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Contract Clarity

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Providers and health plans aren’t always known for close collaboration with one another. But a new Colorado law designed to increase transparency between physicians and managed care organizations has support from both sides of the healthcare fence.

Colorado S.B. 79 creates standardized contract language between health insurers and physicians, requires payers to give physician groups advance notice of contract changes and to disclose payment terms in plain language, and further clarifies the contracting process. The law, which takes effect Jan. 1, 2008, also prohibits payers from requiring physician groups to accept “all products” clauses that obligate physicians to accept any payment rate/insurance product the insurer may later create.

“It should reduce the amount of time it takes for organizations and practice managers to go through the contracting process, and that translates into a substantial savings in terms of cost, labor time, etc., for both the practices and the health plan,” says William F. Jessee, MD, president and CEO of the Medical Group Management Association.

Without the law in place, health plans often were not offering doctors a fee schedule but making unilateral contract changes and altering payment terms without notice, says Colorado Medical Society CEO Alfred Gilchrist. “We thought it was important because there were probably more complaints being received by the Colorado Medical Society in and around contracting and the results of lopsided contracts than anything else we received over a period of time,” Gilchrist says.

The law also relieves physicians from administrative and financial burdens that they face during the contracting process. The average 10-physician practice spends as much as $247,500 a year on duplicative administrative tasks that add no value to the practice or patients, according to statistics released by the MGMA.

The Colorado Medical Society worked with health plans to negotiate many of the bill’s provisions. Janet Pogar, regional vice president of network management at Anthem Blue Cross Blue Shield in Colorado, agrees with the law’s provisions, saying that both physicians and health plans should understand their reimbursement and the methodologies for which the health plan calculates reimbursement. Under the law, the biggest change for Anthem will be a new step in the contracting process with physicians—a “summary disclosure form” that clearly outlines some of the contract’s key terms.

“Anthem is in support of many of the premises behind S.B. 79 as it relates to disclosure and transparency of reimbursement,” Pogar says. “Many health plans were already or were in the process of establishing Web portals that provide this transparency to physicians in terms of reimbursement and reimbursement methodologies.”

—Ben Cole