurance Portability and Accountability Act Privacy Rule and Security Rule, the Health Information Technology for Economic and Clinical Health Act breach notification requirements, state health information privacy laws that may provide greater protections than federal law, and state data breach notification laws that require notification to affected individuals and regulators when unauthorized access to personal information occurs. Specify that the provider is a covered entity under HIPAA responsible for its own compliance with all applicable requirements, while the managed care organization functions as a covered entity or health plan depending on whether it is a licensed insurer or a third-party administrator.

Address the exchange of protected health information between the parties for purposes of treatment, payment, and healthcare operations as permitted by the HIPAA Privacy Rule without requiring patient authorization. Specify that the provider may disclose member protected health information to the managed care organization for purposes of claims payment, utilization review, quality assurance, care coordination, and other healthcare operations functions, and that the managed care organization may disclose protected health information to the provider for purposes of care coordination, case management, and communicating coverage determinations. Establish that both parties will limit uses and disclosures of protected health information to the minimum necessary to accomplish the intended purpose, except when the disclosure is for treatment purposes where the minimum necessary standard does not apply.

Require both parties to enter into business associate agreements with any subcontractors, vendors, or service providers who will have access to protected health information in performing services on behalf of the party. Specify that business associate agreements must include all required elements under the HIPAA Omnibus Rule, including restrictions on use and disclosure of protected health information, requirements to implement appropriate safeguards, obligations to report security incidents and breaches, requirements to ensure subcontractors comply with business associate obligations, and obligations to return or destroy protected health information upon termination of the business associate relationship. Address the parties' respective responsibilities for ensuring business associate compliance and for responding to business associate breaches that may affect the other party's members or operations.

Detail breach notification obligations that require each party to notify the other party promptly upon discovering a breach of unsecured protected health information that affects the other party's members or operations. Define breach in accordance with HIPAA as an impermissible use or disclosure of protected health information that compromises the security or privacy of the information, excluding uses or disclosures where there is a low probability that the information has been compromised based on a risk assessment considering the nature and extent of the information involved, the unauthorized person who accessed the information, whether the information was actually acquired or viewed, and the extent to which risk has been mitigated. Require notification within a specified timeframe, typically 24 to 72 hours of discovery, and require the notifying party to provide sufficient information to enable the other party to assess its own notification obligations and to take steps to mitigate harm to affected individuals.

Establish obligations to cooperate with breach investigation and mitigation, requiring the party that experienced the breach to conduct a thorough investigation to determine the scope of the breach, the individuals affected, the types of information compromised, and the circumstances that led to the breach. Require the breaching party to take prompt action to mitigate harm, which may include notifying affected individuals, offering credit monitoring services if financial information was compromised, implementing corrective measures to prevent similar breaches in the future, and cooperating with regulatory investigations by the Office for Civil Rights or state attorneys general. Address the allocation of costs associated with breach response, typically requiring the breaching party to bear the costs of notification, mitigation, and any regulatory penalties resulting from its failure to implement appropriate safeguards.

Require both parties to implement appropriate administrative, physical, and technical safeguards to protect the confidentiality, integrity, and availability of protected health information as required by the HIPAA Security Rule. Specify that administrative safeguards must include security management processes to identify and manage risks to electronic protected health information, workforce security procedures to ensure that workforce members have appropriate access to electronic protected health information, information access management procedures to authorize access based on job responsibilities, security awareness and training programs, and security incident response procedures. Require physical safeguards including facility access controls, workstation security measures, and device and media controls to protect electronic devices and storage media containing protected health information.

Establish technical safeguards requirements including access controls that limit access to electronic protected health information to authorized users, audit controls that record and examine access and activity in information systems containing protected health information, integrity controls to ensure that electronic protected health information is not improperly altered or destroyed, and transmission security measures to protect electronic protected health information being transmitted over electronic networks. Require encryption of electronic protected health information at rest and in transit, or if encryption is not feasible, require documentation of the risk assessment supporting the decision not to encrypt and implementation of equivalent alternative measures to protect the information.

Address data retention requirements, specifying that medical records and claims documentation must be maintained for the period required by applicable state and federal laws, which typically range from six to ten years depending on the jurisdiction and the type of record. Require that records be maintained in a format that permits retrieval and reproduction when needed for continuity of care, legal proceedings, regulatory audits, or other legitimate purposes. Establish procedures for return or destruction of protected health information upon contract termination, requiring the provider to return to the managed care organization or destroy all protected health information received from the managed care organization that is not part of the patient's designated record set maintained by the provider, and requiring the managed care organization to return or destroy protected health information received from the provider except to the extent retention is required for legal, regulatory, or operational purposes.

Risk Allocation Through Indemnification and Insurance

Establish mutual indemnification obligations that allocate risk between the parties based on which party's conduct or decisions give rise to liability. Require each party to indemnify, defend, and hold harmless the other party, its officers, directors, employees, and agents from and against any claims, demands, actions, damages, liabilities, costs, and expenses, including reasonable attorneys' fees, arising from or related to the indemnifying party's negligence, willful misconduct, breach of contract, or violation of applicable laws. Specify that the indemnification obligation includes the duty to defend, requiring the indemnifying party to assume the defense of claims at its own expense using counsel reasonably acceptable to the indemnified party, and to keep the indemnified party informed of the status of the defense and any settlement negotiations.

Establish that the provider's indemnification obligation covers professional liability claims arising from clinical services rendered to plan members, including claims of medical malpractice, negligence in diagnosis or treatment, failure to obtain informed consent, improper disclosure of confidential patient information, and other claims related to the provider's delivery of healthcare services. Specify that the provider's indemnification obligation applies regardless of whether the claim also alleges that the managed care organization's utilization management decisions or coverage determinations contributed to the injury, provided that the provider's conduct was a proximate cause of the harm. Clarify that the provider's indemnification obligation does not extend to claims arising solely from the managed care organization's utilization management decisions, coverage determinations, or administrative actions where the provider followed appropriate clinical standards and obtained required authorizations.

Establish that the managed care organization's indemnification obligation covers claims arising from its utilization management decisions, coverage determinations, payment denials, credentialing decisions, network termination decisions, and other administrative actions. Specify that the managed care organization will indemnify the provider for claims alleging that denial of prior authorization or termination of authorized services caused harm to a member, provided that the provider appropriately sought authorization and complied with the managed care organization's determination. Address claims alleging that the managed care organization's actions interfered with the provider-patient relationship or constituted corporate practice of medicine, and establish that the managed care organization assumes responsibility for defending its utilization management program and coverage policies.

Detail required insurance coverage that both parties must maintain throughout the contract term to ensure financial capacity to satisfy indemnification obligations and to protect against catastrophic losses. Require the provider to maintain professional liability insurance coverage in amounts appropriate to the provider's specialty and practice setting, typically ranging from one million to three million dollars per occurrence and three million to five million dollars in annual aggregate for physicians in most specialties, with higher limits often required for high-risk specialties such as obstetrics, neurosurgery, and orthopedic surgery. Require hospitals to maintain professional and general liability coverage in substantially higher amounts, typically ranging from ten million to twenty-five million dollars or more depending on the size and scope of operations.

Specify that professional liability insurance must be maintained with insurance carriers rated A- or better by A.M. Best Company to ensure the financial stability of the insurer and its ability to pay claims. Address the distinction between occurrence-based coverage, which covers claims arising from incidents that occurred during the policy period regardless of when the claim is filed, and claims-made coverage, which covers only claims that are both incurred and reported during the policy period. If the provider maintains claims-made coverage, require the provider to maintain tail coverage or extended reporting period endorsements that provide coverage for claims reported after the policy expires but arising from incidents that occurred during the policy period, ensuring continuous coverage even if the provider changes insurers or retires from practice.

Require the provider to name the managed care organization as an additional insured or certificate holder on the professional liability insurance policy, enabling the managed care organization to receive notice if the policy is cancelled, non-renewed, or materially changed. Specify that the provider must provide certificates of insurance evidencing required coverage before the contract becomes effective and must provide updated certificates upon policy renewal or when coverage changes. Establish that the provider must notify the managed care organization within a specified timeframe, typically 10 to 30 days, if insurance coverage lapses, is cancelled, or falls below required limits, and that failure to maintain required insurance constitutes grounds for immediate termination of the contract.

Require the managed care organization to maintain comprehensive general liability insurance, professional liability insurance covering its utilization management and case management activities, errors and omissions insurance covering administrative errors, and cyber liability insurance covering data breaches and network security failures. Specify coverage limits appropriate to the managed care organization's size and scope of operations, and require the managed care organization to provide evidence of coverage to the provider upon request. Clarify that insurance requirements represent minimum coverage levels and do not limit either party's indemnification obligations or liability under the contract, and that each party remains responsible for damages exceeding insurance coverage limits to the extent such damages arise from the party's indemnifiable conduct.

Dispute Resolution Procedures and Governing Law

Establish a comprehensive, multi-tiered dispute resolution process that encourages the parties to resolve disagreements through negotiation and alternative dispute resolution before resorting to litigation, while preserving each party's right to seek judicial relief when necessary to protect important interests. Require that any dispute arising out of or relating to the contract must first be submitted to good faith negotiations between designated representatives of each party who have authority to settle the dispute. Specify that either party may initiate the negotiation process by providing written notice to the other party describing the nature of the dispute and the relief sought, and require the parties' representatives to meet in person or by videoconference within a specified timeframe, typically 15 to 30 days after the dispute notice is provided.

Establish that if the parties' representatives are unable to resolve the dispute through negotiation within a specified period, typically 30 days from the initial meeting, either party may escalate the dispute to mediation before a neutral mediator. Specify the process for selecting a mediator, which may include agreement on a specific mediator, selection from a list of qualified mediators provided by a dispute resolution organization such as the American Arbitration Association or JAMS, or if the parties cannot agree, appointment by the dispute resolution organization. Require that mediation be conducted in accordance with the commercial mediation rules of the selected dispute resolution organization, and specify the location for mediation proceedings, typically the city where the provider practices or where the managed care organization's principal office is located.

Address the allocation of mediation costs, typically requiring the parties to share equally the mediator's fees and administrative costs while each party bears its own attorneys' fees and expenses. Establish that mediation is a confidential process and that statements made during mediation cannot be used as evidence in subsequent arbitration or litigation, encouraging the parties to engage in frank settlement discussions without fear that their statements will be used against them. Specify a timeframe for completing mediation, typically 60 days from the mediator's appointment, after which either party may proceed to arbitration if the dispute remains unresolved.

Establish that if mediation does not resolve the dispute, either party may submit the dispute to final and binding arbitration in accordance with the commercial arbitration rules of a specified dispute resolution organization. Specify whether disputes will be decided by a single arbitrator or a panel of three arbitrators, with single arbitrators typically used for disputes involving smaller amounts in controversy and three-arbitrator panels used for complex disputes or those involving substantial amounts. Detail the process for selecting arbitrators, including each party's right to strike unacceptable arbitrators from lists provided by the dispute resolution organization, and establish qualifications for arbitrators such as experience in healthcare law, managed care contracting, or the specific subject matter of the dispute.

Specify the location of arbitration proceedings, the rules of evidence and procedure that will apply, and the scope of discovery permitted during arbitration. Address whether the arbitrator has authority to award punitive damages, attorneys' fees, or other remedies beyond compensatory damages, and establish that the arbitrator's decision will be final and binding on both parties with very limited grounds for judicial review. Specify how arbitration costs will be allocated, typically requiring each party to bear its own attorneys' fees and expenses while sharing equally the arbitrator's fees and administrative costs, unless the arbitrator determines that one party's position was substantially frivolous or brought in bad faith, in which case the arbitrator may allocate costs differently.

Establish exceptions to the mandatory arbitration requirement for certain categories of disputes where arbitration may not be appropriate or where immediate judicial relief is necessary. Exclude from arbitration claims seeking injunctive relief to prevent irreparable harm, such as disputes over alleged breaches of confidentiality obligations or misuse of proprietary information where monetary damages would be inadequate. Exclude disputes involving medical necessity determinations that affect patient care and where delay inherent in arbitration could jeopardize patient health, allowing such disputes to be resolved through the utilization management appeal process or expedited judicial review. Consider excluding small claims below a specified dollar threshold, such as individual claim payment disputes under a certain amount, allowing such disputes to be resolved in small claims court or through the contract's claims dispute process without the expense of arbitration.

Specify the governing law that will be applied to interpret the contract and resolve disputes, typically selecting the law of the state where the provider practices or where the managed care organization is domiciled. Address choice of venue for any court proceedings that are not subject to arbitration, specifying the state and county where such proceedings must be filed and requiring both parties to consent to personal jurisdiction in that location. Include a provision requiring each party to waive any objection to venue or inconvenient forum, preventing either party from seeking to transfer proceedings to a different location after litigation commences.

Address the relationship between the contract's dispute resolution provisions and any dispute resolution procedures required by state or federal law, such as independent external review of adverse coverage determinations required by the Affordable Care Act or state insurance laws. Specify that members retain all rights to external review and regulatory complaints regardless of the contract's dispute resolution provisions, and that the contract's arbitration requirement applies only to disputes between the contracting parties and does not limit members' rights to pursue claims against either party in court or through regulatory processes.

General Contract Provisions and Administrative Requirements

Include comprehensive general provisions that address standard contract administration matters and establish the framework for the parties' ongoing relationship. Establish amendment procedures requiring that any modification to the contract must be in writing and signed by authorized representatives of both parties to be effective, preventing either party from claiming that oral agreements or informal communications modified the contract terms. Specify the process for proposing amendments, including written notice describing the proposed changes and the business rationale, and establish timeframes for the other party to respond to amendment proposals.

Address assignment and delegation restrictions that prevent either party from transferring its rights or obligations under the contract without the prior written consent of the other party, which consent may not be unreasonably withheld. Establish exceptions to the assignment restriction for transfers to successor entities in connection with mergers, acquisitions, or corporate reorganizations, provided that the successor entity assumes all obligations under the contract and meets the same qualifications as the original party. Specify that any attempted assignment in violation of the contract is void and constitutes a material breach, and address whether the non-assigning party may terminate the contract if an assignment occurs without consent.

Establish notice requirements that specify how legal notices, demands, and other formal communications must be delivered to be effective under the contract. Require that notices be in writing and delivered by methods that provide proof of delivery, such as certified mail with return receipt requested, overnight courier service, or personal delivery with signed acknowledgment of receipt. Specify the addresses to which notices must be sent for each party, typically the principal business address with attention to a specific officer or department, and establish that notices are deemed received on the date of actual delivery or refusal to accept delivery. Require each party to notify the other party promptly of any change in address for receiving notices.

Include a severability provision establishing that if any provision of the contract is determined to be invalid, illegal, or unenforceable by a court or arbitrator, the remaining provisions will continue in full force and effect to the maximum extent possible. Specify that if a provision is found invalid, the parties will negotiate in good faith to replace the invalid provision with a valid provision that achieves the same economic and business objectives to the extent legally permissible. Address whether the entire contract becomes void if a material provision is found invalid and cannot be replaced with an acceptable alternative, or whether the contract continues with the invalid provision severed.

Address the relationship of the parties, specifying that the contract creates an independent contractor relationship and does not create an employment relationship, partnership, joint venture, or agency relationship between the parties. Establish that neither party has authority to bind the other party to contracts or obligations, to make representations or warranties on behalf of the other party, or to incur liabilities in the other party's name. Specify that each party is solely responsible for its own employees, contractors, taxes, benefits, and compliance with employment laws, and that the provider is not entitled to employee benefits from the managed care organization.

Include an integration or entire agreement clause establishing that the written contract, together with all exhibits, schedules, and documents incorporated by reference such as the provider manual and fee schedules, constitutes the complete and exclusive statement of the agreement between the parties and supersedes all prior negotiations, understandings, and agreements whether written or oral. Specify that the contract may not be contradicted by evidence of prior or contemporaneous agreements, and establish the hierarchy among contract documents if conflicts arise, typically providing that the main contract controls over exhibits, and that specific provisions control over general provisions. Address how incorporated documents such as the provider manual will be updated, typically allowing the managed care organization to update administrative policies with reasonable notice to providers while requiring contract amendments for changes to material terms such as payment rates or termination rights.

Address survival of provisions beyond contract termination, specifying which obligations continue after the contract ends. Establish that indemnification obligations survive termination and continue for the applicable statute of limitations period for claims that may be asserted, typically ranging from two to six years depending on the type of claim and applicable law. Specify that confidentiality obligations survive termination and continue for a specified period, typically three to five years, or indefinitely for trade secrets and highly sensitive information. Establish that payment obligations for services rendered prior to termination survive until all claims are paid and any payment disputes are resolved, and that dispute resolution provisions survive to govern resolution of any disputes arising from the contract relationship.

Include comprehensive regulatory compliance provisions requiring both parties to comply with all applicable federal and state laws, regulations, and accreditation standards governing their respective operations and the services provided under the contract. Enumerate key regulatory requirements including the federal Anti-Kickback Statute prohibiting remuneration in exchange for referrals of federal healthcare program business, the Stark Law prohibiting physician self-referrals for designated health services, the False Claims Act prohibiting submission of false or fraudulent claims to federal healthcare programs, HIPAA privacy and security requirements, the Affordable Care Act's prohibition on provider gag clauses, and state insurance laws governing managed care organizations and provider networks.

Establish that neither party will take any action that would cause the other party to violate applicable laws or regulations, and require each party to notify the other party promptly if it becomes aware of any conduct that may violate legal or regulatory requirements. Address the parties' obligations if either party receives a subpoena, civil investigative demand, or other legal process seeking information about the other party or the contract relationship, typically requiring the receiving party to notify the other party promptly and to cooperate in any effort to quash or limit the scope of the request. Specify that each party will cooperate with regulatory audits and investigations affecting the other party, including providing requested documents and making personnel available for interviews, while preserving applicable privileges and confidentiality protections.

Execution and Effectiveness

Provide signature blocks for authorized representatives of each party with sufficient detail to demonstrate authority to bind the organization. Include lines for printed name, title, and date of signature, and consider including a representation that the signatory has full authority to execute the contract on behalf of the organization. For corporate entities, consider requiring attachment of a corporate resolution, board minutes, or certificate of authority demonstrating that the board of directors or other governing body has approved the contract and authorized the signatory to execute it, particularly for contracts involving significant financial commitments or long-term obligations.

Address the mechanics of contract execution, specifying whether the contract requires original signatures from both parties or whether electronic signatures are acceptable. Establish that electronic signatures have the same legal effect as handwritten signatures in accordance with the Electronic Signatures in Global and National Commerce Act and state equivalents such as the Uniform Electronic Transactions Act. Specify the effective date of the contract, which may be the date of execution by both parties, a specific calendar date stated in the contract, or the date of approval by a regulatory authority if the contract requires filing with or approval by the state insurance department.

Include provisions addressing counterparts and electronic delivery, establishing that the contract may be executed in multiple counterparts each of which is deemed an original but all of which together constitute one agreement, and that delivery of executed signature pages by facsimile or electronic mail is as effective as delivery of original signed documents. Specify that the parties will exchange fully executed original contracts within a specified timeframe after electronic delivery of signature pages, typically 10 to 30 days.

Expected Deliverable Format and Quality Standards

The completed Managed Care Contract must be delivered as a professionally formatted legal document suitable for execution by both parties and, if required, filing with state insurance regulators or submission to accreditation organizations. Use a clear hierarchical structure with main article headings, section numbers, and subsection designations that facilitate navigation and cross-referencing. Employ consistent formatting throughout the document including font selection, heading styles, spacing, and indentation that creates a professional appearance and enhances readability.

Ensure that all defined terms are used consistently throughout the document, with initial capitalization to indicate that the term has a specific meaning established in the definitions section. Verify that all cross-references to other sections, exhibits, or incorporated documents are accurate and that the referenced material actually exists and contains the information cited. Include a table of contents that lists all major sections and subsections with page numbers, enabling readers to quickly locate specific provisions.

Prepare all exhibits referenced in the contract, including fee schedules listing payment rates for relevant CPT and HCPPS codes, covered services lists describing the scope of services the provider will render, credentialing applications and recredentialing requirements, sample prior authorization forms, and any other attachments necessary to make the contract complete and operational. Ensure that exhibits are clearly labeled, properly formatted, and attached to or incorporated by reference in the main contract with appropriate version control to prevent confusion about which version of an exhibit applies.

Review the completed contract for internal consistency, ensuring that provisions in different sections do not contradict each other and that the contract reflects a coherent and balanced allocation of rights and obligations between the parties. Verify compliance with all applicable federal and state regulatory requirements for managed care contracts, including state insurance laws governing network adequacy, prompt payment, utilization review, and provider termination, and federal requirements for Medicare Advantage and Medicaid managed care contracts. Ensure that the contract is suitable for filing with state insurance departments if required for network adequacy certification or contract approval, and that it meets accreditation standards if the managed care organization is seeking or maintaining accreditation from NCQA, URAC, or other recognized accrediting bodies.

Before finalizing the document, search the user's uploaded materials one final time to verify that all relevant information has been incorporated, including specific payment rates, quality metrics, regulatory requirements, and organizational policies that should be reflected in the contract. Ensure that the contract appropriately references and incorporates the managed care organization's provider manual, medical policies, and administrative procedures while maintaining the contract as the controlling document for material terms such as payment, termination, and dispute resolution.