Managed Care Contracting Toolkit

© 2016 American Health Lawyers Association 1620 Eye Street NW, 6th Floor

Washington, DC 20006 (202) 833-1100

www.healthlawyers.org

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An Overview of the Newly Updated 2016 Managed Care Contracting Toolkit Originally created in June 2009, this Managed Care Contracting Toolkit (Toolkit) follows the previous form but provides updated information in light of changes in law, including the implementation of the Affordable Care Act (ACA). The Toolkit is organized in the order of a typical managed care contract and outlines general principles that should be considered when negotiating contract provisions as a Provider or Managed Care Organization (MCO). Where applicable and unambiguous, sample contract language has been marked as either MCO- or provider-friendly, or neutral. Important principles have also been listed at the beginning of each section to provide a roadmap and some general thoughts for contracting parties. The Appendices to the Toolkit also include updated information on the following: Appendix A includes case law addressing issues involving managed care contracting as well as provider-payer relationships generally. Topics addressed include ERISA Preemption; in-network and out-of-network reimbursement issues; establishing Usual, Customary and Reasonable (UCR) charges; balance billing; Pharmacy Benefits Management (PBM) litigation; and antitrust issues. Appendix B includes post-HITECH and Omnibus Rule information regarding Business Associate Agreements. Appendix C includes links to state law statutes governing managed care contracting and is updated and expanded to cover more states than addressed in the 2009 Toolkit. Appendices D-1 and D-2 include Medicare Parts D contracting links and other helpful online resources.

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Managed Care Contracting Toolkit Table of Contents I. Definitions …………………………………………………….. 6

II. Scope of Agreement ……………………………………………10

III. Provider Obligations ……………………………………………13

IV. MCO and Payer Obligations ……………………………………22

V. Reciprocal Rights and Obligations ……………………………..31

VI. Claims and Payment …………………………………………….32

VII. Information, Records, Audits, and Recoupments ……………….40

VIII. Dispute Resolution ………………………………………………50

IX. Term and Termination …………………………………………..52

X. Miscellaneous Terms …………………………………………….55

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Appendix A—Managed Care Litigation, Selected Cases and Other Sources …………61

Appendix B—HIPAA Business Associate Agreement Materials ……..………………75

Appendix C—State Law Contracting Links and Online Resources ………...…………76

Appendix D-1—Medicare Advantage & Part D Contract Provisions Checklist (Terminology) ……………………………………………………………….83 Appendix D-2—Medicare Advantage & Part D Compliance Program Guidelines (Core Requirements) ………………………………………………………94

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Many Thanks to the Authors of this Toolkit The update to this Toolkit was directed by David Dirr, Chair of the Managed Care Contracting Affinity Group and Tami Horton, Vice Chair of the Health Care Liability & Litigation Practice Group, with the assistance of Elizabeth Lemoine. David Dirr is an attorney with Dressman Benzinger LaVelle PSC in Crestview Hills, KY. Tami Horton is General Counsel, Chief Privacy Officer and Compliance Officer with the Illinois Bone and Joint Institute LLC in Des Plaines, IL. Elizabeth Lemoine is an attorney with Wick Phillips in Dallas, TX. We give special thanks to the following for their submissions and participation in the Toolkit update: • Melissa Borrelli, Western Health Advantage, Sacramento CA • Daniel Brzozowski, University of Wisconsin Hospitals and Clinics Authority,

Madison WI • Matthew Ehrlich, McLaren Health Care, Flint MI • Helaine Fingold, Epstein Becker & Green PC, Baltimore MD • Sarah Lechner, Barnabus Health, Lambertville NJ • Elizabeth Lippincott, Strategic Health Law, Chapel Hill NC • Timothy Maloney, UC Health, Cincinnati OH • Jen McDowell, Express Scripts, Saint Louis MO • Emily Moseley, Strategic Health Law, Chapel Hill NC • Sydney Nash, American Addition Centers, Inc., Brentwood TN • Terri O’Connell, Goodsill Anderson Quinn & Stifel, Honolulu HI • Edward Ohanian, Greenberg Traurig, Albany NY • Whitney Phelps, Greenberg Traurig, Albany NY • Layna C. Rush, Baker Donelson, Baton Rouge LA • Jackie Selby, Epstein Becker & Green, New York NY • Melissa Wong, Holland & Knight, Boston MA • Janice Ziegler, Dentons, Washington DC

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We also give special thanks to the following individuals for their work on previous iterations of the Toolkit:

o Roy M. Albert, Bon Secours Health System Inc., Columbia MD o Wilson M. Acevedo, OptumHealth, Eden Prairie MN o Douglas Aldeen, Community First Health Plans, San Antonio, TX o Shakeba DuBose, The DuBose Law Firm, Columbus OH o Mandie C. Eichenlaub, UnitedHealthcare Community Plan of Texas, Houston TX o Robin J. Fisk, Fisk Law Office, Ashland NH o James G. Fouassier, Stony Brook University Hospital, East Setauket NY o Kathy S. Ghiladi, Feldsman Tucker Leifer Fidell LLP, Washington DC

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o Nancy P. Gillette, Ohio State Medical Association, Dublin OH o Lisa Ge Shang Han o Mark S. Kopson, Plunkett Cooney PC, Bloomfield Hills MI o Darryl T. Landahl, DaVita Inc., Denver CO o David A. Levenstein, David Levenstein Law PC, Amherst MA o Jennifer S. Lewin, King & Spalding LLP, Atlanta GA o Nupa Patel, MultiPlan Inc., Bedford MA o R. Brent Rawlings, Virginia Hospital and Healthcare Association, Glen Allen VA o Nancy J. Reed, GlobalHealth Inc., Oklahoma City OK o Blake A. Schofield, University of Missouri, Columbus MO o Annie Hsu Shieh, Central Health Plan of California, Diamond Bar CA o Leah B. Stewart, Beatty Bangle Strama PC, Austin TX o Suzanne B. Strothkamp, Express Scripts, St. Louis MO o Tara Swenson Dwyer, Mintz Levin Cohn Ferris Glovsky and Popeo PC, Washington DC o Kim Marie Uva, Quest Diagnostics Inc., Madison NJ

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American Health Lawyers Association Managed Care Contracting Toolkit

Section I—Definitions

Main Principles to Keep in Mind:

1. Defined terms should not be circular.

2. Defined terms should be used consistently throughout the Agreement as capitalized terms.

3. To the extent possible, definitions should be together and not sprinkled throughout the body of the Agreement.

Important Terms to Include or Consider:

� AFFILIATE

Version 1: Affiliate. With respect to [MCO] or [Provider], any corporation, partnership, or other legal entity (including any Plan) directly or indirectly owned or controlled by, or which owns or controls, or that is under common ownership or control with [MCO] or [Provider], respectively. Neutral

Version 2: Affiliate. With respect to [MCO], Affiliate means each of the entities listed on [Exhibit], incorporated into this Agreement by this reference, as may be amended by [MCO] from time to time subject to the terms and conditions of Section __ [referencing amendment]. Affiliate must own or control, be owned or controlled by, or be under common ownership or control with [MCO]. Each Affiliate shall agree to abide by the terms and conditions of this Agreement. Provider Friendly

� CLEAN CLAIM

Clean Claim, unless otherwise required by law or regulation, means a standard original and legible medical claim form (a) in UB04 format or CMS 1500 format as applicable, or their successor forms or formats; (b) submitted within the timeframe set forth in this Agreement; (c) in either electronic format or paper format; (d) containing all information required to answer each data element, as determined by the National Uniform Billing (UB) Committee in the case of a UB04 form, or by CMS in the case of a CMS 1500 form, necessary to immediately process claims for services rendered, and to promptly approve or deny for payment, and (e) does not involve coordination of benefits. Neutral

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� COVERED SERVICES

Covered Services. Medically Necessary services that a Member is entitled to receive under the terms and conditions of a Plan. Neutral

Explanation: Typically, the definition of Covered Services is broadly stated as all services defined as such under the health plan’s benefit plans. However, a provider will typically want to define the scope of services that the provider is agreeing to provide as a much narrower range of services. In addition, there may be service area limitations, place-of-service limitations (in-hospital versus out-of-hospital), and other limitations specific to a particular provider’s practice.

� ENROLLEE OR MEMBER

Member. Any individual enrolled in or eligible for coverage by a Plan. Neutral

� ESSENTIAL COMMUNITY PROVIDER

Essential Community Provider. A provider that serves predominantly low-income, medically underserved individuals, including a health care provider defined in section 340B(a)(4) of the PHS Act; or described in section 1927(c)(1)(D)(i)(IV) of the Act as set forth by section 221 of Pub. L. 111-8; or a State-owned family planning service site, or governmental family planning service site, or not-for-profit family planning service site that does not receive Federal funding under special programs, including under Title X of the PHS Act, or an Indian health care provider, unless any of the above providers has lost its status under either of these sections, 340(B) of the PHS Act or 1927 of the Act as a result of violating Federal law. Neutral

� GRACE PERIOD

Grace Period. The consecutive three-month period that is afforded to an individual enrolled in a QHP to pay delinquent premiums. To be eligible for the grace period, the individual must be receiving advance payments of the premium tax credit at the time the individual fails to make a timely payment of their premium. Neutral

� MEDICALLY NECESSARY OR MEDICAL NECESSITY

Medically Necessary. Care is care provided in accordance with industry standard care guidelines and as such is (a) appropriate and consistent with the diagnosis at the time of treatment, (b) necessary to maintain or improve the patient’s condition, (c) provided in the most appropriate setting taking into consideration the nature and severity of the patient’s symptoms, and (d) not provided solely for the convenience of the Member or treating professional.

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� PARTICIPATING PROVIDER

Participating Provider. Any physician, hospital, skilled nursing facility, or other individual or entity involved in the delivery of health care or ancillary services who or which has entered into and continues to have a current valid contract with [MCO] to provide Covered Services to Members, and has been credentialed by [MCO] consistent with [MCO]’s credentialing policies. Neutral

� PAYER

Version 1: Payer. An employer, insurer, health maintenance organization, labor union, organization, or other person or entity that has contract with [MCO] to provide Covered Services for Members. MCO Friendly

Version 2: Payer. The person or entity underwriting or self-funding liability for health care services provided to Member under a Plan. Payer shall have the legal and financial liability for payment of claims and charges for Covered Services rendered to a Member. Provider Friendly

� PLAN

Version 1: Plan. Any group arrangement or plan of coverage that provides a Member with hospital, medical, surgical or dental benefits and that consists of employer-sponsored group insurance coverage, association-sponsored group prepayment coverage, coverage under labor-management trusteed plans, employer organization plans or employer benefit organization plans, or coverage under governmental programs or coverage required or provided by statute, but not student accident policies or group franchise plans. Neutral

Version 2: Plan. Any contract, plan, or policy issued or administered by an Affiliate or a Payer to provide health care benefits to Members. Any Plan shall be set forth in a plan description, certificate of coverage, or similar document describing the types and levels of benefits payable, including any applicable copayments or cost-sharing obligations on behalf of Members. [Optional: For the purposes of this Agreement, “Plan” shall be limited to health maintenance organization, preferred provider organization, and managed indemnity products authorized by [Provider]]. Provider Friendly

� POLICIES

Policies. Programs, protocols, and administrative procedures adopted by [MCO] or a Payer to be used as guidelines by [Provider] in providing services and doing business with [MCO] and Payers under this Agreement, including but not limited to credentialing and re-credentialing processes, utilization management, quality improvement, peer review, Member grievance process, or concurrent review. Neutral

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� PRIMARY CARE PHYSICIAN (PCP)

Primary Care Physician (PCP). A Participating Provider who has agreed to accept the responsibility for providing accessible, continuous, comprehensive, and coordinated care to Members, including providing initial and primary care, maintaining the continuity of care, initiating referral for care, and that has been selected by [MCO] for PCP status. Neutral

� PUBLIC EXCHANGE

Public Exchange. A governmental agency or non-profit entity that meets applicable standards under Federal law and makes QHPs available to qualified individuals and/or qualified employers. Unless otherwise identified, this term includes an Exchange serving the individual market for qualified individuals and a SHOP serving the small group market for qualified employers, regardless of whether the Exchange is established and operated by a State (including a regional Exchange or subsidiary Exchange) or by HHS. Neutral

� QUALIFIED HEALTH PLAN

Qualified Health Plan. A health plan that has been certified by the U.S. Department of Health and Human Services or applicable state agency as meeting the minimum standards required for participation on each Public Exchange through which such plan is offered. Neutral

� SPECIALTY CARE PHYSICIAN

Specialty Care Physician. A Participating Provider who is a physician or other provider of specialty medical care services who is appropriately licensed, certified, or registered in accordance with applicable state or federal laws, and who is professionally qualified to practice the particular specialty under this Agreement and that has been selected by [MCO] for Specialty Care Physician status. Neutral

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American Health Lawyers Association Managed Care Contracting Toolkit

Section II—Scope of Agreement

Main Principles to Keep in Mind:

1. This section of the Agreement should overview the scope of the arrangement between the parties, including any exclusivity or “most favored nations” terms.

2. MCOs and Providers might also consider addressing how new acquisitions by either party will be handled, how new facilities/providers may be added to the Agreement, and how new plans or products may be added to the Agreement.

3. MCOs and Providers may also want to address any limitations on access to the negotiated rates under the Agreement.

Important Terms to Include or Consider:

� MOST FAVORED NATIONS (MFN)

Version 1: If during the term of this Agreement, [Provider] enters into any contract or other arrangement under which [Provider] renders Covered Services at a discounted payment rate, differential, or other allowance for a comparable volume of admissions that is more favorable than the payment rate or payment method in this Agreement, then the Provider shall immediately notify [MCO] and [MCO] shall be entitled to such discounted rate. MCO Friendly

Version 2: If [Provider] accepts a lower rate (MFN Rate) from another payer, [Provider] agrees to concurrently give a written notice and offer the MFN Rate to [MCO]. Upon [MCO’s] written notice to [Provider], the MFN Rate shall hereinafter be the new reimbursement rate. For purposes of this Section __, another payer means the payer whose payment to [Provider] is less than that of [MCO]. [Optional: Any payer whose payment falls within 90% of the amounts paid by [MCO] in the previous year shall not be considered as “another payer” for purposes of determining whether [Provider] has accepted an MFN Rate.]

The MFN Rate determination shall exclude any government programs, including workers’ compensation program and any capitation arrangements. If [Provider] fails to notify [MCO] on a timely basis after [Provider] determines that it has accepted a MFN Rate, [MCO] may terminate the Agreement upon 180 days notice to [Provider] or adjust the reimbursement rate to be equal to the MFN Rate. Any amounts paid in excess of the MFN Rate will be considered overpayment. [Optional: [MCO] agrees that any recovery based upon an MFN Rate shall not exceed the total amount received from the other payer.]

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Upon request or 120 days after the beginning of each fiscal year, [Provider] agrees to give [MCO] a certification stating that [Provider] is in compliance with this Section __. [Optional: [MCO] shall have the right to audit [Provider’s] compliance with this Section __. Such audit shall be conducted by an independent auditor.] MCO Friendly

Version 3: [Provider] represents and warrants that it does not accept from any payer a greater discount off of [Provider’s] established fee schedule than the discount resulting from this Agreement. If [Provider] contracts with another payer at a lower rate than provided in this Agreement, [Provider] will notify [MCO], and the parties will work in good faith to assure that [MCO] receives as good a discount or rate as that other payer at the earliest possible date. Provider Friendly

� ACCESS TO RATES (SILENT PPO)

• Confidentiality.

Version 1: The parties acknowledge and understand the importance of keeping all proprietary information, including the terms of the Agreement, confidential and agree never to disclose such information to any third party except as may be required by a court or administrative order. Neutral Provider may, however, disclose such information, including payment rates, to an Affiliate of Provider. For purposes of this Agreement, the term "Affiliate" means an entity that controls, is controlled by, or is under common control, directly or indirectly, with Provider. Provider Friendly

Version 2: Provider acknowledges and agrees that all information relating to [MCO's] quality assurance, utilization management, risk management, and peer review programs, [MCO's] credentialing procedures, this agreement, including the rates of compensation payable under this Agreement, [MCO's] Provider Manual, and all other information related to [MCO's] programs, policies, protocols, and procedures, is proprietary information. Provider shall not disclose any such information to any person or entity without [MCO's] express written consent. MCO Friendly

• Contracting Authority.

Provider represents and warrants that it has full legal authority to bind its participating [or "employed"] physicians and practitioners to the terms of this Agreement. Optional, Payer Friendly To the extent that Provider and its participating practitioners are providing Covered Services as a group practice, Provider represents and warrants that such practitioners shall comply fully with the terms of this Agreement.

• List of Payers.

MCO shall include, as an Exhibit to this Agreement, a list of all participating downstream payers and plans sponsors. In addition, MCO agrees to notify Provider promptly regarding the addition or deletion of any payers from this Exhibit. Provider Friendly

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• Binding Downstream Payers.

MCO shall have written agreements with all participating payers that may be included in this Agreement. In addition, MCO agrees that such downstream payers shall be bound by the terms of this Agreement, including payment obligations. Provider Friendly

• New Product Participation.

During the terms of this Agreement, MCO may develop or implement new products. Should MCO offer participation in any such new product to Provider, Provider shall be provided with 90 days' written notice prior to the implementation of such new product.

Payer Friendly Language If Provider does not object in writing to its participation in such new product within such 90-day notice period, Provider shall be deemed to have accepted participation in the new product.

Provider Friendly Language In the event Provider objects to its participation in a new product, the parties shall confer in good faith to reach agreement on the terms of Provider's participation. If agreement on such new product cannot be reached, such new product shall not apply to this Agreement. MCO may in its discretion, establish, develop, manage, and market provider networks in which Provider may not be selected to participate.

• Provider Locations.

Provider agrees to provide Covered Services only at those locations identified in Exhibit [ ] of this Agreement. Provider agrees to notify MCO regarding the addition or deletion of any locations at least 60 days before such addition or deletion takes place.

Payer Friendly Language Until MCO approves the addition of a Provider location, MCO has no obligation to reimburse Provider for any Covered Services provided at said location.

• Non-Exclusivity.

Version 1: Neither Provider, nor or any of Provider's personnel, shall be prohibited from contracting with another health plan company or managed care organization. Provider Friendly

Version 2: The parties enter into this Agreement on a nonexclusive basis. Neutral

• Coding Changes.

Payer shall not change any coding information contained in a claim unless it first notifies Provider of the change and reason for the change and offers Provider an opportunity to appeal the change. Provider Friendly

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American Health Lawyers Association Managed Care Contracting Toolkit

Section III—Provider Obligations

Main Principles to Keep in Mind:

1. This section of the Agreement should set forth all of the obligations that are specific to Provider, although claims submission and appeal obligations are usually set forth in the Claims and Payment section.

2. Providers and MCOs should ensure that this section includes any applicable regulatory requirements or a reference to appropriate regulatory appendices.

Important Terms to Include or Consider:

� UTILIZATION REVIEW OBLIGATIONS

Utilization Management Program. As a condition for payment for Covered Services, [Provider] agrees to participate in and comply with the UM program and QA program (UM/QA Program) utilized by [MCO] to promote the efficient use of resources. [Provider] shall comply with and, subject to [Provider’s] right to appeal as provided in the UM/QA Program, be bound by such UM/QA Program. Failure by [Provider] to comply with the requirements of this Section __ will be deemed to be a material breach of this Agreement. MCO Friendly

Utilization Management Program. [Provider] agrees to participate in and cooperate with the UM Program and QA Program (UM/QA Program) utilized by [MCO], subject to [Provider’s] right to appeal any adverse decisions. A copy of the UM/QA Program is attached to this Agreement as Exhibit __. Subject to the provisions of Section __ [referencing HIPAA], [MCO] shall be entitled, upon reasonable advance written notice and during regular business hours, to access Member medical records maintained by [Provider] for the purpose of conducting utilization review in accordance with the terms of this Agreement and the UM/QA Program. Provider Friendly

� PROVIDER CREDENTIALING

Credentialing. [Provider] represents that it is a duly licensed provider in the State of _____ and accredited by _____. [Provider] agrees to cooperate with and participate in [MCO’s] credentialing and re-credentialing programs. [Provider] agrees to provide in a timely manner all credentialing information sought by [MCO], including evidence of licensure and accreditation. [Provider] shall notify [MCO] immediately of any investigation or action against the [Provider] that may result in suspension or loss of license, suspension or loss of accreditation, or the imposition of any sanction under federal health insurance programs. MCO Friendly

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� PROVISION OF COVERED SERVICES

Cooperation Between the Parties. [MCO] and Provider agree that to the extent compatible with the separate and independent management of each, they will at all times maintain an effective liaison and close cooperation with each other to provide maximum benefits and access to care for Covered Persons at the most reasonable cost consistent with quality standards of care. Neutral

Coordinated and Managed Care. Provider shall participate in the systems established and maintained by [MCO] designed to facilitate the coordination of health care services. Subject to medical judgment, patient care interests, and a patient’s express instructions, and recognizing that the level of Covered Services provided by Provider may be affected by the Provider’s scope of services, Provider shall abide by applicable law and MCO policies and procedures governing referral of Covered Persons. Provider shall obtain all required Covered Persons consents or authorizations necessary for Provider to report such clinical encounter data to [MCO]. For Covered Persons requiring hospitalization, Provider shall abide by all applicable [MCO] policies and procedures and all utilization review requirements. MCO Friendly

Provider Services; Emergency and Urgent Care; Compliance with Provider Requirements. Provider shall provide to Covered Persons: (a) those Covered Services within the scope of Provider’s licensure, expertise, and usual and customary range of services; and (b) in accordance with [insert any applicable law and other requirements], access to 24 hour-per-day, 7 day-per-week urgent and emergency services as specifically required [in Attachment __] to this Agreement. Provider shall comply with all provisions set forth on [Attachment __] attached hereto and incorporated in this Agreement by reference. Neutral

Covered Person Verification. Pursuant to [MCO] procedures [incorporate by reference/include as attachment], Provider shall establish a Covered Person’s eligibility for services before rendering services, except in the case of an Emergency Medical Condition where such verification may be impractical. In the case of an Emergency Medical Condition, Provider shall establish a Covered Person’s eligibility as soon as reasonably practical in accordance with applicable [MCO] procedures [attach or incorporate by reference]. [MCO] shall communicate to Provider in a timely manner any material modifications to [MCO’s] then current eligibility verification procedures. Nothing in this Agreement shall, or shall be construed to, require advance notice, coverage verification, or pre-authorization for emergency room services provided in accordance with the federal Emergency Medical Treatment and Active Labor Act (EMTALA) prior to Provider’s rendering such services. Neutral

Provider Responsibility. [MCO] shall not be liable for, nor will it exercise control or direction over, the manner or method by which Provider provides services to Covered Persons. Provider shall be solely responsible for all medical advice and services provided by Provider to Covered Persons. Provider acknowledges and agrees that [MCO] may deny payment for provider services rendered to a Covered Person which it determines are not Medically Necessary, are not Covered Services pursuant to _______, or are not otherwise provided in accordance with this Agreement; provided, however, that to the extent prohibited by _____, [MCO] shall not retroactively deny reimbursement for a Covered Service provided to a Covered Person by Provider if Provider relied on the written or oral authorization of [MCO] or its agents before providing the service to the Covered Person, except in cases where there was material misrepresentation or fraud. Neither

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such a denial nor any action taken by [MCO] pursuant to a utilization review, referral or discharge planning program shall operate to modify Provider’s obligation to provide appropriate services to a Covered Person under applicable law and any code of professional responsibility. MCO Friendly

Concurrent Review. Provider agrees to provide access to [MCO] employees in accordance with [MCO’s] reasonable policies and procedures to review Covered Persons’ medical records and perform on-site concurrent review. Neutral

� CONTRACTED PROVIDER REQUIREMENTS

Provision of Services by Provider. Provider represents and warrants that substantially all the services provided hereunder shall be provided directly through Provider’s employees and not pursuant to any contractual agreements between Provider and any other person or entity (Contracted Provider). MCO Friendly

Contracted Providers. Notwithstanding the foregoing, to the extent any of the services provided by Provider hereunder are performed for or on behalf of Provider by a Contracted Provider, Provider’s contracts with such Contracted Providers (Contracted Provider Agreements) shall provide that [MCO] is a third-party beneficiary of such contracted Provider Agreements and that [MCO] has standing to enforce a Contracted Provider Agreement in the absence of enforcement by Provider. Such Contracted Provider Agreements shall require Contracted Providers to hold Covered Persons harmless for the cost of any services or supplies provided by Contracted Providers to Covered Persons to the extent required under applicable law and [other applicable requirements], and shall require Contracted Providers to otherwise comply with all terms and conditions of this Agreement applicable to Provider. MCO Friendly

� PROVISION OF NON-COVERED SERVICES

Prior to the provision of any services to a Covered Person that are not Covered Services, Provider: (a) shall advise the Covered Person, in writing, (i) of the nature of the service; (ii) that the service is not a Covered Service for which compensation is payable hereunder; and (iii) that the Covered Person will be responsible for paying for the service; and (b) shall otherwise comply with all applicable law and [other applicable requirements] related to the provision of non-covered services to Covered Persons. Neutral

� REPRESENTATION AND WARRANTIES

Provider Status. Provider hereby represents and warrants that Provider: (i) has the power and authority to enter into this Agreement; (ii) is legally organized and operated to provide the services contemplated hereunder; (iii) is not in violation of any licensure requirement applicable to Provider under law, [or other applicable requirements]; (iv) has not been convicted of bribery or attempted bribery of any official or employee of the jurisdiction in which Provider operates, nor made an admission of guilt of such conduct which is a matter of record; (v) is capable of

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providing, as of the effective date of this Agreement, and at all times during this Agreement’s term, all data related to the services provided hereunder required under applicable law [and other applicable requirements], including without limitation all data required under the Health Employer Data and Information Set and National Committee for Quality Assurance requirements; and (vi) is, as of the date of this Agreement, and shall remain at all times during the term of this Agreement, enrolled as a provider in all applicable Programs in accordance with [all applicable rules]. Neutral

Provider Information and Documentation. Provider further represents and warrants that all information provided by Provider to [MCO] before the execution of this Agreement on Provider’s [participation application] and all information provided thereafter during the term of this Agreement, including without limitation, information relating to insurance coverage, quality assurance, credentialing, change of ownership of Provider, and availability of medical care by Provider to Covered Persons, is true and correct. Provider shall provide [MCO] with written notice of any changes to such information within __ business days of any change; provided, however, that written notice of changes to Provider’s demographic information, such as address and telephone number changes, may be provided within __ business days of such change. Neutral

Reporting Fraud and Abuse. If Provider identifies any suspected fraud, abuse, or misconduct under applicable law, [or other applicable requirements], Provider shall report such suspicion directly to [MCO] immediately in accordance with [MCO’s] then current policies and procedures. MCO Friendly

Compliance with Law [and Other Applicable Requirements]. [MCO] and Provider shall each comply with all applicable state and federal law, [and other applicable requirements] related to this Agreement, including without limitation the provisions set forth in [Attachment __] attached hereto and incorporated herein by reference. Any obligation of a party set forth on [Attachment __] shall be deemed in addition to, and not in limitation of, any obligations of such party otherwise set forth in this Agreement. To the extent any provision set forth in [Attachment __] conflicts with any provision otherwise set forth in this Agreement, [Attachment __] shall control. To the extent Provider provides services to Covered Persons from multiple jurisdictions, this Agreement may include an [Attachment __] applicable to each of the jurisdictions in which Provider operates and provides services to Covered Persons. In such case, the [Attachment __] applicable to the jurisdiction in which a Covered Person is a beneficiary is the [Attachment __] that shall control regarding services provided to such Covered Person. Provider is in compliance with the quality improvement and patient safety requirements set forth in 42 USC 18031(g) and (h) and shall promptly notify [MCO] in the event it is not in compliance with such law. Neutral

Compliance with Quality Rating System Initiatives. Provider agrees to cooperate with [MCO], and will, as necessary, cause its employees, contractors, and any downstream entities to cooperate in the fulfillment of federal and state Quality Health Plan quality measurement and rating requirements, including but not limited to compliance with monitoring and reporting requirements and activities conducted by federal, state or local agencies or accrediting entities, including the Utilization Review Accreditation Commission (“URAC”) and the National Committee for Quality Assurance (“NCQA”). Any records required by a regulatory agency or

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accreditation entity shall, at Provider’s expense, be delivered to [MCO] within the timeframe requested by the requesting agency, but no later than within four (4) business days of its request.

Essential Community Providers.

Version 1: In the event that Provider qualifies as an Essential Community Provider, Provider must take all commercially reasonable steps to maintain such qualification on an annual basis. Should Provider become ineligible to serve as an ECP, Provider shall notify [MCO] in writing at least [30] days prior to the date on which the qualification will cease. Neutral Version 2: In the event that Provider qualifies as an Essential Community Provider, Provider must take all necessary steps to maintain such qualification for the duration of this agreement. Should Provider lose its qualification as an ECP, Provider shall notify [MCO] in writing at least [90] days prior to the date on which the qualification will cease. Upon receipt of such notice, [MCO] may, at its option, terminate this agreement with Provider. MCO Friendly

� PROVIDER LICENSURE AND CREDENTIALING

Licensure. At all times during the term of this Agreement, Provider shall: (a) comply with all applicable laws, rules, and regulations applicable to Provider and the services performed by provider, including without limitation, all applicable licensure requirements; (b) be a certified Medicare and Medicaid Provider, to the extent required under applicable law; and (c) not be subject to any adverse determination or action related to Provider’s status as a certified Medicare and Medicaid provider. Provider shall ensure that each of Provider’s employees is duly licensed, certified, or registered as required by, and performs his or her duties in accordance with, all applicable law and applicable standards of professional ethics and practice. Provider shall notify [MCO] within __ business days following Provider’s receipt of any notice regarding an adverse action related to any restrictions upon, or any suspension or loss of, any licensure, certification, or registration required hereunder. Provider shall submit to [MCO] evidence of Provider’s satisfaction of the requirements set forth in this section upon [MCO’s] reasonable request. The Provider agrees to monitor its employees and staff against the List of Excluded Individuals and Entities (LEIE), the Social Security Administration Death Master List, and the National Plan Provider Enumeration System (NPPES). Neutral

Joint Commission Accreditation. To the extent Provider provides services subject to Joint Commission review and accreditation under [MCO’s] current credentialing requirements, Provider shall obtain and maintain such accreditation at all times during the term of this Agreement and shall notify [MCO] within __ business days following Provider’s receipt of any notice regarding an adverse action related to any restrictions upon, or any suspension or loss of, such accreditation. Subject to applicable law, this Agreement shall immediately terminate upon the expiration, surrender, revocation, restriction, or suspension of such accreditation. MCO Friendly

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� INSURANCE COVERAGE

Professional Liability. At all times during the term of this Agreement, Provider shall maintain professional liability insurance in a manner acceptable to [MCO], including maintain such tail or prior acts coverage necessary to avoid any gap in coverage for claims arising from incidents occurring during the term of this Agreement. Such insurance shall: (i) be obtained from a carrier acceptable to [MCO]; (ii) provide minimum policy limits as set forth in [Attachment __]; and (iii) include coverage for the professional acts and omissions of Provider and any employee, agent, or other person for whose acts or omissions Provider is responsible. To the extent Provider complies with this provision through a self-funded insurance plan, Provider shall maintain reserves related to such self-funded plan as required by [MCO] from time to time and shall provide to [MCO] on a semi-annual basis an opinion letter from an independent actuarial firm attesting to the financial adequacy of such reserves. MCO Friendly

General Liability. During the term of this Agreement, Provider shall maintain general comprehensive liability insurance from a carrier authorized to conduct business in the jurisdiction in which Provider operates, in amounts acceptable to [MCO], but in no event less than any amounts required under law, or [other applicable] requirements. Said insurance shall cover Provider’s premises, insuring Provider against any claim of loss, liability, or damage caused by or arising out of the condition or alleged condition of said premises, or the furniture, fixtures, appliances, or equipment located therein, together with the standard liability protection against any loss, liability, or damage resulting from the operation of a motor vehicle by Provider, Provider’s employees or agents. MCO Friendly

Workers Compensation. Provider shall purchase and maintain workers’ compensation insurance for Provider’s employees. Said insurance shall be obtained from a carrier authorized to conduct business in the jurisdiction in which Provider operates and shall provide such limits of coverage as required by law, or [applicable requirements]. MCO Friendly

Evidence of Insurance. Provider shall provide [MCO] with evidence of Provider’s compliance with the foregoing insurance requirements, as reasonably requested by [MCO] from time to time during the term of this Agreement, but in no event less than annually. Provider shall provide [MCO] with at least __days prior written notice of any adverse changes in Provider’s policy terms, including, without limitation, cancellation or non-renewal of any required coverage or any reduction in the amount of Provider’s coverage. MCO Friendly

� NON-DISCRIMINATION

Version 1: In connection with the performance of work under this Agreement, both parties shall comply with applicable federal and state laws regarding nondiscrimination and equal employment opportunities, including the Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101, et seq., and any applicable regulations promulgated thereunder. Both parties shall not discriminate against any employee or applicant for employment because of age, race, religion, color, handicap, gender, physical condition, developmental disability, sexual orientation, or national origin. This provision shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or

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termination; rates of pay or other forms of compensation; and selection for training. Both parties further agree to post in conspicuous places, available for employees and applicants for employment, notices of the provisions of the nondiscrimination clause. Neutral

Version 2: Provider shall abide by the federal Civil Rights Act of 1964, the Federal Rehabilitation Act of 1973, and all other applicable statutes, regulations, and orders (including, without limitation Executive Orders 11246 and 11375, “Equal Employment Opportunities”), and any and all amendments and successor statutes, regulations, and orders thereto. Provider shall not exclude any Covered Person from participation in, or deny any Covered Person any aid, care, service, or other benefit, on the grounds of race, color, national origin, sex, age, disability, political beliefs, or religion. MCO Friendly

Section 1557 Non-Discrimination—Applicable to Qualified Health or Dental Plans Offered Through an Exchange. Version 1: In connection with the performance of work under this Agreement, the parties shall comply with non-discrimination protections under Section 1557 of the Affordable Care Act, 42 U.S.C. Section 18116, and any applicable regulations promulgated thereunder, in that they shall not exclude from participation in, deny benefits to, or subject to discrimination any individual on the grounds prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or section 794 of title 29. Neutral Version 2: In its performance of work under this Agreement, Provider agrees to comply with Section 1557 of the Affordable Care Act, 42 U.S.C. Section 18116, and any applicable regulations promulgated thereunder, in that they shall not exclude from participation in, deny benefits to, or subject to discrimination any individual on the grounds prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or section 794 of title 29. MCO Friendly

Americans with Disabilities Act Compliance. Provider shall comply with all requirements of the Americans with Disabilities Act (ADA), all regulations promulgated thereunder, and all amendments and successor statutes and regulations thereto. Provider shall not discriminate against any qualified disabled individual covered by the ADA. Provider shall provide physical access for Covered Persons, including, at a minimum, street level access or accessibility ramp into Provider’s facility, wheelchair access to lavatory facilities, and an elevator if Provider’s facility is more than one story. Provider’s provision of services, notices, and other materials shall be appropriate for all Covered Persons, including the blind and hearing impaired. MCO Friendly

Laboratory Compliance. Provider shall comply with all requirements of the Clinical Laboratory Improvement Act (CLIA), regulations promulgated thereunder, and any amendments and successor statutes and regulations thereto. Upon execution of this Agreement, Provider shall furnish written verification to [MCO] that Provider’s laboratory facilities, if any, and those with which it conducts business related to Covered Persons, have appropriate CLIA certification of registration or waiver and a CLIA identification number. Provider shall notify [MCO] in writing of any changes in Provider’s CLIA certification status or the certification status of any laboratory

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facilities with which Provider conducts business related to Covered Persons within __ business days of any such changes. MCO Friendly

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American Health Lawyers Association Managed Care Contracting Toolkit

Section IV—MCO and Payer Obligations

Main Principles to Keep in Mind:

1. This section of the Agreement should set forth all of the obligations that are specific to the MCO, although claims payment and adjudication obligations are usually set forth in the Claims and Payment section.

2. Providers and MCOs should ensure that this section includes any applicable regulatory requirements or a reference to appropriate regulatory appendices.

Important Terms to Include or Consider:

� NOTIFYING MEMBERS OF PROVIDER TERMINATION

Payer and/or Provider shall notify Members of 1) the termination of this Agreement or 2) suspension or exclusion of participation of Provider, prior to the effective date of termination or suspension or exclusion. Provider is responsible for providing timely and relevant information to and otherwise assisting Payer in making such notifications.

In accordance with applicable law, Payer may immediately suspend or exclude the participation of the Provider under this Agreement (with or without terminating this Agreement), as specified in a written notice in the following circumstances: 1) any Official revokes, suspends, restricts or fails to renew any licensure or permit applicable to Provider; or 2) Provider demonstrates conduct (through act or omission) likely to result in revocation, suspension, restriction, or nonrenewal of any licensure or permit applicable to Provider; or 3) Provider is sanctioned under or debarred, suspended, or excluded from or opts out of any federal program (including Medicare or Medicaid) or is identified in a federal list of excluded entities or individuals; or 4) criminal charges are filed against the Provider for any act involving professional misconduct or moral turpitude; or 5) Provider fails to cure any noncompliance with any material provision of this Agreement or the Payer’s Provider Manual within ____ days or a time period acceptable to Payer; or 6) Provider fails to adequately provide or becomes incapable of adequately providing Covered Services; or 7) Provider demonstrates conduct (through act or omission) that threatens the health, safety or privacy of a Member. Neutral

� COMMUNICATION MATERIALS; OTHER NOTICES AND DOCUMENTS, INCLUDING, EVIDENCE OF COVERAGE, PROVIDER DIRECTORY, MEMBER ID CARD, ETC.

Payer and/or Provider shall issue (fill in notices and/or documents listed above) to Members.

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Example: Member ID Cards

Payer and/or Provider shall issue ID Cards to Members as an indicator of Member eligibility, provided that such ID Card shall not be conclusive of eligibility status. Except in the event of an emergency, prior to furnishing Covered Services, Provider shall use best efforts to verify that a person seeking Covered Services is in fact an eligible Member as of the date of the provision of the Covered Services. The verification of eligibility information is not a pre-authorization by the Payer regarding the Medical Necessity of any services provided, or verification that any services provided are Covered Services. Neutral

� PROVIDER DISPUTE RESOLUTION (“PDR”)

If State law requires a specific PDR, describe. Example: A “Provider Dispute” is a written notice from Provider to Payer that 1) challenges, appeals or requests reconsideration of a claim/capitation payment (including a bundled group of similar claims/capitation payments) that has been denied, adjusted, or contested; challenges a request for reimbursement for an overpayment of a claim/capitation; or seeks resolution of a billing determination or other contractual dispute.

Payer’s PDR shall follow its State-approved PDR mechanism (reference Provider Manual or other document that describes the PDR mechanism). Payer only accepts PDRs if they are submitted no later than ___ months from the date of the Covered Services, ___ months after the date of eligibility posting or within ___ days after the payment, denial, or recoupment of a timely claim/capitation submission, whichever is later. Resolution of PDRs shall occur within ____ days of receipt by Payer. Neutral

� PROVIDER CREDENTIALING

Credentialing. [MCO] shall maintain credentialing, re-credentialing, and peer review processes for determining the eligibility of each provider to participate in [MCO’s] network. [MCO] shall individually credential and review the qualifications of [Provider]. The credentialing standards of [MCO] may be amended at any time by [MCO], at its discretion and upon notice to [Provider]. [MCO] represents that [MCO’s] credentialing procedures are consistent with national accreditation standards and that, upon receipt of a properly completed application, [MCO] shall complete its review and credentialing decision and issue appropriate provider identification numbers within 90 days. The requirements for credentialing and re-credentialing shall be set forth in full in Exhibit "___" to this Agreement. Only those criteria, processes or procedures specifically set forth in Exhibit "___" shall be required by the [MCO] in determining eligibility and approving or denying credentials to applicants. [Provider] will use its best efforts to provide accurate information in the credentialing process. Nothing contained in this Agreement, however, will absolve the [MCO] of any duty to undertake its own inquiries or conduct appropriate "due diligence," and nothing contained in this Agreement shall give rise to any liability in [Provider] for any omissions or inaccuracies in the information provided, as long as [Provider] has acted in good faith. Nothing contained herein will preclude or prevent [Provider]

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from declining to process any enrollment application or renewal for any particular clinician, upon any ground which [Provider] deems reasonable. [MCO] agrees that such a decision by [Provider] does not constitute a denial or limitation of medical staff privileges or give rise to any claim that the individual clinician's privileges have been limited to any extent whatsoever. Provider Friendly

� QUALITY ASSURANCE PROGRAM

Quality Assurance Program. [Provider] shall cooperate with [MCO] in the operation of [MCO’s] quality assurance (QA) program to review the medical appropriateness and quality of health care services furnished by [Provider] to Members. Such QA program will be established by [MCO] in its sole and absolute discretion. This QA program shall include all elements covered in [MCO’s] QA program manual, which may be amended from time to time by [MCO] at its discretion and upon notice to [Provider]. [Provider] shall comply with and, subject to [Provider’s] rights of appeal as provided for in the QA program manual, be bound by [MCO’s] QA program. All documents and information received or obtained by either party during its activities pursuant to this Section __ shall be held confidential by that party during and after the term of this Agreement, and shall not be disclosed to any person without the prior written consent of the other party. MCO Friendly

� OVERSIGHT AND MONITORING

Payer shall only delegate activities or functions to Provider pursuant to a written delegation agreement in compliance with (list applicable Federal program(s), if applicable) rules. To the extent Payer delegates any functions for which it is responsible, Payer is ultimately responsible to (insert Federal and/or State agency, e.g., CMS) for oversight and compliance and shall retain the right to monitor performance of the delegated functions and to revoke such delegation if Payer or (insert Federal and/or State agency, e.g., CMS) determines that performance is unsatisfactory. Neutral

� CORRECTIVE ACTION PLANS AND FAILURE TO COMPLY

In the event Provider has failed to substantially comply with Corrective Action Plans (“CAPs”), Payer shall take appropriate action as required by Federal and/or State authority, accreditation requirements, or other Authority, including, without limitation, prohibiting the assignment of Members to Provider. The prohibition on the assignment of additional Members to Provider shall/shall not apply to dependents of Members who are already assigned to the Provider.

� QUALITY IMPROVEMENT AND PATIENT SAFETY PROGRAM

Quality Improvement and Patient Safety Program. To the extent applicable to MCO, [MCO] shall comply with the quality improvement, patient safety and quality rating system requirements

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for QHPs in accordance with 42 USC § 18031.

� UTILIZATION REVIEW AND MANAGEMENT

Version 1: Denial for Failure to Comply with UM Program. If [Provider] fails to comply with [MCO’s] utilization management (UM) program, [MCO] may deny payment for the services. MCO Friendly

Version 2: Denial for Failure to Comply with UM Program. If [Provider] fails to comply with [MCO’s] utilization management (UM) program, [MCO] may deny payment for the services. If [MCO’s] decision to deny coverage for a claim is based solely on [Provider’s] failure to identify a patient as a Member, to obtain prior authorization, to request a continued stay, or to provide medical records or other requested information (collectively, Provider Noncompliance), then [Provider] shall be entitled to appeal the denial and submit the claim for review of medical necessity. Upon review, if the services for which the claim was submitted are found Medically Necessary, determined in accordance with [MCO’s] standard clinical criteria without taking into consideration the Provider Noncompliance, [MCO] shall reverse the denial and pay the claim. Neither [MCO] nor the Member shall be responsible for payment for services determined not to be Medically Necessary. [MCO] may not deny as not medically necessary any item of care, treatment, service, test, or procedure which has been ordered by a physician or other clinician who is a participating provider in any [MCO] network and which has been undertaken or performed by [Provider] pursuant to the direction and order of such physician or clinician. Provider Friendly

Utilization Management Processes. Should [MCO] delegate any of its duties and obligations under this Agreement to any entity or third party, or to a subsidiary or an independent entity to administer benefits or to approve, review, pay, or deny claims for specified care or services on behalf of [MCO] (otherwise known as a "carve-out"), the delegate may not conduct medical necessity or utilization reviews under a standard of review different from that applied by [MCO]. The delegate may not implement any system of claim review or audit wherein the medical reviewer is required to achieve a predetermined level of denial of care, or in which any medical reviewer is compensated in whole or in part based upon a factor of the number of claims determined by the reviewer to be medically unnecessary. Provider Friendly

Version 1: Utilization Management Appeal. [Provider] may appeal a utilization management (UM) decision by requesting reconsideration by [MCO’s] UM committee within one hundred eighty (180) days from [Provider’s] notification of the decision. [Provider] may submit additional information for consideration in the review process with the request for reconsideration. If requested, [Provider] shall serve on [MCO’s] UM committee without compensation and in accordance with procedures established by [MCO]. The UM committee, following procedures set forth in [MCO’s] Policies, will attempt to resolve the dispute. In attempting to resolve the dispute, the UM committee shall consult with at least one physician with training or experience in the area of the services provided. If the dispute cannot be resolved, the UM committee shall issue a final decision subject to any rights to external review under applicable law. MCO Friendly

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Version 2: Utilization Management Appeal. [Provider] may appeal a utilization management (UM) decision by requesting reconsideration by [MCO’s] UM committee within one hundred eighty (180) days from the date of notification of the UM decision. The review committee shall consist of three individuals: [MCO] and [Provider] shall each designate a member, and those two members shall designate a third. Notwithstanding the foregoing sentence, no member of the review committee shall have been involved in making the initial determination or shall report to an individual involved in making the initial coverage determination. In making its request, [Provider] may submit additional information for review in the reconsideration process regarding the services provided. The UM committee will attempt to resolve the dispute. In attempting to resolve the dispute, the UM committee shall consult with at least one physician who is Board Certified in the area of the services requested/provided. If the dispute cannot be resolved, the review committee shall issue a final decision. If either party is dissatisfied with this decision, it may request external review if available under applicable law or request arbitration, as provided herein, by making the written demand for arbitration within ten days from receipt of the review committee’s final decision. Provider Friendly

� CONCURRENT REVIEW

Version 1: Concurrent Review. [Provider] agrees to cooperate with [MCO’s] concurrent review program as [MCO] may choose to conduct it from time to time, including giving [MCO’s] staff access to [Provider’s] facility; relaying Member status, updates, and records as required by [MCO’s] Policies; and giving notice of [MCO] determinations to Members. MCO Friendly

Version 2: Concurrent Review. [MCO] approval of an inpatient stay shall include a recommended length of stay for that admission, which shall be communicated by [MCO] to [Provider] at the time of the initial certification. [Provider] shall make reasonable efforts to give [MCO] notice of any request for continued stay at least twenty-four hours before the initial discharge date. Requests for continued stays shall be reviewed by [MCO] for Medical Necessity. [MCO] shall promptly notify [Provider] in writing or by telephone of its decision regarding the request and of any newly established length of stay. If a Member decides to remain at [Provider’s] facility after [MCO] has determined discharge is appropriate and [MCO] has informed Member that the services are no longer Covered Services, [Provider] may seek payment from Member for services rendered beyond the approved length of stay. Once [MCO] issues its approval of a continued stay, such approval shall be binding upon [MCO] as to the Medical Necessity of the services that were the subject of the concurrent review. Provider Friendly

Version 3: Concurrent Review. [MCO] may conduct utilization reviews either concurrently or retroactively, but not both on the same service or admission. The process of concurrent review shall be for the limited purpose of allowing [MCO] to disapprove or decline coverage for prospective services. Concurrent review shall not result in a denial of coverage or payment for services rendered at a date and time prior to the actual review itself. There may be no utilization review of emergency services, as both parties acknowledge that the propriety and eligibility for coverage of emergency service and treatment are determined by the "reasonably prudent layperson" standard established by law. [MCO] may not issue anticipatory denials or denials for

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days following the date of the actual utilization review on the ground that it has been unable to review medical records. [MCO] may not end a review of any day in which all records requested have been transmitted to [MCO], or reviewed by an on-site [MCO] representative, by 3:00 PM on the day in question. Provider Friendly

� POST-PAYMENT

Version 1: [MCO] shall perform retrospective review to verify that all claims submitted are in accordance with the UM program. If [MCO] determines that any claim or portion thereof was not a Covered Service, then [MCO] may deny payment for that claim or if the claim has already been paid, offset payment against one or more future claim payments in accordance with Section __ of this Agreement. MCO Friendly

Version 2: If [MCO] provides certification for Covered Services, [MCO] shall not be permitted to retrospectively deny payment for such Covered Services based on Medical Necessity. However, [MCO] may retrospectively deny or reduce payment for pre-certified Covered Services if (1) [Provider] knew but failed to disclose material medical information that, if known, would have led [MCO] not to certify or continue to certify such services, or (2) Medically Necessary services were not furnished to Member in accordance with this Agreement. No claim may be retrospectively adjusted more than 180 days after it was paid. If [MCO] determines that one or more claims was overpaid, [MCO] shall provide notice and an explanation of each claimed overpayment to [Provider]. [Provider] shall have the opportunity to appeal as described in [MCO’s] Policies. [Provider] shall have sixty days to file an appeal or repay any overpayments. If [Provider] fails to appeal or refund the amount claimed due within the sixty-day period, [MCO] may offset the amount from future payments with an explanation of the offset and a reference to the specific claim numbers for the claims being offset. Provider Friendly

Version 3: Unless required by law or by the provisions established in a self-funded plan benefit design administered by [MCO], retrospective review of a claim must be undertaken and completed within one (1) year of the initial receipt by [MCO] of the claim. Both parties are precluded from requesting any adjustments on a particular claim beyond the time frame established herein unless the parties agree to the contrary in writing, and on a claim by claim basis only. The only other exception to this requirement is where the liability of the [MCO] is subsequent to another plan or payer, the claim is later adjusted with the previous health plan or payer so as to give rise to liability in [MCO], and further demand is then made on [MCO] for payment. In such an event the request for additional reimbursement from [MCO] may not be made more than six (6) months after the adjustment with the previous plan or payer is final. Provider Friendly

Note: See below “Post-Payment Audits” in Section VII—Information, Records, Audits, and Recoupments for alternative language relating to recoupments.

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� RESEARCH

Provider warrants that no clinical investigation, experiments, or research on Members (except such investigation or research that consists of statistical analysis of patient records and treatment or other use of such records which does not involve the dissemination of information identifying the particular patient covered) shall be initiated or performed without prior notification to and approval by Payer and without the written informed consent of the Member requested to participate in the research, experiment, or investigation. The requirement of prior notification and approval by Payer does not apply in cases where there will be no charge for such services; provided, however, the Provider shall defend, indemnify, and hold Payer harmless from any claims arising from such services. Neutral

� RESCISSION OR MODIFICATION POST PRIOR AUTHORIZATION AND AFTER

PROVIDED

Except for (1) Emergency Services and (2) Covered Services that do not require Prior Authorization and are specifically set forth in the Provider Manual, Prior Authorization is required for payment of Covered Services. The applicable Payer may terminate a Prior Authorization prior to its expiration date, as specified in the Provider Manual. However, Payer will not revoke or modify a Prior Authorization to the extent that Provider already has provided Covered Services in good faith reliance on an applicable Prior Authorization. Compensation for non-Emergency Services provided to Members is payable to Provider only if Covered Services are covered by a Prior Authorization that has neither expired nor been terminated as of the date(s) of service. Neutral

� MCO “DUE DILIGENCE”

Should [MCO] maintain in whole or in part what is commonly known as an "administrative services organization (ASO)" or a "preferred provider organization (PPO)," or acts as a "third party administrator (TPA)" for claims for direct payers, [MCO] makes the following representations, which are deemed to be material to this Agreement: 1. [MCO] has conducted a full investigation of each and every payer who is or will be participating with [Provider] before contracting with that payer as a part of [MCO]'s network, to insure that the payer is licensed according to the laws of every jurisdiction in which it may do business and, where applicable, that the payer is an authorized and licensed insurer under the laws of the state;

2. If the payer is organized and exists under federal laws more commonly known as ERISA or FEHBA, then the payer is in full compliance with all of the requirements for ERISA or FEHBA plans as mandated by federal laws and regulations, including but not limited to 29 CFR 2560.503-1, respecting claims procedures, together with all other regulations promulgated by the US Department of Labor;

3. [MCO] has no credible knowledge, evidence, or information which reasonably may lead to the conclusion that the payer may not be able to pay claims as they come due in the ordinary course

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of the payer's business. In this respect [MCO] represents that it has determined that, as of the execution of this Agreement, there are no proceedings for insolvency or protection from creditors by or against the payer in any court of competent jurisdiction, and that the payer is not the subject of any criminal proceedings or regulatory inquiries directed in whole or in part to allegations concerning the payer's inability or failure to pay claims as they come due in the ordinary course of business; and

4. [MCO] will only enter into contractual arrangements directly with payers, and under no circumstances will [MCO] enter into any contractual agreements with other entities acting as preferred provider organizations or other plan benefit administrators. Provider Friendly

� NOTICE OF MATERIAL CHANGE TO PROVIDER CONTRACTS

Payer shall notify Provider in writing at least _____ (business/calendar) days in advance of any proposed material amendment referenced in this Agreement. If Payer and Provider cannot agree on the material amendment, Provider shall have the right to terminate the Agreement prior to the implementation of the material amendment by giving the Payer written notice of termination within _____ (business/calendar) days of receipt of the proposed material amendment. Neutral

� MATERIAL CONTRACT CHANGES REQUIRED DUE TO FEDERAL OR STATE

LAW OR ACCREDITING BODY

If at any time during the term hereof, any applicable law is amended, revised, or interpreted by a court of governmental regulatory agency of competent jurisdiction, or if any applicable private sector accreditation standard is amended, revised, or added, and the Payer reasonably determines that a modification of this Agreement (or the Provider Manual or other documents incorporated by reference) is necessary to cause it to conform with said amendments, revisions, or interpretations, this Agreement shall be deemed to be automatically amended to conform to the requirements of such statutes, regulations, or standards. Payer shall give Provider written notice of the proposed amendments, revisions, or interpretations and the date(s) on which they are to go into effect, which shall not be less than ____ (business/calendar) days following the date of the notice, unless a different period is required by law, in which case, the amendments, revisions, or interpretations shall be effective on that date specified in the notice. Neutral

� COMMUNICATION MATERIALS: LANGUAGE ASSISTANCE

Depending on Federal/State law: Provider acknowledges that Payer is required under (Cite Federal and/or State Authority) to ensure that language assistance services are provided to Members at all points of contact. Payer and/or Provider shall establish and maintain an ongoing language assistance program to ensure limited English proficient Members have appropriate access to language assistance while accessing Covered Services. Language assistance shall be provided only by qualified interpreters (if State law defines this term, may want to include it here) and/or bilingual staff, at all points of

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contact. Neutral

� NON-DISCRIMINATION

Provider shall not discriminate or differentiate in its treatment of any Member because of race, color, creed, national origin, health status, ancestry, religion, sex, marital status, sexual orientation, physical or mental disability, genetic information, veteran’s status, gender identity, gender expression, age, status as a Member or a participant in a publicly financed program, whether a Member has filed a complaint, whether a Member has executed an advance directive, or other status protected by applicable laws.

Provider shall not refuse to provide Covered Services to Members participating in a publicly financed health care program. Provider shall make Covered Services available to all Members, in the same manner, in accordance with the same standards, and with the same availability, as to Provider’s other patients. In addition, Provider shall not discriminate or differentiate in its treatment of any Member based on the payment by such Member of an additional fee intended to secure improved access to any physician.

Provider shall ensure that the evaluation and treatment of employees and applicants for employment are free of such discrimination and shall comply with the provisions of the (insert applicable Federal and State authority). Neutral

� CONFIDENTIAL INFORMATION

The parties shall keep in strictest confidence and in compliance with all applicable laws: 1) the terms of this Agreement; 2) any Member information, including name, address and health records (including mental health records); 3) information concerning any matter relating to the business of the other, including the other’s employees, products, services, membership, prices, operations, business systems, planning and finance, policies, procedures and practice guidelines; 4) data, records, or other information obtained from each other during the course of or pursuant to this Agreement; and 5) any information learned while performing obligations under this Agreement, which if provided by the other, would be required to be kept confidential under this Agreement. Subject to applicable law, neither party shall disclose Confidential Information (suggest defining this term) to a third party unless authorized in writing in advance by the other, provided however that Member information may be disclosed to the Member, the Member’s authorized representative, Providers participating in the Member’s care, and others as permitted by Law. Neutral

� DELEGATION

In addition to all other obligations of Provider in this Agreement, Provider agrees to assume responsibility for the activities listed in Exhibit ____, and shall cooperate with all oversight

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activities conducted by Payer related to such delegation. Delegated functions include, but are not limited to: __________. Neutral

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American Health Lawyers Association Managed Care Contracting Toolkit

Section V—Reciprocal Rights and Obligations

Main Principles to Keep in Mind:

1. This section of the Agreement should set forth rights and obligations that apply equally to both MCO and Provider.

2. Terms that are sometimes reciprocal are listed below, but this is usually a subject of negotiation between the parties.

Important Terms to Include or Consider:

� INSURANCE

[MCO’s] Insurance. At all times during the term of this Agreement, [MCO] shall maintain (i) professional liability insurance with minimum limits of $1,000,000 per occurrence and $3,000,000 aggregate; and (ii) general liability insurance in the amounts of $1,000,000 and $3,000,000 aggregate. Provider Friendly

[Provider’s] Insurance. At all times during the term of this Agreement, [Provider] shall maintain (i) professional liability insurance with minimum limits of $1,000,000 per occurrence and $3,000,000 aggregate; and (ii) general liability insurance in the amounts of $1,000,000 and $3,000,000 aggregate. Provider may elect to self-insure professional and/or general liability. Provider Friendly

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American Health Lawyers Association Managed Care Contracting Toolkit

Section VI—Claims and Payment

Main Principles to Keep in Mind:

1. The section of the Agreement typically includes all of the financial terms, including but not limited to claims timeframe and submission requirements, claims payment timeframes and requirements, Member payment and cost-sharing obligations, grounds for denial of claims, overpayment and underpayment processes, and coordination of benefits.

2. MCOs and Providers should ensure that this section includes any applicable regulatory requirements (i.e., “prompt pay” requirements) or a reference to appropriate regulatory appendices.

Important Terms to Include or Consider:

� TIMELY FILING

Time to file a claim. Payer is not obligated to make payment of claims received more than 180 days from (a) the date of an outpatient service, or the date of discharge from an inpatient setting, as applicable; (b) the date Provider reasonably knew that a patient was a Member; (c) or, when Payer is not the primary payer, the date of receipt of the primary payer’s explanation of benefits. If a dispute exists between Provider and Payer as to the day a claim was received by Payer, and the claim was submitted by standard mail and Provider retained a record of the day the claim was mailed, there exists a presumption that the claim was received by Payer on the fifth business day after the day the claim was mailed. If a dispute exists between Provider and Payer as to the day a claim was received and the claim was submitted electronically, there exists a presumption that the claim was received by Payer twenty-four hours after the claim was submitted. Neutral

� PROMPT PAYMENT

Prompt payment of claims.1 Payers or their designees shall pay or deny a claim, or request specific additional information needed to process a claim, not later than thirty days after receipt. When a Payer denies a claim, Payer shall notify Provider and Member in writing. The notice shall state, with specificity, the reason for the denial, and the Member's rights to appeal.

When Payer determines that reasonable additional information is needed to establish Payer's responsibility to make payment, Payer shall notify all relevant external sources in writing with specificity of the information needed. If Payer requests such reasonable additional information,

1 Based on Ohio’s prompt payment statute.

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Payer shall pay or deny a claim not later than forty-five (45) days after receipt of the claim. The number of days that elapse between Payer's last request for additional information within the thirty day period and Payer's receipt of the additional information shall not be counted for purposes of determining Payer's compliance with the forty-five (45) day timeframe. Payer shall not make a subsequent request for further additional information unless related to Member's pre-existing condition, which condition was unknown to Payer and about which it was reasonable for Payer to have no knowledge at the time of its initial request for additional information. When Payer requests such additional information, the number of days that elapse between making the request and receiving the additional information shall not be counted for purposes of determining Payer's compliance with the time period of not more than forty-five days.

When Provider submits a claim that is not a complete claim, Payer shall notify Provider not later than fifteen days after receipt of claim. The notice shall state, with specificity, the information needed to correct all material deficiencies. Once the material deficiencies are corrected, Payer shall proceed in accordance with this section. Neutral

� ELIGIBILITY AND DENIALS

• Eligibility

Version 1: Eligibility. [Provider] shall verify Member eligibility prior to the provision of services, however, [MCO] shall not deny coverage and payment on the basis of lack of timely verification if delay is due to a mistake or misunderstanding or misrepresentation by a Member or lack of verification by [MCO]. If [MCO] verifies a Member’s eligibility, [MCO] shall reimburse [Provider] for the services even if [MCO] later determines that such Member was in fact ineligible at the time services were provided. In no event shall Provider be required by Plan to verify eligibility in cases of emergency. Provider Friendly

Version 2: Eligibility and Retroactive Disenrollment. [Provider] shall verify Member eligibility before providing Covered Services to a Member. For Emergency Services, [Provider] shall verify Member eligibility within 24 hours of the Member being stabilized or the [Provider] learning the individual may be a Member, whichever is later. Members’ eligibility status is subject to retroactive disenrollment, and [MCO] may recoup payments for items or services provided to such individuals after the effective date of disenrollment even if such items and services were authorized by [MCO]. MCO Friendly

• Denial No Retroactive Denial. If an authorized representative of [MCO] authorizes the provision of a health care service or product, [MCO] may not subsequently retract its authorization after the health service or product has been provided, or reduce payment for a service or item unless: (i) such authorization was based on a material misrepresentation or omission about the Member’s health condition; or (ii) the Member’s Plan is terminated before the service or product is provided, so long as [Provider] is aware of such termination; or (iii) the Member’s

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coverage terminates before the service or product is provided, so long as [Provider] is aware of such termination. Provider Friendly

� GRACE PERIOD Version 1: Grace Period. [MCO] will notify Provider of the possibility for denied claims when an individual enrolled in a Qualified Health Plan is in the second or third month of the grace period. If the individual does not pay all delinquent premiums by the end of the grace period, the individual’s coverage will be retroactively terminated to the end of the first month of the grace period, and [MCO] will deny all claims for services rendered by Provider during months two and three of the grace period. Neutral Version 2: Grace Period. [MCO] will notify Provider of the possibility for denied claims when an individual enrolled in a Qualified Health Plan is in the second or third month of the grace period. If the individual does not pay all delinquent premiums by the end of the grace period, the individual’s coverage will be retroactively terminated to the end of the first month of the grace period, and [MCO] will deny all claims for services rendered by Provider during months two and three of the grace period. In the event the individual’s coverage is terminated, Provider may seek reimbursement directly from the individual for services rendered during months two and three of the grace period, and the terms of this agreement prohibiting balance billing shall not apply. Provider Friendly � FOR INDIVIDUAL MARKET QUALIFIED HEALTH AND DENTAL PLAN

PROVIDER AGREEMENTS—ACCEPTANCE OF THIRD PARTY PAYMENTS Provider agrees to accept cost-sharing payments from the following third-party entities on behalf of a plan enrollee: (a) A Ryan White HIV/AIDS Program under title XXVI of the Public Health Service Act; (b) An Indian tribe, tribal organization, or urban Indian organization; and (c) A local, State, or Federal government program, including a grantee directed by a government program to make payments on its behalf.

� MEDICAL NECESSITY

Version 1: Notwithstanding any other provision of this Agreement, Covered Services shall be deemed Medically Necessary if ordered by a physician or other authorized person. [Provider] shall not be denied payment on the basis of Medically Necessity when the Covered Service has been ordered by a physician or other authorized person. [Note: Appropriate for ancillary or facility providers, but not for physicians.] Provider Friendly

Version 2: The fact that a Provider has prescribed, performed, ordered, or coordinated a service or course of treatment does not, in and of itself, mean [MCO] considers it Medically Necessary. [MCO] reserves the right to review each claim for medical necessity. MCO Friendly

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� DETERMINATION OF MEDICAL NECESSITY

Payer shall disclose to Provider the industry-standard care guidelines used for determining Medical Necessity. Payer shall make its determination of Medical Necessity in accordance with the timeframes provided in the section of this Agreement addressing prior authorization. Payer’s determination that a service is not Medically Necessary means that the service is not a Covered Service. Payer shall not retroactively deny payment for services it has determined to be Medically Necessary by prior authorization unless, in making its prior authorization determination, Payer justifiably relied on inaccurate or incomplete information provided by Provider. Neutral

� UNDERPAYMENTS, OVERPAYMENTS, AND RECOUPMENT

Version 1: Subject to applicable law, [MCO] or Payer may not request a refund or offset against a claim more than twelve months after [MCO] or Payer has paid a claim except in cases of adjudicated fraud or misrepresentation by [Provider]. Provider Friendly

Version 2: Overpayment and Recoupment. Provider shall use reasonable due diligence to identify any overpayment and report and repay same to MCO in accordance with applicable law. Following 30 days advance written notice, [Provider] authorizes [MCO or Payer] to deduct from amounts that may otherwise be due and payable to [Provider] any outstanding amounts that the Provider may owe [MCO or Payer] for any reason. Within the notice period, [Provider] may either refund or repay such amount or provide [MCO or Payer] with a written explanation, with supporting documentation, disputing that such amounts should be refunded or repaid. MCO Friendly

� CORRECTION OF OVERPAYMENT AND UNDERPAYMENT

Correction of Overpayment and Underpayment. In the event either Party believes a claim was not paid correctly, or that funds were paid that were not due, the Party may seek correction of the payment error by giving the other Party notice within 180 calendar days of the date the incorrect payment was made. The 180 calendar day timeframe for notification will not apply in the case of fraud by a Party. Payer shall correct any underpayment within 60 calendar days of receipt of notice from Provider, or within 60 calendar days of discovering the underpayment. Provider shall refund any overpayment, or advise Payer to recover any overpayment by offset, within 60 calendar days of receipt of notice from Payer, or within 60 calendar days of discovering the overpayment. Payer shall not recover any overpayment by offset without Provider’s written agreement. Any dispute related to an alleged overpayment or alleged underpayment shall be resolved pursuant to the dispute resolution process provided in this Agreement. Neutral

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� PRICE AND CHARGE ADJUSTMENTS

Chargemaster Neutrality. Provider shall notify Payer at least 45 calendar days prior to implementing a material increase or a material decrease to its customary charges. For purposes of this chargemaster neutrality provision, a material increase or material decrease is an increase in Provider’s customary charges or a decrease in Provider’s customary charges that could be expected to result in an increase in payment or a decrease in payment to Provider equal to or greater than 1 percent. Provider’s notice shall include the following: (1) the expected weighted average percentage increase or decrease calculated using 12 months historic service utilization by Members measured from the nearest first of the month prior to the date of Provider’s notice; (2) the effective date of the increase or decrease; (3) Provider’s calculation of the adjustment to any payment rates calculated using a percentage of customary charge methodology (“Percentage Rates”) required to completely offset the increase in Provider’s customary charges or decrease in Provider’s customary charges. Except as otherwise provided in this chargemaster neutrality provision, Payer shall, within 30 days of receipt of Provider’s notice, issue new payment rate schedules reflecting the new, adjusted, rates. The new payment schedule shall be identical to the payment schedule to be amended except for changes to the Percentage Rates. The Parties shall use best efforts to resolve any disagreement materiality or the amount of any adjustment to the Percentage Rates. Any unresolved disagreement will be resolved pursuant to the dispute resolution process provided in the Agreement. Neutral

� COORDINATION OF BENEFITS2

Coordination of benefits.3 Payer and Provider shall cooperate and exchange information regarding alternate health coverage of Members, and other information relative to coordination of benefits. Payer shall be responsible for coordination of benefits for Members. In general Payer will bear primary responsibility (1) when Member is covered under an individual policy issued to the Member, (2) when Member is covered under a group plan issued to a group of which Member is a member, (3) when Member has no other coverage, or (4) for Members who are dependents, when the person with primary coverage through Payer has a birthday that occurs earlier in the year than any other person of whom Member is a dependent. Payer will bear secondary responsibility in all other cases. Neutral

� SUBROGATION

Subrogation. In the event a Member is injured by an act or omission of a third party (“Subrogation Event”) either Party to this Agreement may elect to pursue subrogation rights against the potentially responsible party. Payer shall, however, make payment to Provider in accordance with this Agreement while pursuing its subrogation rights. Provider shall abide by any final determination of responsibility for the Subrogation Event and, upon receiving payment from the responsible party (“Third Party Payment”), shall refund Payer from the Third Party Payment the amount not to exceed the total amount paid by Payer to Provider for Covered

2 Health Plans Contracting Handbook: A Guide for Payers and Providers, Seventh Edition, American Health Lawyers Association, page 201.

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Services related to the Subrogation Event. Provider is entitled to keep any Third Party Payment in excess of the amounts paid Provider by Payer for providing Covered Services related to the Subrogation Event. Nothing in this Agreement, including without limitation, Provider’s agreement to accept amounts received under this Agreement as payment in full for providing Covered Services or Provider’s promise to hold Member harmless for the cost of Covered Services except for Member Liability, will limit or preclude Provider’s right to retain any Third Party Payment received in excess of the amount paid Provider by Payer for providing Covered Services related to the Subrogation Event. Neutral

� MEMBER LIABILITY

Permitted Billing of Members. Provider shall accept the discounted payments provided in this Agreement as payment in full for providing Covered Services to Members. Payer shall pay Provider the discounted payments provided in this agreement, less any Member Liability as determined by Payer, for providing Covered Services to a Member. When providing Covered Services to a Member, Provider shall not seek to recover, and will not accept, any payment from a Member in excess of the Member Liability determined by Payer. Except when a Member qualifies for financial assistance pursuant to Provider’s financial assistance policy, when providing Covered Services to a Member, Provider shall collect Member Liability as determined by Payer from Member. Neutral

� HOLD HARMLESS

Member Hold Harmless. Provider agrees that in no event, including but not limited to nonpayment by Payer, insolvency of Payer, or breach of this Agreement, shall Provider bill, charge, collect a deposit from, seek remuneration or reimbursement from, or have any recourse against a Member, or person acting on behalf of a Member, for Covered Services provided pursuant to this Agreement. Nothing in this member hold harmless provision may be construed to prohibit Provider from collecting Member Liability, or fees for uncovered health care services delivered on a fee-for-service basis to Members, nor from any recourse against Payer or its successor. Neutral

� PRIOR AUTHORIZATION; RETROACTIVE PRIOR AUTHORIZATION

Prior Authorization. Except when providing emergency care, Provider shall confirm Member eligibility and obtain authorization prior to providing services. Except as otherwise provided by law, Payer shall respond to Provider’s request for prior authorization within one hour when Provider requests authorization to provide care following emergency care (“Post-Stabilization Care”). Otherwise, Payer shall respond to Provider’s request for prior authorization within 14 calendar days of Provider’s request. Payer’s failure to timely respond to Provider’s request for prior authorization constitutes waiver of Payer’s right to require prior authorization. Payer’s decision to authorize services shall be based on Payer’s determination that the services are Medically Necessary. Payer shall not retroactively deny payment for services it has prior

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authorized unless, in making its prior authorization determination, Payer justifiably relied on inaccurate or incomplete information provided by Provider. When Payer, in response to Provider’s request for prior authorization, notifies Provider that a service does not require prior authorization under the circumstances, Payer shall not retroactively deny payment for the service for lack of prior authorization. Neutral

� ADMINISTRATIVE SIMPLIFICATION

Provider shall utilize and comply with applicable standard transaction requirements under the Standards for Electronic Transactions, 45 C.F.R. Part 162, Subpart I, as amended from time to time, with respect to all applicable electronic transactions between Provider and [MCO]. Provider shall submit to [MCO], and [MCO] will be prepared to accept from Provider claims and eligibility related information in the ASC X12 Technical Reports Type 3 (TR3), Version 005010 format, or any other format that may be required by applicable law. [MCO] will comply with all Provider requests to use the ACH Network to conduct EFT and ERA transactions. Further, [MCO] will not: 1.Delay or reject an EFT or ERA transaction because it is a standard; or 2.Charge an excessive fee or otherwise give Provider incentives to use an alternative payment

method to EFT via the ACH Network.

Provider and [MCO] each hereby agree that it shall not change any definition, data condition or use of a data element or segment in a standard, add any data elements or segment to the maximum defined data set, use any code or data elements that are either marked “not used” in the standard’s implementation specification or are not in the implementation specification, or change the meaning or intent of the implementation specification.

These provisions shall commence as of the earliest applicable compliance date or the date of this agreement (whichever is later) and shall be coterminous with the applicable Provider agreement. Neutral

� APPEALING DENIED CLAIMS

Appealing Denied Claims. Payer may deny payment for the following reasons only: (a) lack of Member eligibility for benefits; (b) lack of coverage including lack of Medical Necessity; (c) Provider’s failure to obtain prior authorization; and (d) Provider’s failure to timely file a claim. Provider may appeal Payer’s determination within 60 days of receipt of Payer’s determination. If a dispute exists between Provider and Payer as to the day an appeal was received by Payer, and the appeal was submitted by standard mail and Provider retained a record of the day the appeal was mailed, there exists a presumption that the appeal was received by Payer on the fifth business day after the day the appeal was mailed. If a dispute exists between Provider and Payer as to the day an appeal was received and the appeal was submitted electronically, there exists a presumption that the appeal was received by Payer twenty-four hours after the claim was submitted.

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Payer shall overturn its denial of payment for failure to obtain prior authorization upon proof that Provider’s services were Medically Necessary. Provider’s appeal may be in any form or format provided the appeal contains all of the information needed to identify the denied claim and information required to make a determination with respect to Provider’s appeal. Provider’s appeal shall be reviewed by a physician board certified in the area related to the service requested who shall not be the same physician involved in the initial decision to deny payment. Payer shall communicate its determination to Provider within 30 calendar days of receipt of Provider’s appeal. Payer’s failure to timely respond to Provider’s appeal shall result in the denial being overturned.

Nothing in this section may be interpreted to interfere with Provider’s rights as an assignee of a Member’s benefits. Neutral

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American Health Lawyers Association Managed Care Contracting Toolkit

Section VII—Information, Records, Audits, and Recoupments

Main Principles to Keep in Mind:

1. This section should include terms addressing the handling of records by both MCOs and Providers, audits, HIPAA, rights to data, and confidentiality.

2. As HIPAA is revised and many states pass additional confidentiality, medical privacy, and data breach laws, MCOs and Providers should take extra care to ensure that the terms in this section include any mandates and are consistent with applicable laws.

Important Terms to Include or Consider:

� RECORD ACCESS: MEDICAL RECORDS, QUALITY REVIEW RECORDS, AND UTILIZATION REVIEW RECORDS

[Provider] shall maintain medical and billing records related to services provided to Members for at least four years following the provision of services to a Member, unless a longer period is required by state or federal law. [Provider] and [MCO] shall abide by all state and federal laws and regulations pertaining to record confidentiality and security, including HIPAA.

[Provider] shall provide [MCO] access to Member’s medical and billing records during normal business hours and upon ten days prior written request to [Provider]. [MCO] may access Member’s medical and billing records (i) to determine [MCO’s] liability prior to the payment of a claim; or (ii) to investigate a Member’s appeal or grievance. In addition, [MCO] shall abide by: (i) all applicable state and federal laws, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA); (ii) [Provider’s] policies and procedures relating to the release, removal, and transfer of medical and billing records; and (iii) any applicable Member consent and release requirements.

[Provider] shall provide access to Member’s medical and billing records to accreditation organizations such as The Joint Commission. [Provider] shall provide access to Member’s medical and billing records to any authorized representative of a state or federal agency.

[Provider] shall provide Members with access to their own medical and billing records, so long as such access is in accordance with: (i) all applicable state and federal laws, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA); (ii) [Provider’s] policies and procedures relating to the release, removal, and transfer of medical and billing records; and (iii) any applicable Member consent and release requirements.

[MCO] shall pay [Provider] for copies of medical and/or billing records requested by [MCO] [Optional: in cases where [MCO’s] request is for a purpose other than determining [MCO’s]

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liability]. Payment shall be at a rate of $_____. [MCO] may not access any medical and/or billing records for patients of [Provider] who are not Members. Provider Friendly

� POST-PAYMENT AUDITS

Version 1: Audits, Evaluations, and Inspections. Provider shall maintain, for a period of ten (10) years from the end date of [MCO’s] plan year, all contracts, books, computers and electronic systems, medical records and documentation involving transactions related to [MCO’s] plans. Provider acknowledges and agrees that: (A) the United States Department of Health and Human Services (“DHHS”), the Office of Inspector General (“OIG”), and/or their designees have the right to inspect, evaluate and audit pertinent contracts, books, computers and electronic systems, medical records and documentation of Provider involving claims made on behalf of individuals enrolled in QHPs, which may include access to Provider’s premises and physical facilities consistent with applicable law; and (B) DHHS, the Office of Inspector General, and/or their designees have the right to inspect, evaluate, and audit any pertinent information for any of [MCO’s] QHPs for ten (10) years from the end date of [MCO’s] plan year with CMS or applicable state agency. This provision shall survive termination of the Agreement. Provider agrees that DHHS, the OIG and/or their designees shall have direct access to Provider’s contracts, books, computers and electronic systems, medical records and documentation relating to the [MCO’s] QHPs on Provider’s premises. [MCO] reserves the right to assess a financial penalty if Provider repeatedly fails to provide QHP-related records. Neutral

Version 2: Audits, Evaluations, and Inspections. Provider shall maintain, for a period of ten (10) years from the end date of [MCO’s] plan year, all contracts, books, computers and electronic systems, medical records and documentation involving transactions related to [MCO’s] plans. Provider acknowledges and agrees that: (A) the United States Department of Health and Human Services (“DHHS”), the Office of Inspector General (“OIG”), and/or their designees have the right to inspect, evaluate and audit pertinent contracts, books, computers and electronic systems, medical records and documentation of Provider involving claims made on behalf of individuals enrolled in QHPs, which may include access to Provider’s premises and physical facilities consistent with applicable law; and (B) DHHS, the Office of Inspector General, and/or their designees have the right to inspect, evaluate, and audit any pertinent information for any of [MCO’s] QHPs for ten (10) years from the end date of [MCO’s] plan year with CMS or applicable state agency. This provision shall survive termination of the Agreement. Provider agrees that DHHS, the OIG and/or their designees shall have direct access to Provider’s contracts, books, computers and electronic systems, medical records and documentation relating to the [MCO’s] QHPs on Provider’s premises. [MCO] reserves the right to assess a financial penalty if Provider repeatedly fails to provide QHP-related records. Such records must be adequate for [MCO] to determine if Provider has performed its obligations under this agreement and for [MCO] to enforce its rights. Provider must immediately notify [MCO] by telephone and inform it in writing of any request from any government entity for records and/or access to personnel, physical premises, facilities, or equipment. If requested by [MCO], Provider agrees to submit to [MCO] any records and equipment requested by such government entity for submission by [MCO] on Provider’s behalf. Provider agrees to notify [MCO] of the date and

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time of any onsite inspection of Provider’s premises, with sufficient time to allow [MCO] to participate, unless prohibited by government authorities. MCO Friendly

Version 3: Audits, Evaluations, and Inspections. As applicable, [Provider] shall comply with all inspections, evaluations and audits for [MCO’s] qualified health plans for the period of ten (10) years from the end date of [MCO’s] plan year. This includes audits conducted by [MCO] and/or its designees, upon execution of a mutually agreed upon confidentiality agreement with reasonable confidentiality terms, signed by [MCO’s] representatives or designee(s) performing such audit, inspections, evaluations. Provider shall also comply with all inspections, evaluations and audits conducted by the U.S. Department of Health and Human Services (“DHHS”), the Office of Inspector General (“OIG”), the state insurance commission or other similar state regulatory body, the State Comptroller General, all accrediting agencies and self -insured groups to which [MCO] is subject, or their designees. Provider shall provide access to any accounting, administrative, medical records, or other records or documentation relating to this Agreement, including access to the records of its subcontractors. Records subject to inspection, evaluation, or audit under this Agreement, include, but are not limited to the following:

• The Covered Services performed under this Agreement; • Reconciliation of benefit liabilities; • Determination of amounts payable; • Medical audit or review; • Other documents relating to financial transactions associated with this Agreement;

provided, however, that [Provider] may remove portions or sections of such documents that involve trade secrets and/or protected confidential information except where laws or governmental authorities require such disclosure; and

• Other matters directly pertaining to this Agreement, as such person or entity conducting the audit, evaluation, or inspection deems necessary.

[Provider] shall, cooperate in any investigation and/or examination by [MCO] or any government entity or their designees relating to the provision of Covered Services pursuant to this Agreement.

For the purpose of conducting the activities specified in this Section __, [Provider] shall make available, its premises, physical facilities, information, and records relating to Members during regular business hours and upon reasonable notice and demand at [Provider’s] expense that [MCO], the State Insurance Commission, or other similar state regulatory body, DHHS, the OIG, the Comptroller General, all accrediting agencies and self insured groups to which [MCO] is subject, or their designees may require. [Provider] agrees to notify [MCO] of the date and time of any onsite inspection of [Provider’s] premises, with sufficient time to allow [MCO] to participate, unless prohibited by government authorities.

[The parties agree that any audit activity in connection with this Section __ may occur a maximum of one (1) time per year and one (1) year in arrears. Notwithstanding the foregoing, the maximum of one (1) time per year and one (1) year in arrears shall not apply when audits are necessary, or are required by [MCO], to comply with laws or requests for information and data related to the programs and activities described in this Section __ of the Agreement for: federal

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and/or state agencies, authorities or officials, accreditation bodies, or self-insured group customers of [MCO] which request such information or data from [MCO]. Neutral

Audit Procedures. An audit of the Covered Services is intended to enable [MCO] to confirm that [Provider] has complied with its obligations under this Agreement. To accomplish the review in a timely manner, the following guidelines will apply to the audit process:

• Audit Request.

Version 1: An audit notification letter or request will be directed to [Provider’s] audit manager either in writing or by e-mail. Audits require at least thirty (30) business days prior written notice unless laws otherwise require or [MCO] must conduct an audit sooner due to a request or investigation by a federal or state agency or authority, a self-insured group, or pursuant to a lawsuit or criminal investigation necessitating [MCO] conduct an audit in a shorter timeframe. Provider Friendly

Version 2: An audit notification letter or request will be directed to [Provider] either in writing or by e-mail. [Provider] shall permit [MCO], its designees, federal or state agencies to audit, evaluate, inspect, review and copy any documents or records relating to this Agreement at any time during [Provider’s] usual business hours. MCO Friendly

• Third Party Auditor. In the event a third party auditor or designee is used, the auditor or designee shall be a mutually acceptable independent third party retained by [MCO]. The third party shall execute a confidentiality agreement with [Provider] in a form and substance reasonably acceptable to [Provider] prior to conducting an audit.

• Teleconference. Upon [Provider’s] receipt of an audit request, [Provider] may organize and conduct an initial teleconference between [Provider] and [MCO] to address the audit requirements, including but not limited to: individual audit participants; confidentiality agreement; onsite requirements, mutually established timelines; claims or prescription copies, availability and cost; guidelines for acceptable verification of audit questions; [Provider’s] right to respond within a reasonable time after questions arise and before audit results are disseminated by the auditor to [MCO]; audit process confirmation letter; other appropriate issues.

• Timelines. [Provider] and [MCO] will mutually agree upon an audit timeline, taking into consideration individual circumstances and constraints.

• Audit Report. In the event of an audit by a third party, [Provider] and [MCO] will be provided a copy of any proposed audit report and [Provider] will have a reasonable opportunity to comment on any such report before it is finalized.

• Close of Audit. Upon finalization of audit results and agreement between [Provider] and [MCO] on any identified financial discrepancies, the period under review will be considered closed unless there is a need to reopen such audit pursuant to an investigation by federal or state agencies or authorities, a self-insured group request or due to a lawsuit or criminal investigation which necessitates reopening of such audit.

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• Audit Costs. Each party shall be responsible for their own reasonable expenses incurred in

connection with the audit. Specifically, but without limiting the generality of the foregoing: (i) [Provider] shall be responsible for all reasonable costs related to the copying and provision of records and staff to interface with the auditor(s) and review and respond to audit findings; and (ii) [MCO] shall be responsible for costs incurred by [MCO] and its auditors, including without limitation, travel and lodging, [MCO] staff and/or auditors to conduct the audits, and review claims and appeals, if applicable.

• Audit Document Limitations. [MCO] acknowledges that it shall not be entitled to audit

documents that [Provider] is barred from disclosing by applicable law or pursuant to an obligation of confidentiality to a third party. Neutral

� CMS REPORTING

In the event that [MCO] is required to provide periodic records of certain claims data to CMS or the applicable state regulatory body, [MCO] may contact Provider in order to provide a response to CMS or the state. Provider agrees to cooperate with any requests made by [MCO] so that [MCO] may comply with this and other CMS and state requirements.

Provider will certify to [MCO] and/or CMS, or the applicable state regulatory body, as to the accuracy, completeness and truthfulness of their submitted claims data, and acknowledge when necessary that the submitted claims data may be used for purposes of obtaining Federal reimbursement.

Further, Provider shall promptly submit claims for services rendered as directed by [MCO]. [MCO] requires providers to make a good faith effort to submit complete and accurate information. [MCO] may implement a financial penalty if the claims information is not timely, accurate, and complete. Claims shall include all services provided to an individual and all documented diagnoses must be submitted on the claim as specifically as possible. Provider shall have the right to review its claims which have been processed by [MCO’s] offices during [MCO’s] regular business hours. Provider waives any right to collect for charges not included in the claim as submitted and agrees not to bill the individual for any such omitted services, claim or late charges. MCO Friendly

� RECOUPMENTS

• Look Back Period. [MCO] may make corrective adjustments to any previous payment, provided that the corrections are made within thirty-six (36) months from the date of the initial reimbursement. Notwithstanding the foregoing, [MCO] may make corrective adjustments at any time relating to fraud, waste or abuse by [Provider] or if otherwise required to by law, regulation or a regulatory agency.

Note: Government programs and state laws may require different look back periods. Notification of Overpayment.

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Version 1: [Provider] shall immediately notify [MCO] of any overpayment or suspected overpayment. MCO Friendly

Version 2: [MCO], will notify [Provider] prior to making a corrective adjustment and [Provider] will have thirty (30) days from date of such notice to review and respond to [MCO], in writing, with any objections and supporting documentation.

Version 3: When [MCO] determines that [Provider] has been overpaid, [MCO] will provide at least sixty (60) days advance notice to [Provider] prior to requesting repayment. The notice will include information sufficient to explain the requested recoupment to [Provider] as well as any applicable appeal rights. Provider Friendly

• Overpayments.

Version 1: If [MCO] pays [Provider] more than is provided for under this Agreement, [Provider] agrees to immediately return the amounts to [MCO]. [MCO] may, in its sole discretion, deduct or offset against future payments owed to [Provider]. MCO Friendly

Version 2: If [MCO] pays [Provider] more than is provided for under this Agreement, [Provider] agrees to promptly return the amounts to [MCO]. [MCO] may deduct or offset against future payments owed to [Provider] after [Provider] has exhausted [Provider’s] appeal rights as specified in [MCO’s] Policies.

Version 3: If [MCO] pays [Provider] more than is provided for under this Agreement, [Provider] agrees to return any undisputed amounts to [MCO] within ninety (90) days of receipt of notice of an overpayment, or within ninety (90) days after [Provider] has exhausted its appeal rights. [Provider] may, in its sole discretion, authorize [MCO] to deduct or offset against future payments owed to [Provider]. Provider Friendly Note: State law or ERISA may require specific appeal procedures.

• Underpayments.

Version 1: [MCO] shall promptly notify [Provider] of any underpayment or suspected underpayment. If [MCO] pays [Provider] less than is provided for under this Agreement, [MCO] will pay the undisputed amount owed to [Provider] within the earlier of: 1) ninety (90) days after [MCO] discovers the underpayment, or 2) ninety (90) days after [MCO] is notified of the underpayment by [Provider]. Provider Friendly

Version 2: If [Provider] disagrees with the amount paid by [MCO] for a claim, [Provider] must submit a written request to [MCO], including sufficient documentation to support [Provider’s] claim, within sixty (60) days from the date the claim was paid. [Provider] will be deemed to have accepted the amount paid by [MCO] if [Provider] fails to submit a written request within the specified time period. [MCO] shall pay the undisputed amount owed to

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[Provider] within ninety (90) days after [MCO] confirms the underpayment to the [Provider]. MCO Friendly

• Extrapolation.

Version 1: [MCO] may use extrapolation in order to determine the amount [Provider] owes to [MCO]. MCO Friendly

Version 2: [MCO] may use extrapolation in order to determine the amount [Provider] owes to [MCO]. [MCO’s] extrapolation will be based on a statistically valid sampling of claims. [Provider] shall have the right to challenge the validity of the sampling through the appeals process. Extrapolation shall be limited to claims relating to fraud, waste, and abuse or [Provider’s] grossly negligent billing practices and the universe of claims shall be limited to the six (6) months immediately preceding the date the audit was concluded.

Note: State law may limit the right of a MCO to extrapolate claims.

� RATINGS/RANKINGS

Version 1: Bases for Ratings/Rankings. The details of [MCO’s] Pay for Performance (P4P) program shall be available to [Provider] on [MCO’s] website. [MCO] shall notify [Provider] within thirty days after any material change in [MCO’s] P4P program. MCO Friendly

Version 2: Bases for Ratings/Rankings. The target performance measures, applicable patient populations, and acceptable performance documentation materials for [MCO’s] Pay for Performance (P4P) program are specified in the P4P program manual attached as Exhibit __ to this Agreement. No change shall be made to such manual except by formal amendment in accordance with Section __ of this Agreement [referencing amendments]. Provider Friendly

Challenges to Ratings/Rankings. If [Provider] objects to any quality or performance data, rating, or ranking issued or published by [MCO], [Provider] may submit to [MCO] a written request for reconsideration. Within thirty days after [MCO’s] receipt of such a request, representatives of [MCO] shall meet with [Provider] to discuss the data, rating, or ranking at issue and the bases for it, as well as any additional data or information [Provider] contends should lead to a different result. Within fifteen days after such meeting, [MCO] shall notify [Provider] in writing of its decision on the dispute. If [Provider] disagrees with such decision, [Provider] may proceed to arbitration of the dispute in accordance with the provisions of Section ___ [referencing dispute resolution]. Neither [Provider’s] request for reconsideration nor the pendency of any arbitration shall delay or preclude [MCO’s] distribution or publication of the data, rating, or ranking at issue. MCO Friendly

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� RIGHTS IN AND USES OF INFORMATION

• Claims Data Ownership.

Version 1: Claim Data. [MCO] and [Provider] shall have equal access to and a non-exclusive license to use all data submitted by [Provider] to [MCO] as part of or in support of any claim for reimbursement under this Agreement (Claim Data) for purposes of administering and performing their respective obligations under this Agreement. Nothing in this Agreement shall be deemed to grant [MCO] or [Provider] ownership of or an exclusive license or right to use any Claim Data. Neutral

Version 2: Claim Data. At all times during the term of this Agreement and thereafter, [MCO] shall be and remain the sole owner of, and shall have the exclusive right and license to use all data submitted by [Provider] to [MCO] as part of or in support of any claim for reimbursement under this Agreement (Claim Data). MCO Friendly

Version 3: Claim Data. [Provider] shall be and at all times remain the sole owner of, and shall have the exclusive right and license to use all data submitted by [Provider] to [MCO] as part of or in support of any claim for reimbursement under this Agreement (Claim Data). Provider Friendly

• Secondary Uses of Data.

Version 1: Secondary Uses of Data. [Provider] collects and reviews certain quality data relating to care rendered by [Provider] that is reported in a manner that has been validated by a third party as having a clear, evidence-based link to quality or safety. If the information [Provider] collects is reported or otherwise available in the public domain, [MCO] will obtain the information directly from the entity to which [Provider] reported. If [Provider] does not report such to a third party and it is not otherwise in the public domain then, on a quarterly basis, [Provider] will report to [MCO] the quality data specified by [MCO] for all of [Provider’s] commercial patients, including those who are not Members. [MCO] may publish such data to Members, Payers, and to entities to which [MCO] currently renders services or seeks to render services. MCO Friendly

Version 2: Secondary Uses of Data. Nothing in this Agreement shall be deemed to grant [MCO] any ownership of, right in, or license to use Claim Data or other data obtained from [Provider] for any secondary purpose other than the administration and performance of its obligations under this Agreement, and any such secondary use or purpose is hereby expressly prohibited. Provider Friendly

� CONFIDENTIALITY

Version 1: Confidentiality. Neither [MCO] nor [Provider] shall disclose directly or indirectly, through an agent or otherwise, to any third party, any information regarding this agreement or services provided pursuant to this Agreement except as required by law or regulation. Neutral

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Version 2: Confidentiality. Except as required by law or regulation, neither [MCO] nor [Provider] shall disclose directly or indirectly, through an agent or otherwise, to any third party, any proprietary business information not available to the general public that was obtained from the other party. Neutral

Version 3: Confidentiality. Except as required by law or regulation, neither [MCO] nor [Provider] shall disclose directly or indirectly, through an agent or otherwise, to any third party: (a) any proprietary business information not available to the general public that was obtained from the other party, or (b) the specific reimbursement amounts provided for under this Agreement, except for purposes of administration of benefits. MCO Friendly

Version 4: Confidentiality and Proprietary Information. [Provider] acknowledges that all materials and information developed by or belonging to [MCO] including but not limited to this Agreement, mailing lists, patient lists, employer lists, product-related information and structure, utilization review procedures, formats and structure and related information and documents concerning [MCO’s] systems and operations of its Plans; all materials bearing [MCO’s] or Payers’ logo; other information not in the public domain; and the compensation payable to Participating Providers pursuant to the terms of this Agreement (collectively, Proprietary Information) is confidential. [Provider] shall not disclose any Proprietary Information to any competitor of [MCO] or to any other third party without the written consent of [MCO]. [MCO] may voluntarily disclose any of its Proprietary Information to any third party including but not limited to Members, Payers, and potential customers of [MCO], and no such voluntary disclosure by [MCO] shall release [Provider] from its obligations under this Section __. MCO Friendly

Version 5: Confidentiality. The parties’ respective proprietary materials, including but not limited to practice guidelines, provider and patient registries, report formats, and any other information not in the public domain (Confidential Information) is confidential. Both parties shall maintain the confidential nature of Confidential Information. Except as required by law, neither party shall disclose any of the other party’s Confidential Information to any competitor of the other party without the written consent of such other party. Any individual or entity employed, owned, operated, controlled by, or affiliated with [Provider], or which participates in a joint operating agreement or other joint venture with [Provider], shall not be considered a direct competitor for the purposes of this Section __. This Section __ does not prohibit the sharing of claim-related information with any other professional or facility provider who or that: (i) participate in or with any of [Provider’s] member entities for the provision of Covered Services or (ii) participate in any of [Provider’s] clinical integration protocols. Provider Friendly

� COMPLIANCE WITH APPLICABLE LAWS.

In connection with all services performed under this agreement, Provider agrees to comply with all applicable federal and state laws and regulations and Department of Health and Human Services (“HHS”) guidance and instructions, including but not limited to (a) all laws and regulations applicable to QHPs and their Delegated Entities, including but not limited to the standards set forth in 45 C.F.R. Section 156, subpart C; Section 155, subparts H and K and 155.705 (exchange processes, procedures and standards), 155.220 (assisting with enrollment)

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and 156.705 and 156.715 (maintenance of records and compliance reviews); (b) all applicable state and federal privacy and security requirements, including but not limited to the confidentiality, privacy and security provisions for QHPs contained in the regulations found at 45 C.F.R. 155.260, 155.270 and 155.280 as well as HIPAA administrative simplification rules (45 C.F.R. Parts 160, 162, and 164); and (c) all applicable laws, regulations and guidance designed to prevent fraud, waste or abuse of federal funds, including the False Claims Act (31 U.S.C. 3729 et seq.), the Anti-Kickback Statute (Social Security Act § 1128B(b)). MCO Friendly

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American Health Lawyers Association Managed Care Contracting Toolkit

Section VIII—Dispute Resolution

Main Principles to Keep in Mind:

1. MCOs and Providers should ensure that the dispute-resolution terms cover all possible disputes, including those related to coverage, payment, or ratings/rankings. Parties should consider whether different types of disputes should be handled by different processes.

2. Parties should consider whether to include a timeframe for disputes to be initiated to ensure that disputes are submitted to dispute resolution in a timely manner and to ensure that stale disputes are subject to a “statute of limitations.”

3. Parties should consider whether the subject of the dispute (for example, an objectionable new claims payment rule or contract amendment) may take effect during the pendency of the dispute, as well as whether the dispute resolution terms should survive termination of the Agreement.

Important Terms to Include or Consider:

� COVERAGE, PAYMENT, RATINGS/RANKINGS, OR OTHER DISPUTES

Version 1: Comprehensive Agreement to Arbitrate. Any dispute arising out of or relating to this contract or the subject matter thereof, or any breach of this contract, including any dispute regarding the scope of this clause, will be resolved through arbitration administered by the American Health Lawyers Association Dispute Resolution Service and conducted pursuant to the AHLA Rules of Procedure for Arbitration. Judgment on the award may be entered and enforced in any court having jurisdiction.

Version 2: Mediation as a Prerequisite to Arbitration. Any dispute arising out of or relating to this contract or the subject matter thereof, or any breach of this contract, including any dispute regarding the scope of this clause, will be resolved through arbitration administered by the American Health Lawyers Association Dispute Resolution Service and conducted pursuant to the AHLA Rules of Procedure for Arbitration. Judgment on the award may be entered and enforced in any court having jurisdiction.

Prior to filing a claim for arbitration under this clause, a party must request mediation through the AHLA Dispute Resolution Service. No earlier than 60 days after notifying the opposing party that the request for mediation was submitted to AHLA, a party may initiate arbitration through the AHLA Dispute Resolution Service if, for any reason, the matter has not been fully resolved in mediation.

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Version 3: Negotiation as a Prerequisite to Arbitration. Any dispute arising out of or relating to this contract or the subject matter thereof, or any breach of this contract, including any dispute regarding the scope of this clause, will be resolved through arbitration administered by the American Health Lawyers Association Dispute Resolution Service and conducted pursuant to the AHLA Rules of Procedure for Arbitration. Judgment on the award may be entered and enforced in any court having jurisdiction.

Prior to filing a claim for arbitration under this clause, [MCO] and [Provider] shall meet to attempt in good faith to resolve the dispute. If such efforts are unsuccessful, the complaining party shall provide written notice to the other party describing the dispute within 20 days of the meeting.

Version 4: Requirement to Exhaust Administrative Remedies. Any dispute arising out of or relating to this contract or the subject matter thereof, or any breach of this contract, including any dispute regarding the scope of this clause, will be resolved through arbitration administered by the American Health Lawyers Association Dispute Resolution Service and conducted pursuant to the AHLA Rules of Procedure for Arbitration. Judgment on the award may be entered and enforced in any court having jurisdiction.

Prior to filing a claim for arbitration under this clause, [Provider] must exhaust its remedies under [MCO’s] appeal policies, which are set forth in section/exhibit [ ] of this contract.

Version 5: Carve-outs for Certain Types of Claims. Except as is set forth in section [ ] below, any dispute arising out of or relating to this contract or the subject matter thereof, or any breach of this contract, including any dispute regarding the scope of this clause, will be resolved through arbitration administered by the American Health Lawyers Association Dispute Resolution Service and conducted pursuant to the AHLA Rules of Procedure for Arbitration. Judgment on the award may be entered and enforced in any court having jurisdiction.

Exceptions: Claims for [medical malpractice] [termination without cause] may be brought in any state or federal court with jurisdiction over the subject matter.

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American Health Lawyers Association Managed Care Contracting Toolkit

Section IX—Term and Termination

Main Principles to Keep in Mind:

1. If the Agreement will include an evergreen or renewing term, the parties should negotiate how rate adjustments or renegotiations will be handled.

2. MCOs and Providers should ensure that any termination and continuity of care terms comply with applicable state laws, especially if termination is due to MCO or Payer insolvency.

Important Terms to Include or Consider:

� TERM OF AGREEMENT

Version 1: This Agreement shall be effective on ____________ and shall continue until __________ (Initial Term). Definite Term

Version 2: The term of this Agreement shall commence on _________ and shall continue until its expiration on _____________, unless sooner terminated as provided herein (Term). Definite Term

Version 3: This Agreement shall be effective on ____________ and shall automatically renew for successive one-year periods until terminated in accordance with the termination provisions outlined in this Agreement. Evergreen Term

� RENEWAL

This Agreement shall commence on ___________ and shall continue for an initial term of ____ (__) year(s) (Initial Term), unless sooner terminated as provided herein. This Agreement shall automatically renew thereafter for additional and successive one-year terms (Renewal Term(s)), unless sooner terminated as provided herein. Notwithstanding any other provision contained in this Agreement to the contrary, either party may, upon written notice given at least ninety days prior to the end of any Initial Term or any Renewal Term, give the other party notice of its intent not to renew this Agreement (hereinafter, Notice of Non-Renewal). Should either party give the other party Notice of Non-Renewal, this Agreement shall terminate at the end of the Initial Term or existing Renewal Term, as applicable. Any reference to the “Term” of this Agreement shall include the Initial Term and any Renewal Term(s). Auto Renewing Term

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� TERMINATION FOR CAUSE

Version 1: This Agreement may be terminated by either party for cause upon ____________ (__) days written notice to the other party. “Cause” shall mean any material breach of this Agreement. The breaching party shall be given a reasonable opportunity to cure the material breach, but in no event shall the cure opportunity exceed ____________ (__) days. Neutral

Version 2: In the event of a material breach of this Agreement by either party, the non-breaching party may terminate this Agreement upon giving the breaching party thirty days prior written notice, provided that such termination shall not be effective if the breach is cured within such thirty-day period. Neutral

� IMMEDIATE TERMINATION

Version 1: This Agreement shall terminate immediately, with no prior-written-notice requirement, if either party: (i) loses its license; (ii) files for bankruptcy or is declared insolvent; or (iii) loses its insurance as required in Sections __ or __ [referencing insurance requirements]. Neutral

Version 2: Notwithstanding any provision contained in this Agreement to the contrary, upon the occurrence of any of the following events, [MCO] shall have the option to terminate this Agreement upon ten days prior written notice: (a) an act of bankruptcy by [Provider] within the meaning of the federal bankruptcy laws, or bankruptcy, receivership, insolvency, reorganization, liquidation, or other similar proceedings shall be instituted by or against [Provider], or the dissolution of [Provider], whether voluntary or involuntary; provided, however, that in the event of involuntary bankruptcy or involuntary dissolution, [Provider] shall have the right to cure in accordance with Section __ of this Agreement [referencing cure period for material breaches]; (b) the loss of license or accreditation by [Provider]; (c) the sale, exchange, or other disposition of a majority of all of the property and/or assets of [Provider], the merger or consolidation of [Provider] with any other corporation, or the sale of stock or transfer of membership in [Provider] in an amount that constitutes 51% or more of the voting rights of the stockholders or members of [Provider]; or (d) exclusion by the Federal or any state government from participation in the Medicare or Medicaid programs or other government health care program. MCO Friendly

� TERMINATION WITHOUT CAUSE

Version 1: This Agreement may be terminated without cause by either party upon ____________ (__) days prior written notice to the other party. Neutral

Version 2: This Agreement may be terminated at any time by the mutual written agreement of the Parties. Neutral

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Version 3: This Agreement may be terminated by either party without cause at any time [Optional: after the Initial Term] upon at least 180 days prior written notice to the other party. Neutral

� POST-TERMINATION OBLIGATIONS AND PAYMENT

In the event that this Agreement is terminated [Optional: or is not renewed], and a Member is an inpatient on the effective date of the termination, [Provider] shall continue to provide Medically Necessary Covered Services to the Member(s) until the lesser of (i) the completion of the provision of Medically Necessary Covered Services to Member; or (ii) ninety days. [MCO] shall pay [Provider] for the provision of said Medically Necessary Covered Services in accordance with the provisions of this Agreement (notwithstanding the termination). Member shall remain responsible for any cost-sharing obligations. Neutral

� TERMINATION AFTER NOTICE OF DEFICIENCIES

Version 1: In the event that [MCO] or the United States Department of Health and Human Services (“HHS”) determines that any delegated functions have not been performed satisfactorily and in compliance with all applicable federal and state laws, rules, and regulations, or if requisite reporting and disclosure requirements are not otherwise fully met in a timely manner, [MCO] will supply written notice of its intent to terminate this agreement to Provider. Provider will be given [30 days] to cure all deficiencies. If Provider is unable to cure the noncompliance within [30 days] following notice from [MCO] or HHS, [MCO] shall have the right to unilaterally revoke all or such portions of Provider’s delegated obligations as [MCO] deems necessary to effectuate [MCO’s] ultimate responsibility to HHS for the performance of its QHP obligations. MCO Friendly Version 2: In the event that [MCO] or the United States Department of Health and Human Services (“HHS”) determines that any delegated functions have not been performed satisfactorily and in compliance with all applicable federal and state laws, rules, and regulations, or if requisite reporting and disclosure requirements are not otherwise fully met in a timely manner, [MCO] will supply written notice of termination of this agreement to Provider. Provider will be given [90 days] to cure all deficiencies. If Provider is unable to cure the noncompliance within [90 days] (or if curing the noncompliance in [90 days] is not feasible, such other commercially reasonable additional time period as agreed to by the parties) following notice from [MCO] or HHS, [MCO] shall have the right to, upon written notice to Provider, revoke all or such portions of Provider’s delegated obligations as [MCO] deems necessary to effectuate [MCO’s] ultimate responsibility to HHS for the performance of all QHP obligations. [MCO] and Provider acknowledge that they may negotiate a remedy in lieu of revocation of delegation. Neutral / Provider Friendly

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American Health Lawyers Association Managed Care Contracting Toolkit

Section X—Miscellaneous Terms

Main Principles to Keep in Mind:

1. MCOs and Providers should strongly consider including, at a minimum, some version of each of the terms listed below.

2. MCOs and Providers should negotiate whether the assignment, amendment, and other provisions will be “reciprocal,” such that the same terms apply to both parties.

Important Terms to Include or Consider:

� ENTIRE AGREEMENT

This Agreement, including any exhibits and appendices attached hereto, represents the entire agreement of the parties and supersedes all prior negotiations, communications, and understandings between the parties whether oral or written. Neutral

� ASSIGNMENT/SUBCONTRACTING

Version 1 (No Assignment): Assignment. Neither party may assign it rights, duties, or obligations under this Agreement without the prior written consent of the other party. Any attempted assignment in violation of this Section __ shall be void. Neutral

Version 2: Assignment. [Provider] may not assign any rights or subcontract or delegate any duties or obligations under this Agreement, in whole or part, or transfer this Agreement in any manner without consent of [MCO], which shall not be unreasonably withheld. The preceding sentence shall include any assignment by [Provider] to a wholly owned affiliate and any assignment by [Provider] to a successor in interest resulting from a merger, acquisition, or reorganization or sale of substantially all of a [Provider’s] assets. Any such attempted assignment, subcontracting, delegation, or transfer in violation of this provision shall be void. In the event [Provider] merges with or substantially sells all of its assets to a third party, [Provider] must notify [MCO] in advance or within ten (10) days in advance of any proposed merger or acquisition. [MCO] shall have the sole right to permit assignment of this Agreement to the successor entity and shall have the right to terminate the Agreement as set forth in Section __ [referencing immediate termination]. MCO Friendly

Subcontracting. Provider many not subcontract any rights or responsibilities under this agreement without [MCO’s] prior written consent. To the extent Provider receives such written consent, Provider agrees that any subcontractor (and any downstream subcontractor) must agree, in writing, to comply with all of the obligations set forth herein and in this agreement, including, without limitation, those involving privacy and security of protected health information (PHI)

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and exclusion from federal health care programs. MCO Friendly

� MERGERS AND ACQUISITIONS

Version 1: If [Provider] sells all or substantially all of its assets, or changes management, or materially changes its service area, business, or operations, [MCO] may limit this Agreement to the [Provider’s] operations or business or corporate form, in existence prior to the occurrence of any of the events described above. MCO Friendly

Version 2: [Provider] shall provide [MCO] thirty days prior written notice of change in operations, business, or corporate form. [MCO] may not limit this Agreement to [Provider’s] operations or business or corporate form in existence prior to the occurrence of any of the events described above, unless [MCO] determines that such change can affect the quality of care or delivery of Covered Services. If [Provider] disagrees with such limitation, [Provider] shall have the right to terminate the Agreement. Provider Friendly

� SEVERABILITY

Version 1: If any provision of this Agreement is held illegal, invalid, or unenforceable in any jurisdiction, that shall not affect: (a) the validity or enforceability of any other provision of this Agreement, or (b) the validity or enforceability in other jurisdictions of that or any other provision of this Agreement. Neutral

Version 2: In the event that any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal. or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had never been contained herein, unless the deletion of such provision or provisions would result in such a material change so as to cause completion of the transactions contemplated herein to be unreasonable. Neutral

� CHOICE OF LAW

This Agreement shall be construed, enforced, and governed by the laws of the [State]. All disputes that cannot be settled by the parties will be resolved by the [type of court(s)] in [State]. Neutral

� DISASTERS

A. This Section __ shall be deemed to be effective immediately upon the effective date of any verbal or written declaration or pronouncement by any Federal, state, or local government entity of a disaster or a state of emergency, or of a "public health emergency" substantially meeting the criteria and requirements of that term as established by the Model State Emergency Health Powers Act (collectively, the emergency or emergency

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declaration), and shall continue in effect until ninety days after the withdrawal, termination, or cessation of such emergency if: (1) such emergency declaration is addressed to an event, incident, or occurrence taking place within (list named counties or regions), or within (city); or (2) such emergency declaration expressly or impliedly includes [Provider] in the scope of its decrees and directions, or affects the usual and normal operations and functioning of [Provider].

B. In such an event as described in (A) above, the following shall apply: (1) [Provider] shall be excused from the requirement, where otherwise applicable, that it secure authorization or provide notification to [MCO] in advance of the rendering of any medical care, treatment, or service to Member; or that care, treatment, and services be based upon the referral of a Primary Care Physician or other gatekeeper; (2) Payment of a claim for Covered Services shall not be denied by [MCO] for the failure of [Provider] to submit the claim in the manner required by this Agreement, or within the time frames otherwise established herein, or upon any particular forms otherwise required hereunder. For purposes of payment, any documentation submitted by [Provider] that specifies the nature of the Member's condition and the services rendered shall support payment by [MCO] or Payer; (3) There shall be no concurrent review of medical care treatment and services. Retroactive review of services shall be allowed to the best abilities of these parties to establish the required level of Medical Necessity justifying payment; however, under no circumstance may a claim be denied payment in the full amount required by this Agreement because a medical record is incomplete or unavailable if [Provider] can establish a reasonable explanation for the missing or incomplete record. "Reasonable excuse" shall include but not be limited to physical damage to the actual records or the medium of electronic retention, and the unavailability of [Provider] employees usually assigned to facilitate such record keeping functions because such employees either were absent or were engaged in patient care; (4) Care, treatment, and services mandated by government officials shall not be the subject of any concurrent or retrospective utilization review. [MCO] or Payers shall pay in full for any Covered Service ordered to be performed by any government entity or official regardless of any determination of Medical Necessity; (5) A claim may not be denied on the ground that a treating physician (a) was not credentialed to practice medicine at [Provider] or for [MCO], or (b) was not authorized to practice medicine in [State] if such requirement is suspended by competent government authority; (6) No authorization or prior approval will be required to effect the discharge of a Member to any other health care facility or to home; (7) The isolation or quarantine of any Member pursuant to law or the mandate of any public health official shall require payment as if such retention at [Provider] were for an acute and Medically Necessary Covered Service; (8) [Provider's] failure to comply with any requirement of law defining a provider's minimum standards of patient care in and of itself shall not be the basis for the denial of payment of a claim if the Member's care was otherwise medically proper; (9) [Provider's] failure to comply with any requirement of the Emergency Medical Treatment and Active Labor Act (EMTALA) shall not be the basis for the denial of payment of a claim; (10) [Provider's] failure to maintain any standard or requirement otherwise necessary to qualify [Provider] legally to treat patients shall not be the basis for the denial of payment of a claim, regardless of whether a government agency has suspended any or all of such requirements.

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C. A subsequent determination of invalidity, illegality, abuse of discretion or authority, or any other lawful order revoking, modifying, nullifying, or otherwise affecting the scope, effect, or duration of an emergency declaration shall not alter or nullify the requirements of this Section __. Provider Friendly

� NEVER EVENTS

Version 1: A preventable provider acquired condition (PPAC) means an unanticipated occurrence that adversely affects the medical condition of a Member and that was proximately caused or precipitated by an act or omission of [Provider].

Whenever any PPAC as described with particularity elsewhere in this Agreement occurs with respect to a Member, [Provider] will use its best efforts to report such PPAC to [MCO] within ninety days of the occurrence of such PPAC if the reporting of such PPAC would otherwise be required to be made by this Agreement. Upon review of such records as are relevant to a determination of the issue and consistent with Section __ of this Agreement [referencing denial of claims or recoupment based on medical necessity], [MCO] may deny or recover payment if all or any part of the payment made or to be made is so related to the PPAC that it would not have been made but for the occurrence of the PPAC. Any recoupment of payments for services directly related to the PPAC shall be limited to one year from the date that the PPAC was reported to [MCO] pursuant to this Section __. Notwithstanding anything in the foregoing to the contrary, under no circumstance may [Provider] be denied any part of the reimbursement otherwise required to be paid pursuant to this Agreement if the PPAC does or did not result in any increase in reimbursement that otherwise would have been required of [MCO] or Payer absent the occurrence of the PPAC. Under no circumstance may [MCO] deny or recover reimbursement in any amount greater than that equal to the actual increase in reimbursement paid or to be paid that is directly related to the occurrence of the PPAC.

[MCO] may deny or recover reimbursement paid in the event of a second or subsequent admission, service, or treatment only to the extent the readmission, service, or treatment is required primarily and directly because of a PPAC arising during an earlier admission, service, or treatment. In the event [MCO] elects to deny all or a part of the reimbursement due on the second or subsequent admission, service, or treatment, then the PPAC shall not affect reimbursement on the initial or earlier admission, service, or treatment.

Any and all information reported to [MCO] under this Section __ shall be used by [MCO] solely to determine whether any procedure or service is subject to exclusion from reimbursement and payment pursuant to this Section __. [MCO], on behalf of itself, its affiliates, agents, assigns, Payers, and Members, acknowledges that the reporting by [Provider] of information required pursuant to this Agreement shall not be deemed to be an admission or declaration against interests by [Provider] of any liability, culpability, negligence, or wrongdoing of any kind or nature whatsoever. Any and all such information shall be deemed proprietary and confidential and shall be subject to the provisions of the confidentiality clause set forth in Section __ [referencing confidentiality]. Provider Friendly

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Version 2: [MCO]’s claims processing procedures apply the CMS guidelines for Preventable Conditions for Commercial and Medicare plans, which results in an adjustment in the DRG assignment and payment for certain hospital-acquired conditions specified by CMS. [Provider] will not receive additional payment for cases when one of the selected conditions is acquired during hospitalization (i.e., was not present on admission). The case would not be paid as if the secondary diagnosis was not present.

For Covered Services that are not contracted on a DRG-based reimbursement methodology, payment adjustments may be applied for hospital-acquired conditions as specified by CMS. [Provider] will not receive additional payment for cases when one of the selected conditions is acquired during hospitalization (i.e., was not present on admission). The case would not be paid as if the secondary diagnosis was not present.

[Provider] agrees to report all secondary diagnoses that are present on the admission of all commercial and Medicare members by utilization the Present on Admission (POA) indicator on all claim submissions in accordance with CMS regulations.

[Provider] acknowledges and agrees that no payment is due by [MCO] or the Member for [Provider] charges associated with “Preventable Conditions” as defined and updated by CMS.

[Provider] further agrees to use its best efforts to comply with the patient safety and reporting requirements of “Never Events” defined by the National Quality Forum. [Provider] acknowledges and agrees to not bill for Never Events and that no payment is due by [MCO] or the Member for [Provider]’s charges associated with Never Events. For conditions that are included in CMS Preventable Conditions and Never Events, requirements stated above related to CMS Preventable Condition shall control. [MCO] has the right to recover any payment made in error related to Preventable Conditions or Never Events. Neutral

� CHANGES IN LAW

In the event that state or federal law or regulation or requirement by an entity that accredits either party, or an arbitration or judicial interpretation of same, should require that the terms, benefits, and conditions of the Agreement be changed accordingly, then a party may propose an amendment to the Agreement to conform with the requirement to the other party. If the other party does not agree with the proposed amendment, then [Provider] and [MCO] shall meet and attempt to agree upon the terms of such amendment. Neither party shall condition or otherwise use the process of amending the Agreement contained in this Section as a basis for demanding changes to the Agreement not affected by the requirement that necessitate the amendment. If the parties are unable to reach agreement, the matter shall be submitted to arbitration under the dispute resolution provisions of the Agreement and the arbitrator shall decide what changes, if any, must be made to the Agreement; provided that the arbitrator shall award an additional payment to [Provider] in the amount of increased costs if [Provider] is expected to incur more than $1,000 in increased annualized costs as a result of such change(s). Provider Friendly

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� DELEGATION OF DUTIES

Version 1: To the extent [MCO] has delegated to Provider any of [MCO’s] activities and/or reporting requirements under its QHP contract with CMS or applicable state agency, Provider agrees that if CMS or [MCO] determines that Provider has not satisfactorily performed such delegated activities or reporting responsibilities, CMS or [MCO] may revoke any such activities or reporting responsibilities, or negotiate a remedy in lieu of revocation of delegation. [MCO] is ultimately responsible to CMS or applicable state agency for the performance of such delegated activities or reporting responsibilities. No delegation shall relieve [MCO] from the statutory responsibility to assess and oversee the provision of health services to individuals enrolled in QHPs. [MCO] retains ultimate responsibility to comply with the terms of its QHP contract with CMS. Provider Friendly

Version 2: To the extent [MCO] has delegated to Provider any of [MCO’s] activities and/or reporting requirements under its QHP contract with CMS or applicable state agency, Provider agrees that if CMS or [MCO] determines that Provider has not satisfactorily performed such delegated activities or reporting responsibilities, CMS or [MCO] may revoke any such activities or reporting responsibilities and terminate this agreement. MCO Friendly

� EXCLUDED POWERS

Provider represents and warrants that it and its employees, contractors, and any Downstream Entities are not excluded or debarred by the HHS Office of Inspector General or by the General Services Administration from participation in any federal health care program, and that they are not, to the best of Provider’s knowledge, under investigation for any such exclusion or debarment. Provider will notify [MCO] immediately if there are any changes in status under this paragraph. MCO Friendly

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American Health Lawyers Association Managed Care Contracting Toolkit

APPENDIX A

Managed Care Litigation Selected Cases and Other Sources

INTRODUCTION The cases included in this outline are intended to provide a starting point for research on several common topics in managed care litigation. We have attempted to offer citations to potentially relevant case law within each topic area. Such case law may include seminal cases, recent decisions, and/or litigation ongoing at the time this outline was being published. Importantly, given the highly regulated nature of managed care, case law must always be considered in the context of applicable laws and regulations. This outline is exhaustive in neither breadth nor depth. It should be used as an initial research tool only. The case summaries are intended only to provide a quick overview of a particular case’s relevance to the topic and should not be relied upon for a statement of the court’s ultimate holding. ERISA PREEMPTION Overview ERISA, the Employee Retirement Income Security Act, governs employment-based health insurance (i.e., health benefits received through an employer). Because the majority of non-governmental health benefit plans are employment-based, any managed care litigation is likely to touch upon ERISA issues, if only tangentially. For this reason, ERISA preemption is often a threshold question in any litigation. Complete (Jurisdictional) Preemption There are two types of ERISA preemption. The first type is typically referred to as “complete” or “jurisdictional” preemption and relates to the fact that ERISA provides an exclusive remedy in certain cases; thus, no cause of action under an alternative theory of liability is permitted. Aetna Health, Inc. v. Davila, 542 U.S. 200 (2004): Seminal case setting forth scope of ERISA preemption of state law causes of action under ERISA § 502(a). State law causes of action are completely preempted if (1) an individual, at some point in time, could have brought his claim under ERISA § 502(a) and (2) no other independent legal duty is implicated by a defendant’s actions. Reversed 5th Circuit decision, holding that claims under Texas Health Care Liability Act

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by beneficiaries against HMOs based on failure to authorize care were completely preempted by ERISA. See also Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011); Connecticut State Dental Assoc. v. Anthem Health Plans, 591 F.3d 1337 (11th Cir. 2009); Lone Star OB/GYN Associates v. Aetna Health, Inc., 579 F.3d 525 (5th Cir. 2009); Pascack Valley Hosp. v. Local 464A UFCW Welfare, 388 F.3d 393 (3d Cir. 2004); Blue Cross v. Anesthesia Care Assocs. Med. Group, Inc., 187 F.3d 1045, 1051 (9th Cir.). 1999). Distinguishing legal claims related to the right of payment (coverage determination and benefits under ERISA benefit plan), which are preempted, from cases related to the rate of payment under an in-network contract, which are not preempted: Marin General Hosp. v. Modesto & Empire Traction, 581 F.3d 941 (9th Cir. 2009); In Home Health, Inc. v. Prudential Ins. Co. of Am., 101 F.3d 600 (8th Cir. 1996); Franciscan Skemp v. Central States Joint Bd., 538 F.3d 594 (7th Cir. 2008); Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376, 380 (5th Cir. 2011), opinion reinstated in part on reh'g, 698 F.3d 229 (5th Cir. 2012); Wurtz v. Rawlings Co., LLC, 761 F.3d 232, 243 (2d Cir. 2014), cert. denied, 135 S. Ct. 1400, 191 L. Ed. 2d 360 (2015). Claims involving an independent legal duty outside of ERISA, such as estoppel or misrepresentation claims by a provider against an insurer based on insurer’s representations to the provider, are not preempted. Likewise, cases brought by insurers based on claims for overpayments premised on allegations of misrepresentation in billing have been found also to fall outside ERISA. Conflict (Express) Preemption The second type of ERISA preemption is variably referred to as “conflict,” “express,” or “defensive” preemption, and relates to the question of when an ERISA plan must comply with state law in addition to ERISA laws and regulations. These cases interpret section 514(a) of ERISA (29 U.S.C. § 1144(a)), which provides that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any [ERISA] employee benefit plan." The extent to which ERISA displaces state regulation of health insurers and health benefit plans primarily depends on whether the employer offers benefits through a self-funded plan (meaning that the employer itself is responsible for the cost of providing the covered benefits to employees and dependents) or purchases a group health insurance policy for its employees from a licensed insurer. Self-funded plans are exempt from virtually all state law and regulation, while “fully insured” plans (policies purchased by employers from licensed insurers) are generally required to comply with any state laws that regulate insurance. Egelhoff v. Egelhoff, 532 U.S. 141 (2001): Finding that a Washington probate law that automatically revokes a spouse’s interest in a non-probate asset (e.g., insurance benefits, pension plans) upon divorce is preempted as it interferes with the plan’s ability to determine a beneficiary of a pension plan and with uniform administration across states. To determine whether a state

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law "has a connection" to an ERISA plan, a court "look[s] both to the objectives of the ERISA statute . . . as well as to the nature of the effect of the state law on ERISA plans." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983): Broadly interprets the ERISA preemption clause as meaning that a state law “relate[s] to” an ERISA plan “if it has a connection with or reference to such a plan." North Cypress Medical Center v. Cigna Healthcare, 781 F. 3d 182 (5th Cir. 2015): Holding Texas’s prompt payment law for HMOs to be preempted by ERISA. America’s Health Ins. Plans v. Hudgens, 742 F.3d 1319, 1331 (11th Cir. 2014): Finding that Georgia’s prompt pay law, which explicitly applied to third-party administrators (TPAs) of self-funded ERISA plans, was preempted as it would require self-funded plans to pay claims within the mandated limits. ERISA Litigation Provider and Insurer Standing Under ERISA Grasso Enterprises, LLC v. Express Scripts, Inc., No. 15-1578 (8th Cir. Jan. 11, 2016): Holding that provider, as assignee of plan beneficiary, may appeal an adverse determination but may not seek injunctive relief (either as assignee or in its own right) under ERISA. N. Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369 (3d Cir. 2015): As a matter of first impression, held that assignment of right to payment confers standing on healthcare provider to sue for payment under ERISA. North Cypress Medical Center v. Cigna Healthcare, 781 F. 3d 182 (5th Cir. 2015): Holding that provider, as assignee of plan beneficiary, had standing to bring claim for breach of benefits, regardless of whether there was a threat that provider would bill patient for the claims. Court noted that the rights of the patient that are assigned must be viewed at the time of assignment, not later. Rojas v. Cigna Health and Life Ins. Co., 793 F. 3d 253 (2d Cir. 2015): Holding that providers cannot sue as beneficiaries under ERISA; providers may have derivative standing if patients assign their rights, but an assignment for payment only does not construe standing to sue based on circumstances in this case, where provider was excluded from network, as patient would not have standing to sue under such facts. Penn Chiropractic Ass'n v. Independence Hosp., 802 F.3d 926 (7th Cir. 2015): Following Rojas, holding that, notwithstanding network agreement, providers are not beneficiaries in their own right under ERISA and thus do not have standing to sue under ERISA. However, an assignment of benefits does give providers standing as a beneficiary.

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Spinedex Physical Therapy v. United Healthcare of Arizona, Inc., 770 F. 3d 1282 (9th Cir. 2014): Holding that provider, as assignee of plan beneficiary, had standing to bring claim for benefits but that beneficiaries did not assign the right to bring claims for breach of fiduciary duty. Anti-Assignment Provisions Finding no waiver of anti-assignment provisions in ERISA plan based on direct payments to provider where plan documents otherwise authorize direct payments: Merrick v. UnitedHealth Grp. Inc., No. 14 CIV. 8071 (ER), 2016 WL 1229616, at *2 (S.D.N.Y. Mar. 25, 2016); Advanced Orthopedics and Sports Medicine v. Blue Cross Blue Shield of Mass., No. 14 Civ. 7280 (FLW), 2015 WL 4430488, at *7 (D.N.J. July 20, 2015); Aviation W. Charters, Inc. v. United Healthcare Ins. Co., No. 14 Civ. 338 (PHX) (NVW), 2014 WL 5814232, at *3 (D. Ariz. Nov. 10, 2014); Mbody Minimally Invasive Surgery, P.C. v. Empire Healthchoice HMO, Inc., No. 13 Civ. 6551 (TPG), 2014 WL 4058321, at *3 (S.D.N.Y. Aug. 15, 2014). Finding that insurers either are estopped from relying upon or waived anti-assignment provisions based on prior course of dealing: DeMaria v. Horizon Healthcare Services, Inc., No. 11 Civ. 7298 (WJM), 2015 WL 3460997, at *8 (D.N.J. June 1, 2015); Premier Health Ctr., P.C. v. UnitedHealth Group, No. 11 Civ. 425 (ES), 2014; WL 4271970, at *15 (D.N.J. Aug. 28, 2014) Productive MD, LLC v. Aetna Health, Inc., 969 F. Supp. 2d 901, 92223 (M.D. Tenn. 2013); Neuroaxis Neurosurgical Assoc., PC v. Cigna Healthcare of New York, Inc., No. 11 Civ. 8517 (BSJ) (AJP), 2012 WL 4840807, at *3 (S.D.N.Y. Oct. 4, 2012); Biomed Pharm., Inc. v. Oxford Health Plans (NY), Inc., No. 10 Civ. 7427 (JSR), 2011 WL 803097, at *5 (S.D.N.Y. Feb. 18, 2011). Holding that unambiguous anti-assignment provisions in ERISA plan documents are enforceable: Physicians Multispecialty Grp. v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1295 (11th Cir. 2004); LeTourneau Lifelike Orthotics & Prosthetics, Inc. v. WalMart Stores, Inc., 298 F.3d 348, 349, 352 (5th Cir. 2002); City of Hope Nat. Med. Ctr. v. HealthPlus, Inc., 156 F.3d 223, 229 (1st Cir. 1998); Davidowitz v. Delta Dental Plan of California, Inc., 946 F.2d 1476, 1481 (9th Cir. 1991). Plan Right to Seek Recoupment From Beneficiary, Provider, or Third Party Sereboff v. Mid Atlantic Medical Services, Inc., 547 US 356 (U.S. 2006): Permitting plan to recover under §502(a)(3) against a beneficiary’s tort settlement based on a plan provision that created an equitable lien by agreement. Montanile v. Board of Trustees of the Nat’l Elevator Industry Health Benefit Plan, No. 14-723 (Jan. 20, 2016): Holding that when a participant dissipates the funds subject to an equitable lien on nontraceable items, the fiduciary cannot bring a suit to attach the participant's general assets under §502(a)(3) because the suit is not one for "appropriate equitable relief."

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Exhaustion Holding that federal policy favors use of the exhaustion doctrine—that beneficiaries must exhaust administrative remedies before bringing suit under ERISA—even though not statutorily required, and that the decision as to whether a particular case should be dismissed on the basis of lack of exhaustion is within the discretion of the trial court: Amato v. Bernard, 618 F. 2d 559 (9th Cir. 1980); Kross v. Western Elec. Co., Inc., 701 F. 2d 1238 (7th Cir. 1983); Denton v. First Nat. Bank of Waco, Texas, 765 F. 2d 1295 (5th Cir. 1985); Paese v. Hartford Life Accident Ins. Co., 449 F. 3d 435 (2d Cir. 2006); Metropolitan Life Ins. Co. v. Price, 501 F. 3d 271 (3d Cir. 2007). OTHER TYPES OF PREEMPTION Medicare Advantage Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010): Finding beneficiaries’ fraud and consumer protection claims to be expressly preempted by Medicare Advantage statute. Rencare, Ltd. v. Humana Health Plan of Tex., Inc., 395 F.3d 555 (5th Cir. 2004): Holding that case was a simple contractual dispute between provider and plan and therefore did not arise under federal law and was not preempted by the Medicare statute. South Tex. Health Sys. v. Care Improvement Plus of Tex. Ins. Co., No. 7:14-CV-912, 2015 WL 9257021 (S.D. Tex. Sept. 28, 2015): Holding that claims brought under the Texas Prompt Pay Act were expressly preempted because CMS had established standards under Part C of Medicare that regulate the prompt payment of claims under MA plans. Gen. Surgical Associates, P.A. v. Humana Health Plan of Texas, Inc., No. SA-14-CA-31-RP HJB, 2015 WL 1880276, (W.D. Tex. Mar. 17, 2015), report and recommendation adopted, No. 5:14-CV-031-RP, 2015 WL 1880298 (W.D. Tex. Apr. 23, 2015): Holding that claims under Texas Prompt Pay Act related to Medicare Advantage payments were preempted. Estate of Ethridge v. Recovery Mgmt. Sys., Inc., 235 Ariz. 30 (Ct. App. 2014), review denied (Nov. 6, 2014), cert. denied, 135 S. Ct. 1517 (2015): Finding that Part C of the Medicare Act and its associated regulations preempt Arizona’s anti-subrogation doctrine. Rudek v. Presence Our Lady of Resurrection Med. Ctr., No. 13-C-06022, 2014 WL 5441845 (N.D. Ill. Oct. 27, 2014): Holding that a beneficiary’s claims against an administrator of a Medicare Advantage plan brought under common law and the Illinois Consumer Fraud and Deceptive Business Practices Act were preempted by the Medicare Act. Morrison v. Health Plan of Nev., 328 P.3d 1165 (Nev. 2014): Holding that a Medicare beneficiary's state common law negligence claim against a Medicare Advantage organization is preempted.

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Meek-Horton v. Trover Solutions Inc., 915 F.Supp.2d 486 (S.D. New York. 2013): Holding that Medicare Advantage statute preempted state law governing procedures for placing a lien on personal injury suit settlements. Fairfield County Medical Ass’n v. United Healthcare of New England, 985 F. Supp. 2d 262 (D. Conn. 2013): Holding that federal law did not preempt claims based on physicians’ agreements with a Medicare Advantage plan. Federal Employee Health Benefits Act (FEHBA) Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006): Finding no federal question jurisdiction to exist where contracted FEHBA plan seeks to recoup from a beneficiary’s tort settlement, but leaving open question of whether contract-based claims are preempted by the FEHBA. REIMBURSEMENT DISPUTES Out-of-Network (Non-Par) Providers Children’s Hosp. Cent. Cal. v. Blue Cross of Cal., 226 Cal.App.4th 1260 (Cal. Ct. App. 2014): Permitting hospital to recover on unjust enrichment theory against Medicaid managed care plan for post-stabilization services provided to enrollees. NYC Health and Hospitals Corp. v. WellCare of NY, 35 Misc. 540 (Sup. Ct. NY Cnty 2011): Holding that out-of-network hospital stated claim for unjust enrichment as against Medicare Advantage plan. El Paso Healthcare v. Molina Healthcare of NM., 683 F. Supp. 2d 454 (W.D. Tex. 2010); Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alternatives, Inc., 832 A.2d 501, 510 (Pa. Super. Ct. 2003); River Park Hosp., Inc. v. BlueCross BlueShield of Tenn., Inc., 173 S.W. 3d 43 (Tenn. App. 2002): Permitting hospitals to recover on unjust enrichment or quantum meruit theory against Medicaid managed care plans for emergency services provided to enrollees. In-Network Providers See “right to payment” vs. “rate of payment” cases under ERISA Complete Preemption above. Ingenix Litigation Background: United Healthcare’s subsidiary Ingenix maintained a proprietary database for establishing usual, customary, and reasonable (“UCR”) charges. Providers brought a series of class actions against United Healthcare and the various insurers who had relied on the database

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for establishing UCR, arguing that the database used flawed and inaccurate data that led to systemic underpayments to providers. Initial class action against United was filed in 2000. FAIR Health: As part of a 2009 settlement of an investigation led by then-New York State Attorney General Andrew Cuomo, United Healthcare turned the proprietary database over to the state, which then established an independent nonprofit organization funded by $50 million from UHC to create an alternative to the Ingenix database. That group, FAIR Health (see www.fairhealth.org), now operates a separate database. Settlements: Some of the class actions against insurers using the Ingenix database have been settled, including a 2008 settlement of $215 million with Health Net, a 2009 settlement of $350 million with United, a 2014 settlement with Horizon Blue Cross Blue Shield of New Jersey (injunctive relief only). Ongoing Litigation In re Aetna UCR Litig., No. 2:07-cv-3541 (D.N.J.) (2013 settlement of $120 million collapsed after scores of opt-outs). Franco v. Conn. Gen. Life Ins. Co., No. 07-cv-6039 (D.N.J.) (on appeal to Third Circuit). In re WellPoint, Inc. Out-of-Network “UCR” Rates Litig., No. 2:09-ml-02074-PSG-FFM (C.D. Cal.). Establishing “Usual, Customary & Reasonable” Charges Mock v. Principal Life Ins. Co., Case No. 08CV769JHPPJC (N.D. Okla. Jan. 30, 2012): Upholding use by ERISA administrator of Medicare fee schedule rates to determine “prevailing charges” under plan documents. Holland v. Trinity Health Care Corp., 791 N.W.2d 724, 730 (Mich. Ct. App. 2010): Holding that phrase “usual and customary charges” in an agreement with self-pay patient unambiguously referred to the hospital’s charge master. Spectrum Health, Inc. v. Good Samaritan Employers Assoc., Inc. Trust Fund, 45 Employee Benefits Cas. 2223 (W.D. Mich. Dec. 11, 2008): Holding that the usual and customary rate cannot be based on list or wholesale prices, but should instead be based on “the amount others charge for medicine, services or supplies to treat the illness or injury in question.” Fresenius Med. Care Holdings, Inc. v. Brooks Food Group, Inc., No. 3:07CV14-H, 2008 U.S. Dist. LEXIS 121304, 2008 WL 2679187 (W.D.N.C. June 26, 2008): Upholding decision by re-pricer hired by plan that 135% of Medicare reimbursement amount constituted “usual and reasonable” for out-of-network dialysis care.

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Geddes v. United Staffing Alliance Employee Medical Plan, 469 F. 3d 919 (10th Circ. 2006): Finding ERISA administrator’s calculation of “usual and customary” rate for out-of-network providers to be arbitrary and capricious where administrator based rate on average in-network reimbursement rate. Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alternatives, Inc., 832 A.2d 501, 510 (Pa. Super. Ct. 2003): In unjust enrichment case for underpayment of emergency services furnished to Medicaid managed care patients, hospital is entitled to the reasonable value of the services furnished. Reasonable value is “what someone normally receives for a given service in the ordinary course of its business from the community that it serves.” Court held that reasonable value in this case would be the average collection rate for government and insurance plan payers. River Park Hosp., Inc. v. BlueCross BlueShield of Tenn., Inc., 173 S.W. 3d 43 (Tenn. App. 2002): In unjust enrichment case, factors to consider in determining damages to hospital (i.e., a “reasonable rate”) include the hospital’s billed charges, in-network rates (while noting that in-network rates may not be appropriate for out-of-network providers given difference in volume and administrative burden), industry custom, and factors that may increase provider’s costs. HCA Health Services of Georgia v. Employers Health Insurance Company, 240 F. 3d 982 (11th Cir. 2001): Holding that plan’s interpretation of its payment obligations for out-of-network care was arbitrary and capricious. The plan language defined the “maximum allowable fee” as “the fee which is recognized by a prudent layperson.” The plan construed this language to pay an in-network rate to the out-of-network provider. The Court rejected this interpretation, finding that the discounted fee for in-network providers arises only out of a specific contractual relationship. Galloway v. Methodist Hosp., Inc., 658 N.E.2d 611, 614 (Ind. Ct. App. 1995); Heartland Health Sys., Inc. v. Chamberlin, 871 S.W.2d 8, 11 (Mo. Ct. App. 1993): Upholding trial court decisions finding that uninsured patients were responsible for paying billed charges to hospital. Silent PPOs Queen's Med. Ctr. v. Kaiser Found. Health Plan, 948 F. Supp. 2d 1131 (D. Haw. 2013): After defendant health plan and plaintiff hospital were unable to agree on a new managed care agreement, existing agreement expired and defendant began paying full billed charges for services provided. Thereafter, defendant began paying discounted rates based on its contract with a third-party entity which, in turn, had a contract with an entity which allegedly had a valid contract with plaintiff hospital. Plaintiff alleged that defendant was not entitled to discounts and had engaged in fraud in failing to disclose basis for discounts. Court denied defendant’s motion to dismiss, permitting plaintiff hospital to proceed on multiple theories including breach of contract (based on oral representations), intentional misrepresentation, negligent misrepresentation, tortious interference with contractual relations, promissory estoppel, and violations of RICO. Walsh Chiropractic, Ltd. v. StrataCare, Inc., 752 F. Supp. 2d 896, 900 (S.D. Ill. 2010)Holding that provider had adequately stated a claim for unjust enrichment and a claim under the Illinois

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Consumer Fraud Act (ICFA) based on allegations that defendant was not entitled to discounts under the provider’s PPO agreement with a third party. Christie Clinic, P.C. v. Multiplan, Inc., No. 08-CV-2065, 2008 WL 4615435, at *11 (C.D. Ill. Oct. 15, 2008): Dismissing consumer fraud act claim, but denying payers’ motions to dismiss on breach of contract and civil conspiracy. Roche v. Travelers Prop. Cas. Ins. Co., No. 07-CV-302-JPG, 2008 WL 2875250, at *8 (S.D. Ill. July 24, 2008): Dismissing provider’s breach of contract claims and claims under Illinois Consumer Fraud Act (ICFA), but granting leave to re-plead unjust enrichment claims. First State Orthopaedics v. Concentra, Inc., 534 F. Supp. 2d 500 (E.D. Pa. 2007): Approving class action settlement between provider class and defendant for underpayments based on defendant’s alleged “re-pricing” of claims and use of discounts under a PPO agreement without providing bargained-for exchange of steerage. Patient Billing Practices, Cost-Sharing and Balance Billing Aetna Life Ins. Co. v. Bay Area Surgical Mgmt, No. 1-12-CV-217943 (Cal. Sup. Ct. Santa Clara Cnty. Apr. 14, 2016): Entering jury verdict in favor of Aetna on all counts and awarding $37 million. Jury found that network of six out-of-network surgery centers had engaged in fraud and misrepresentation by, among other things, waiving patient cost-sharing amounts and billing insurers with inflated charges. Aetna Life Ins. Co. v. Huntingdon Valley Surgery Ctr., No. 13 Civ. No. 3101, 2015 WL 5439223, at *11 (E.D. Pa. Sept. 15, 2015): Granting summary judgment for provider on insurer’s fraud and misrepresentation claims where provider disclosed discounts offered to patients on cost-sharing amounts. On appeal to Third Circuit. OSF Healthcare Sys. v. Banno, No. 08-1096, 2008 WL 5170628, at *3-4 (C.D. Ill. Dec. 10, 2008): Finding that complaint failed “to specifically allege how or why [the provider] had a legal duty to [payor] to charge and/or collect co-payments from . . . [or] exactly what fraud was perpetrated on [the payor].” Garcia v. Health Net of N.J., Inc., No. C-37-06, 2007 WL 5253484 (N.J. Super. Ct. Ch. Div. Nov. 20, 2007) aff’d, No. A-2430-07T3, 2009 WL 3849685 (N.J. Super. Ct. App. Div. Nov. 17, 2009): Finding “no authority to establish that the doctors or the Center acted unlawfully in routinely failing to enforce the obligation of Health Net subscribers to pay co-insurance.” People v. Brigham, 702 N.Y.S.2d 119, 125 (App. Div. 1999): “Thus, defendant’s practice in openly charging these higher, nondiscounted rates to insurance companies did not constitute a misrepresentation of his actual charges for services rendered or an ‘overcharge’ for services rendered.”

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Payer Recoupments Premier Health Center, P.C. v. UnitedHealth Group, No. No. Civ. 11–425(ES) (D.N.J): Class action challenging UnitedHealth’s authority to recoup amounts paid to out-of-network providers (ongoing). ARBITRATION Health Ins. Corp. of Ala. v. Smith, 869 So.2d 1100, 1108 (Ala. 2003): Finding that FAA applies to clause in contract with member and preempts relevant state law, where insurer conducted claims processing across state lines. In re Managed Care Litig., 2009 WL 855963, at *4-7 (S.D. Fla. Mar. 30, 2009): Finding that physicians were sophisticated parties and that arbitration clause in provider agreement was not unconscionable. Kan. City Urology, P.A. v. United Healthcare Servs., 261 S.W.3d 7, 14 (Mo. Ct. App. July 15, 2008): Finding that claims by physicians asserting price fixing and monopolization were within scope of arbitration clause. Nayal v. HIP Network Servs. IPA, Inc., 620 F.Supp.2d 566, 573 (S.D.N.Y. 2009): Finding that arbitration clause in provider agreement was neither procedurally nor substantively unconscionable, even where the contract may have been offered on a take-it-or-leave-it basis. Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064, 2070-2071 (2013): Affirming third circuit ruling in favor of physician and allowing arbitration to proceed on merits. Physician filed arbitration claim alleging that plan had systematically failed to make full and prompt payment to doctors and sought class certification. Siopes v. Kaiser Foundation Health Plan, Inc., 312 P.3d 869, 888 (Haw. 2013): Finding arbitration provision in contract between benefit plan and insurer unenforceable based on a lack of agreement between plan and member to arbitrate. UFCW & Employers Benefit Trust v. Sutter Health, 194 Cal. Rptr.3d 190, 209 (Cal. Ct. App. 2015): Finding that ERISA plan accessing provider’s services through ASO contract with managed care organization was not bound by arbitration clause in contract between provider and ASO provider. PBM LITIGATION Chelsea Family Pharmacy, PLLC v. Medco Health Solutions, Inc., 567 F.3d 1191, 1199-1200 (10th Cir. 2009): Finding local pharmacy’s claims related to reimbursement rates were subject to mandatory arbitration, but other claims related to anticompetitive conduct were not subject to arbitration clause.

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In re Express Scripts, Inc., PBM Litigation, No. 4:05-MD-01672 SNL, 2008 WL 2952787, at *8-16 (E.D. Mo. 2008): Denying class certification based on finding that PBM was not a fiduciary under ERISA where it had i) discretion over MRAs, ii) discretion over drug prices, iii) discretion over rebates, iv) discretion over formulary, and v) discretion over interest. However, PBM was a fiduciary in controlling and disposing of plan “savings.” Moeckel v. Caremark, Inc., 622 F.Supp.2d 663, 693 (M.D. Tenn. 2008): Finding that PBM was not a fiduciary under ERISA where PBM’s contracting with retail pharmacies in its proprietary network was separate and distinct from its contractual relationship with employer sponsoring prescription drug plan. EXCLUDED / TERMINATED PROVIDERS DeVore v. Heritage Provider Network, 2013 WL 6139793, at *3 (Cal. Ct. App. 2013): Finding that provider did not fail to exhaust administrative or judicial remedies prior to initiating lawsuit, where plan did not offer provider hearing until after lawsuit had been commenced and no procedure existing for hearing prior to lawsuit. Plan had moved to terminate FFS contract with provider in an effort to reduce the number of specialty providers in its panel. Fairfield County Medical Association v. United HealthCare of New England, 985 F.Supp.2d 262, 273-274 (D. Conn. 2013): Enjoining termination and permitting temporary restraining order where plan terminated provider participation in plan via contract “amendment.” Provider contract included clause providing plan broad discretion to unilaterally alter agreements upon advance notice. Plan sent letters to a large number of providers notifying them that they would be removed from its Medicare Advantage Network and characterized letters as “amendments” to its contracts. Association sought and received TRO and injunction to enjoin terminations. However, court did not bar terminations if plan followed contract terms related to provider terminations. Other Resources • Joe Carson, Modern Healthcare, Seattle Children’s Sues After Exchange Plans Fail to

Include it in Network (2013) • CY2016 MA HSD Provider and Facility Specialties and Network Adequacy Criteria

Guidance • Draft 2017 Letter to Issuers in the Federally-Facilitated Marketplaces • James W. Boswell and Andrew J. Hefty, American Health Lawyers Association, Managed

Care Disputes (2014)

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NARROW NETWORKS Brown v. Blue Cross of California, No. BC554949 (Cal. Super. Ct., filed Aug. 19, 2014): Alleging that members were moved to ACA-compliant plans in 2014 and when the member contacted insurer or checked the insurer’s websites, there was misrepresentation about which providers were participating in their new plans. Plaintiffs allege that although they were issued PPO ID cards, they were enrolled in exclusive provider organization (EPO) plans with minimal out-of-network coverage. Cowart v. Blue Cross of California, No. BC549438 (Cal. Super. Ct., filed Jun. 20, 2014): Asserting claims that insurer allegedly mislead members about coverage under its EPO plan by issuing ID cards that incorrectly stated members were enrolled in PPO plans. Unlike insurer’s PPO plans, EPO plans may not have out-of-network benefits. Fairfield County Medical Association v. United HealthCare of New England, 985 F.Supp.2d 262, 273-274 (D. Conn. 2013) (see above, Excluded/Terminated Providers). Harrington v. Blue Shield of Cal., No. CGC14539283 (Cal Super. Ct., filed May 14, 2014): Class action alleging that insurer’s plans utilized different provider panels, but that the composition of those panels was not disclosed to prospective purchasers on exchange or plan website. Plan’s website comparison tools allegedly returned information for broad PPO panel, when individual benefit products utilized subsets of network. Simon v. Blue Cross & Blue Shield of Kansas City, Case No. 1416-CV12765, Division 9 (Jackson Cnty. Cir. Ct., filed May 29, 2014): Purported class action brought against insurer under Missouri Merchandising Practices Act and for unjust enrichment based on inaccuracy of provider directory made available to those who enrolled in insurer’s plan offered on exchanges. On January 6, 2016, the court dismissed the claim under the Missouri Merchandising Practices Act, finding no private right of action, but permitting the unjust enrichment claim to continue. Roberts v. United Healthcare Services., Inc., BC540910 (Cal. Super. Ct., filed Mar. 28, 2014): Medicare Advantage member challenged plan’s lack of in-network urgent care clinics in state. Member alleged that he was charged higher non-contracted provider co-pay associated with visiting non-contracted urgent care center. See also, Excluded/Terminated Providers above. Other Resources Justin D. Pitt and Brian R. Stimson, American Health Lawyers Association, Managed Care Litigation in the Age of Health Care Exchanges and Value-Based Payment (2015)

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ACOs / CINs Grider v. Keystone Health Plan Central, Inc., No. CIV.A.2001-CV-05641, 2003 WL 22182905 (E.D. Pa. Sept 18, 2003): Finding that physicians participating in HMO pleaded fraud by alleging HMO i) misrepresented attainability of performance measures for physician compensation, and ii) took actions to reduce provider reimbursement such as automatically downcoding claims, automatically bundling claims, manipulating CPT codes, and providing incentives for claim reviewers to delay or deny payments. Moore v. Regents of Univ. of Cal., 987 P.2d 479 (Cal. 1990): Finding physician must disclose personal interests unrelated to patient’s health, whether research or economic, in obtaining patient’s consent to treatment that may affect professional judgment. Neade v. Portes, 739 N.E.2d 496 (Ill. 2000): Finding that IL courts have never recognized a cause of action for breach of fiduciary duty against a physician. Jezek v. Carecredit LLC, No. 10C7360, 2011 WL 2837492 (N.D. Ill. 2011): Finding no fiduciary relationship between physician and patient extending to financing matters. FTC Advisory Letters • FTC Staff Letter regarding Norman PHO (February 13, 2013) • Advisory Opinion to Miles (February 19, 2002) • FTC Staff Letter regarding MedSouth, Inc. (June 18, 2007) • FTC Staff Letter regarding Greater Rochester Independent Practice Association, Inc.

(September 17, 2007) • FTC Staff Letter regarding TriState Health Partners, Inc. (April 13, 2009) • FTC Staff Advisory Opinion regarding Suburban Health Organization, Inc. (March 28, 2006)

Other Resources • Managed Care Litigation in the Age of Health Care Exchanges and Value Based Payment,

2015 AHLA Physicians and Hospital Law Institute for discussion on potential causes of action under P4P, value and ACO arrangements.

• Mark Shields, From Clinical Integration to Accountable Care, 20 Annals of Health L. 151 (2011).

• Christopher B. Thurman, The Risk of Shared Savings in the Commercial Insurance Market, 52 U. Louisville L. Rev. 559 (2014).

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ANTITRUST Overview of BCBS Antitrust Litigation In re: Blue Cross Blue Shield Antitrust Litigation, No. 2:13-CV-20000 (N.D. Ala. 2013): Multidistrict litigation involving classes seeking to represent both providers and subscribers across the country. Plaintiffs alleged that independent Blue Cross/Blue Shield Plans along with the Blue Cross Blue Shield Association engaged in a conspiracy to allocate geographic markets by designating “service areas” where only one designated plan was permitted to sell health insurance to customers. Other Select Antitrust Cases Abraham v. Intermountain Health Care, Inc., 395 F.Supp.2d 1312 (D.C. Utah 2005): Finding that a limited health care plan can appoint a limited number of providers to its panel and is not obligated to maintain an open panel in order to avoid antitrust scrutiny. Mueller v. Wellmark, Inc., 861 N.W.2d 562 (Iowa 2015): Finding service agreement did not per se violate antitrust laws and that insurer’s arrangements with self-insured and out-of-state affiliates would be governed by the rule of reason analysis where chiropractors brought class action against insurer alleging discriminatory and anticompetitive practices. Omnicare, Inc. v. UnitedHealth Group, Inc., 594 F.Supp.2d 945 (N.D. Ill. 2009): Finding in favor of defendant on summary judgment where institutional pharmacy challenged payer merger. Shortly after accepting merger terms, but prior to completed merger the payer offered pharmacy below low reimbursement terms and pharmacy filed claims alleging anticompetitive conduct. United State of America v. United Regional Health Care System, No. 7:11-cv-00030 (N.D. Tex. filed Feb. 25, 2011): DOJ and State filed enforcement action alleging violations of Section 2 of the Sherman Act. Provider with strong market position allegedly used exclusionary provider contracting to maintain its competitive position. Final judgment prohibits defendant from conditioning prices/discounts on whether insurers contract with other providers or preventing insurers from entering into agreements with rivals.

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APPENDIX B

HIPAA Business Associate Agreement Materials

Health care plans, certain health care providers, and health care clearinghouses are all "covered entities" under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). In most instances, health care plans and health care providers may share protected health information (PHI) pursuant to an exception for treatment, payment, or health care operations. The parties may wish to include a provision in the Agreement recognizing that both parties are subject to HIPAA and intend to comply with HIPAA and any other applicable state and federal privacy and security laws such as the following:

The parties agree to comply with the applicable privacy and security requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and all rules and regulations promulgated thereunder, as well as other applicable state and federal laws governing the privacy and security of personal information.

When covered entities contract with, or delegate to, others to assist in carrying out their health care activities and functions, HIPAA requires that covered entities enter into Business Associate Agreements (often called BAAs) with their "business associates." Business associate functions and activities include: claims processing or administration; data analysis, processing or administration; utilization review; quality assurance; billing; benefit management; practice management; and repricing. Business associate services are: legal; actuarial; accounting; consulting; data aggregation; management; administrative; accreditation; and financial.

HIPAA requires that BAAs include certain required terms. The Health Information Technology for Economic and Clinical Health (HITECH) Act expanded the importance of these agreements because business associates are now directly subject to HIPAA and must have HIPAA compliant BAAs with their subcontractors that use or create PHI.

See Guidance and Sample Business Associate Agreement Provisions from the U.S. Department of Health & Human Services.

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APPENDIX C

State Law Contracting Links and Online Resources

ARIZONA • Ariz. Rev. Stat. Ann. § 36-596 (Coordination of benefits) • Ariz. Rev. Stat. Ann. § 36-2959 (Reimbursement rates; capitation rates; annual review) • Ariz. Rev. Stat. Ann. § 23-1062.01 (Timely payment of medical, surgical and hospital benefit

billing; content of bills; contracts between providers and carriers; exceptions; definitions) • Ariz. Rev. Stat. Ann. § 36-2906 (Qualified plan health services contracts; proposals;

administration) • Ariz. Rev. Stat. Ann. § 32-3216 (Health care providers; charges; public availability; direct

payment; notice; definitions) • Ariz. Rev. Stat. Ann. § 20-3102 (Timely payment of health care providers' claims;

grievances) • Ariz. Rev. Stat. Ann. § 36-2943 (Provider subcontracts; hospital reimbursement)

CALIFORNIA • Cal. Health & Safety Code § 1348.6 (Proscriptions on Payment to Health Care Practitioner to

Deny, Limit, or Delay Services) • Cal. Health & Safety Code § 1375.5 (Contract Provision Requiring Risk-Bearing

Organization to be at Financial Risk for Provision of Health Care Services) • Knox-Keene Health Care Service Plan Act of 1975 • Cal. Health & Safety Code § 1375.6 (Contract Provision Requiring Provider to Accept

Certain Rates or Methods of Payment) • Cal. Health & Safety Code § 1375.7 (Health Care Providers’ Bill of Rights) • Cal. Health & Safety Code § 1379 (Contracts; Necessity of Writing; Liability for Plan’s

Debts; Actions) • Cal. Health & Safety Code § 1379.5 (Contract Between Plan and Health Care Provider who

Provides Health Care Services in Mexico; Requirements; Plan’s obligations) • Cal. Health & Safety Code § 1395 (Advertising, Contracts with Licensed Professionals,

Offices; Misrepresentation by Plan, Compliance by Plan) • Cal. Health & Safety Code § 1395.5 (Contract to Restrict Health Care Provider’s

Advertising) • Cal. Code Regs. tit. 28, § 1300.67.8 (Contracts with Providers) • Cal. Code Regs. tit. 28, § 1300.51 (Section K (Contracts with providers) of the Revised

Health Care Service Plan Application Form) • Medi-Cal Managed Care Boilerplate Contracts

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COLORADO • Colo. Rev. Stat. § 25-37-101, et seq. (Contracts with Health Care Providers)

CONNECTICUT General Statutes of Connecticut, Chapter 700C, Health Insurance: • Sec. 38a-226a – 226d (Utilization review) • Sec. 38a-478f (Provider profile development requirements) • Sec. 38a-478g (Managed Care Contract Requirements; Plan Description Requirements) • Sec. 38a-478h (Removal of providers. Notice requirements. Retaliatory action prohibited) • Sec. 38a-478k (Gag clauses prohibited) • Sec. 38a-478l (Consumer report card required. Content) • Sec. 38a-478m (Internal grievance procedure) –repealed eff. July 1, 2011 • Sec. 38a-478n (Exhaustion of internal appeal mechanisms. External appeal to commissioner)

– repealed eff. July 1, 2011 • Sec. 38a-478p (Expedited utilization review. Standardized process required) – repealed eff.

July 1, 2011 • Sec. 38a-478q (Use of laboratories covered by plan required) • Sec. 38a-479b (Material changes to fee schedules. Return of payment by provider. Appeals.

Filing of claim by provider under other applicable insurance coverage) • Sec. 38a-479aa (Preferred provider networks) • Sec. 38a-479bb (Requirements for managed care organizations that contract with preferred

provider networks. Requirements for preferred provider networks) • Sec. 38a-479cc (Duties of a preferred provider network when providing services pursuant to

a contract with a managed care organization) • Sec. 38a-479ff (Adverse action or threat of adverse action against complainant prohibited)

DELAWARE • 18 Del. Code Regs. 1300 (Health Insurance General Provisions) • 18 Del. Code Regs.§ 1301 (Internal Review and Independent Utilization Review of Health

Insurance Claims) • 18 Del. Code Regs. § 1310 (Standards for Prompt, Fair and Equitable Settlement of Claims

for Health Care Services) • 18 Del. Code Regs. § 1313 (Arbitration of Health Insurance Disputes Between Carriers and

Providers) • 18 Del Code Regs. 1400 (Health Insurance Specific Provisions) • 18 Del. Code Regs. § 1403 (Managed Care Organizations)

FLORIDA • Fla. Stat. §641.234 (Administrative, provider, and management contracts) • Fla. Stat. § 641.2342 (Contract Providers) • Fla. Stat. § 641.315 (Provider Contracts)

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• Fla. Stat. §641.3154 (Organization liability; provider billing prohibited) • Fla. Stat. § 641.3155 (Prompt payment of claims) • Fla. Stat. § 641.3156 (Treatment authorization; payment of claims) • Fla. Stat. § 641.316 (Fiscal Intermediary Services) • Florida State Medicaid Model Contract

GEORGIA • Managed Health Care Plans Act, O.C.G.A. § 33-20A-60 (Definitions) • Managed Health Care Plans Act, O.C.G.A. § 33-20A-61 (Physician Contracts) • Managed Health Care Plans Act, O.C.G.A. § 33-20A-62 (Payment) • O.C.G.A. § 33-21-9, Health Maintenance Organizations (Establishment and Maintenance of

Complaint System) • O.C.G.A § 33-21A-1(Medicaid Care Management Organizations Act) • O.C.G.A. § 33-21A-7 (Bundling of Provider Complaint and Appeals) • O.C.G.A. § 33-21A-9 (Submission and Payment of Claims) • O.C.G.A. § 49-4-153 (Administrative hearings and appeals for appeals and grievances) • O.G.C.A. § 33-24-59.5 (Timely Payment of Health Benefits) • Medicaid Care Management Organization Contract with the Georgia Department of

Community

HAWAII • Haw. Rev. Stat. 432E (Patients’ Bill of Rights and Responsibilities Act) • Haw. Rev. Stat. 432E (Health Maintenance Organization Act) • Haw. Rev. Stat. 334B (Utilization Review and Managed Care of Mental Health, Alcohol, or

Drug Abuse Treatment)

ILLINOIS • 215 Ill. Comp. Stat. 125/2-8 (Provider Agreements) • 215 Ill. Comp. Stat. 125 (Health Maintenance Organization Act) • 215 Ill. Comp. Stat. 180 (Health Carrier External Review Act) • 50 ILAC § 5420 (Managed Care Reform & Patient Rights) • 50 ILAC § 5421.50 (Contracts, Administrative Arrangements And Material Modifications)

KENTUCKY • Ky. Rev. Stat. § 304.17A-527 (Filing of Provider Agreements, Risk-Sharing Arrangements,

and Subcontract Agreements with Commissioner -- Contents -- Disclosure of Financial information not required)

• Ky. Rev. Stat. § 304.17A-560 (Most Favored Nation Provision) • Ky. Rev. Stat. § 304.17A-577 (Disclosure of Payment of Fee Schedule to Manage Care Plan

Health Care Provider)

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• Ky. Rev. Stat. § 304.17A-600 et seq. (Definitions for KRS 304.17A-600 to 304.17A-633, Utilization Review)

• Ky. Rev. Stat. § 304.17A-700 to 304.17A-730 (Payment of Claims) • 806 Ky. Admin. Regs. 17:300 (Provider agreement and risk-sharing agreement filing

requirements) • Kentucky Medicaid Managed Care Contract

MARYLAND • Md. Code Ann., Ins. § 19-701 et seq (Title on Health Maintenance Organizations, including

§ 19-710. Certificate qualifications to qualify as HMO § 19-712. Powers and duties of health maintenance organization; § 19-713.2. Administrative service provider contract plans; § 19-713.3. Registration of contracting provider)

• Md. Code Ann., Ins. § 15-112 (Powers and duties of carriers relating to provider panels) • Md. Code Ann., Ins. § 15-112.2 (Restrictions relating to provider contracts and provider

panels) • Md. Code Ann., Ins. § 15-115 (Providers choosing not to participate in managed care

organization) • Md. Code Ann., Ins. § 15-121 (Reimbursement methodology or methodologies used to

reimburse physicians for health care services)

MASSACHUSETTS • 176G MGL (Health Maintenance Organizations (HMOs) • 176I MGL (Preferred Provider Arrangements) • 176O MGL (Health Insurance Consumer Protections) • 176T MGL (Risk-Bearing Provider Organization) • 211 CMR 43.00 (Health Maintenance Organizations (HMOs)) • 211 CMR 152.05 (Provider Contracts in Limited, Regional and Tiered Provider Network

Plans) • 211 CMR 155.00 (Risk-Bearing Provider Organizations) • 211 CMR 52.00 (Managed Care Consumer Protections and Accreditation of Carriers) • Managed Care Provider Contracts Checklist. See also Mass.gov website for Consumer

Affairs and Business Regulation for other Checklists for Managed Care (located towards bottom of web page).

• Bulletin 2012-01(Reporting to the Bureau of Managed Care (the “Bureau”) of Instances Where Insurance Carriers Are Not Consistent with Required Uniform Coding and Billing Standards; Issued 01/25/12 )

• Bulletin 2014-10 (Changes to Massachusetts General Laws Chapter 6D §16 and Chapter 176O §§ 12 and 16 Affecting Disclosure of Medical Necessity Criteria; Issued 11/4/14 )

• Bulletin 2014-05 (Guidelines on Submitting Filing Materials Relative to the Certification of Risk-Bearing Provider Organizations Under Chapter 176T of the General Laws and 211 CMR 155.00; Issued August 15, 2014

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• Bulletin 2014-01 (Revised Transitional Rules for Carriers and Provider Organizations Relative to the Certification of Risk-Bearing Provider Organizations - Extended Transition Period; Issued January 17, 2014)

• Bulletin 2015-05 (Access to Services to Treat Substance Use Disorders; Issued July 31, 2015)

• Bulletin 2015-08 (Using Standard Prior Authorization Forms when Reviewing Requests for Behavioral Health Services; Issued November 3, 2015)

• Bulletin 2016-02 (Requirements for Carriers Issuing Written Notices of Adverse Determinations; Issued 1/19/16 )

MICHIGAN • Mich. Comp. Laws Ann. § 500.3501, et seq. (Health Maintenance Organizations) • Mich. Comp. Laws Ann. § 550.1201, et seq. (Nonprofit Health Care Corporation Reform

Act)

NEW JERSEY • N.J. Stat. Ann. § 26:2J-2, et seq. (Health Maintenance Organizations) • N.J. Stat. Ann. § 17:48F-13 (Contracts with providers or subcontracts for services;

mandatory provisions) • N.J. Stat. Ann. § 17:48H-18 (Licensed systems; contract requirements) • N.J. Stat. Ann. § 26:2S-9 (Contracts between providers and managed care carriers; contents)

NEVADA • Nev. Rev. Stat. Ann. § 616B.527, et seq. (Organizations for Managed Care) • Chapter 616B under Nev. Rev. Stat. Ann. addresses a variety of insurance matters.

NEW YORK • N.Y. Public Health Law §4400 (Health Maintenance Organizations) • N.Y. Public Health Law §4900 (Utilization Review) • N.Y. Insurance Law §3224-a (Standards for Prompt, Fair and Equitable Settlement of Claims

for Health Care and Payments for Health Care Services) • N.Y. Insurance Law § 3224-b (Rules Relating to the Processing of Health Claims and

Overpayments) • N.Y. Insurance Law § 3238 (Pre-Authorization of Health Care Services) • 10 N.Y.C.R.R. Part 98 (Health Maintenance Organizations) • New York State Department of Health, Provider Contract Guidelines for MCOs and IPAs • New York Medicaid Model Contracts

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NORTH CAROLINA • G.S. § 28-3-200 (Miscellaneous Insurance and Managed Care Coverage and Network

Provisions) • G.S. § 58-3-225 (Prompt Claim Payments under Health Benefit Plans) • G.S. § 58-3-265 (Prohibition on Managed Care Provider Incentives) • G.S. § 58-67 (Health Maintenance Organization Act)

North Carolina Administrative Code, Requirements for Network Plan Carriers: • 11 N.C. Admin. Code § 20.0101 (Managed Care Definitions) • 11 N.C. Admin. Code § 20.0201 (Written Contracts) • 11 N.C. Admin. Code § 20.0202 (Contract Provisions) • 11 N.C. Admin. Code § 20.0204 (Carrier and Intermediary Contracts) • 11 N.C. Admin. Code § 20.0205 (Filing Requirements) • Provider Networks/Managed Care Form & Rate Filings – Contracts

OHIO • Ohio Rev. Code § 1751.13 (Contracts with Providers and Health Care Facilities) • Ohio Rev. Code § 3963.01 – 3963.03 (Health Care Contracts, Information Required in

Contracts) • Ohio Admin. Code §5160-26-01 to 5160-26-12 (Medicaid Managed Care) • Ohio Admin. Code §5160-26-05 (Managed Health Care Programs; Provider Panel and

Subcontracting Requirements) • Model Medicaid Addenda

PENNSYLVANIA • 40 Pa. Stat. Ann. § 1551, et seq. (Health Maintenance Organization Act) • 40 Pa. Stat. Ann. § 991.2166 (Prompt payment of claims)

VIRGINIA • Va. Code § 38.2-5805 (Provider Contracts)

TEXAS • HMO Physician/Provider Contractual Requirements Checklist • Tex. Ins. Code §§ 843.361, 843.281, 843.362, 843.306-843.309, 843.310; Chapter 843,

Subchapter J (Prompt Payment of Claims & Submission of Clean Claims); 843.323 (Rejection of Batched Claims); 843-315 & 843.316 (Capitation); 843.311 (Requirements for Contracts with Podiatrists); 843.3115 (Requirements for Contracts with Dentists)

• Texas Constitution and Statutes • 28 TAC § 11.901 (Texas Administrative Code Rules Regarding HMO Contracting

Arrangements)

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• 28 TAC §§ 3.3701-3.3725 (Texas Preferred and Exclusive Provider Benefit Plans) • Texas Workers Compensation Network Provider Information • Texas Workers Compensation Provider Contract Requirements and Information • Texas Health and Human Services – Vendor and Contract Information • Texas Health and Human Services (Medicaid) Contractual Requirements • HHSC Provider Contract Requirements Checklist • Texas Health and Human Services – Texas Medicaid and CHIP Uniform Managed Care

Manual – Chapter 4: Marketing Policies and Procedures • Texas HHSC Uniform Managed Care Terms & Conditions

MANAGED CARE CONTRACTING TOOLKIT Appendix D-1: Medicare Advantage and Part D Contract Provisions Checklist (Terminology)

83 Medicare Advantage and Part D Contract Provisions Checklist (Terminology) Copyright 2019 American Health Lawyers Association.

Terminology

Contractor As used here (specific to offshoring of services), any entity or person with whom a Sponsor contracts to provide any type of service in relation to a Medicare contract where protected health information (PHI) is received, processed, transferred, handled, stored or accessed offshore.

Downstream Entity

Any party that enters into a written arrangement, acceptable to CMS, with person or entities involved with the Medicare Advantage or Part D benefit, below the level of the Sponsor/First Tier Entity arrangement (i.e., a subcontractor). Downstream Entity arrangements continue down to the level of the ultimate provider of both health and administrative services. See 42 CFR § 422.2 and 42 CFR § 423.501.

FDR First Tier, Downstream or Related Entity.1

First Tier Entity

Any party that enters into a written arrangement, acceptable to CMS, with a Sponsor to provide administrative services (i.e., a vendor) or health care services (i.e., a health care provider or supplier or Pharmacy Benefit Manager) for a Medicare eligible individual under the MA or Part D programs. See 42 CFR § 422.2 and 42 CFR §§ 423.4 and 423.501.

MA Application CY 2020 Medicare Advantage and 1876 Cost Plan Expansion Application (available at https://www.cms.gov/Medicare/Medicare-Advantage/MedicareAdvantageApps/Downloads/cy-2020-part-c-ma-and-1876-cost-plan-expansion-application.pdf) (last accessed February 21, 2019).

Medicare Advantage Contract Amendment

Model CMS Medicare Advantage contract amendment that lists certain required terms (available at https://www.cms.gov/Medicare/Medicare-Advantage/MedicareAdvantageApps/Downloads/Model_Contract_Amendment_080714.pdf) (last accessed February 21, 2019). 2

MMCM Medicare Managed Care Manual

PDBM Prescription Drug Benefit Manual

PDP Application CY 2020 Part D Application (available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2020-Part-D-Application.pdf) (last accessed February 21, 2019).

1 For CMS guidance regarding what individuals or entities qualify as FDRs, see Section 40 of Chapter 21 of the Medicare Managed Care Manual and Chapter 9 of the Prescription Drug Benefit Manual (“Medicare program requirements apply to FDRs to whom the sponsor has delegated administrative or health care service functions relating to the sponsor’s Medicare Part C and D contracts.”). 2 This model contract amendment provides contract language for Medicare Advantage Organizations (MAOs) to use in provider and administrative agreements between the MAO and its First-Tier Entity. Such language may also be used between a First-Tier Entity and its Downstream Entity. Note, this document does not contain all CMS required provisions for the Medicare Advantage context. This document is not appropriate for use in Medicare Part D prescription drug contracts, Medicare-Medicaid Plan contracts, or any other contracts distinct from Medicare Advantage (MA) products.

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Provider

Any (1) individual engaged in the delivery of health care services in a State and is licensed or certified by the State to engage in that activity in the State; or (2) entity engaged in the delivery of health care services in a State and is licensed or certified to deliver those services if such licensing or certification is required by State law or regulation. See 42 CFR § 422.2. Note: Chapter 11 of the MMCM references requirements for providers and suppliers identified in this document. Under original Medicare, a “provider” is generally a hospital, Critical Access Hospital (CAH), Skilled Nursing Facility (SNF), Comprehensive Outpatient Rehabilitation Facility (CORF), or Home Health Agency (HHA), and a “supplier” is generally a physician or other practitioner, or an entity other than a “provider,” that furnishes health care services or supplies. While these terms are used somewhat inconsistently in 42 CFR Parts 422 and 423 and in the Medicare Managed Care Manual, the provider requirements identified in this document apply to all provider types.

Related Entity Any entity that is related to the Sponsor by common ownership or control and either (1) performs some of the Sponsor’s management functions under contract or delegation; (2) furnishes services to Medicare enrollees under an oral or written agreement; or (3) leases real property or sells material to the Sponsor at a cost of more than $2,500 during a contract period. See 42 CFR § 422.2 and 42 CFR § 423.501.

Sponsor Medicare Advantage organization or Part D sponsor.

Contractual Provision Reference MA Contract Type

PDP Contract Type

Required in the Contract?

GENERAL COMPLIANCE REQUIREMENTS

FDR must comply with all applicable Medicare laws, regulations, and CMS instructions.

42 CFR § 422.504(i)(4)(v) MMCM, Ch. 11, § 100.4 and § 100.5 Medicare Advantage Contract Amendment, Section 8

All FDRs See broader

requirements, outlined below

Yes

FDR must comply with all federal laws, regulations, and CMS instruction (including Medicare).

42 CFR § 423.505(i)(3)(iv) 42 CFR § 423.505(i)(4)(iv) PDP Application, Section 3.1.1.E.8

N/A All FDRs Yes

FDR must perform each service or other activity specified in the contract in a manner consistent and in compliance with Sponsor’s contractual obligations to CMS.

42 CFR § 422.504(i)(3)(iii) 42 CFR § 423.505(i)(3)(iii) Medicare Advantage Contract Amendment, Section 6 PDP Application, Section 3.1.1.E.4

All FDRs All FDRs Yes

Contract must include accountability provisions that indicate Sponsor may delegate activities or functions to an FDR only in a manner consistent with the “Delegated Requirements” section below.

42 CFR § 422.504(i)(3)(ii) 42 CFR § 423.505(i)(3)(ii) All FDRs All FDRs Yes

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85 Medicare Advantage and Part D Contract Provisions Checklist (Terminology) Copyright 2019 American Health Lawyers Association.

Contractual Provision Reference MA Contract Type

PDP Contract Type

Required in the Contract?

Sponsor monitors on an on-going basis the performance of the parties Note: The Part D application notes that the contract must explicitly state that the Sponsor itself will perform ongoing monitoring. Language indicating that the Sponsor has the right to monitor is not sufficient; the contract must affirmatively state that the Sponsor will monitor the entity on an ongoing basis.

42 CFR § 422.504(i)(4)(iii) 42 CFR § 423.505(i)(4)(iii) MMCM, Ch. 11, § 100.4 PDP Application, Section 3.1.1.E.13 Medicare Advantage Contract Amendment, Section 9(iii)

All FDRs All FDRs Yes

Providers must agree to comply with Sponsor’s policies and procedures. MMCM, Ch. 11, § 100.4 Providers N/A Yes, for Providers

FDR must clearly agree to participate in the Sponsor’s Part D benefit program. This is not required for a network pharmacy if the existing contract would allow participation in this program. If the MA or Part D sponsor is not directly contracting with the FDR, the MA or Part D sponsor must be identified as an entity that will benefit from the services described in the contract.

PDP Application, Section 3.1.1.E.1 and 3 and Appendix X

N/A All FDRs Yes

For New Part D Applicants: The contract is for a term of at least the initial one-year contract period (i.e., January 1 through December 31) for which the application is being submitted. Where the contract is for services or products to be used in preparation for the next contract year’s Part D operations (e.g., marketing, enrollment) the initial term of such contract must include this period of performance (e.g., contracts for enrollment-related services must have a term beginning no later than October 15 extending through the full contract year ending on December 31st of the next year).

PDP Application, Section 3.1.1.E.6 N/A All FDRs Yes

MANAGED CARE CONTRACTING TOOLKIT Appendix D-1: Medicare Advantage and Part D Contract Provisions Checklist (Terminology)

86 Medicare Advantage and Part D Contract Provisions Checklist (Terminology) Copyright 2019 American Health Lawyers Association.

PRIVACY AND ACCURACY OF RECORDS

Providers must agree to safeguard beneficiary privacy and confidentiality and assure accuracy of beneficiary health records.

Note: Although this guidance is specific to Providers, every FDR agreement should contain provisions adequate to ensure the confidentiality and protection of PHI.

MMCM, Ch. 11, § 100.4 Providers N/A Yes, for Providers

FDR must agree to comply with all state and federal confidentiality and enrollee record accuracy requirements, including requirements established by the Sponsor and MA or Part D program. More specifically, the FDR must agree to (1) abide by all federal and state laws regarding confidentiality and disclosure of medical records or other health and enrollment information, (2) ensure that medical information is released only in accordance with applicable federal or state law, or pursuant to court order or subpoenas, (3) maintain the records and information in an accurate and timely manner, and (4) ensure timely access by enrollees to the records and information that pertains to them.

42 C.F.R. § 422.504(a)(13) and § 422.118 MMCM, Ch. 11, § 100.5 Medicare Advantage Contract Amendments Section 3 42 CFR § 423.136 and 42 C.F.R. § 423.505(b)(14) PDP Application, Section 3.1.1.E.9

All FDRs All FDRs Yes, for all FDRs

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RECORDKEEPING, AUDITS, AND DATA REPORTING

The U.S. Department of Health and Human Services (HHS), the Comptroller General, or their designees have the right to audit, evaluate, collect, and inspect any books, contracts, computer or other electronic systems, including medical records and documentation of the FDR related to CMS’s contract with the Sponsor. This information can be collected directly from any FDR, though CMS will provide notification to the Sponsor that a direct request for information has been initiated.

42 CFR § 422.504(i)(2)(i)-(iii) 42 CFR § 423.505(i)(2)(i)-(iii) MMCM, Ch. 11, § 100.4 and § 100.5 Medicare Advantage Contract Amendment, Section 1 and 2 PDP Application, Section 3.1.1.E.10

All FDRs All FDRs Yes

HHS, the Comptroller General, or their designees have the right to inspect, evaluate, and audit any pertinent information for any particular contract period through 10 years from the final date of the contract period or from the date of completion of any audit, whichever is later.

42 CFR § 422.504(i)(2)(iv) 42 CFR § 423.505(i)(2)(iv) MMCM, Ch. 11, § 100.4 and § 100.5 PDP Application, Section 3.1.1.E.10 Medicare Advantage Contract Amendment, Section 1

All FDRs All FDRs Yes

If the FDR will adjudicate and process claims at the point of sale and/or negotiate with prescription drug manufacturers and others for rebates, discounts, or other price concessions on prescriptions drugs, the contract must include language requiring FDR compliance with reporting requirements set forth in 42 CFR § 423.514(d) and (e).

42 CFR § 423.514(d) and (e) PDP Application, Section 3.1.1.E.20 and Appendix X

N/A Applicable FDRs Yes, for applicable FDRs

If the FDR supplies drug or medical cost contracting and claim adjudication services to the Sponsor, the FDR shall furnish all underlying data associated with medical loss ratio (MLR) reporting to the Sponsor in a timely manner, as requested by the Sponsor, in order for the Sponsor or CMS to validate the accuracy of MLR reporting.

42 CFR § 422.2480(c)(2) 42 CFR § 423.2480(c)(2)

Applicable FDRs Applicable FDRs Yes, for applicable

FDRs

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MEMBER PROTECTIONS

Language prohibiting the FDR from holding any beneficiary enrollee liable for payment of fees that are the legal obligations of the Sponsor.

42 CFR § 422.504(g)(1)(i) 42 CFR § 422.504(i)(3)(i) 42 CFR § 423.505(g)(1)(i) 42 CFR § 423.505(i)(3)(i) PDP Application, Section 3.1.1.E.11 MMCM, Ch. 11, § 100.3 Medicare Advantage Contract Amendment, Section 4

All FDRs All FDRs Yes

Specify in contracts with Providers that members eligible for both Medicare and Medicaid will not be held liable for Medicare Part A and B cost sharing when the state is responsible for paying such amounts, and the Provider will (a) accept the MA plan payment as payment in full; or (b) bill the appropriate state source for the Medicare Part A or B cost sharing amount. All Medicare Advantage providers and suppliers, including pharmacies, must refrain from collecting Medicare cost-sharing for covered Parts A and B services from individuals enrolled in the Qualified Medicare Beneficiary Program (QMB) program, a dual eligible program that exempts individuals from Medicare cost sharing liability.

42 CFR §422.504(g)(1)(iii) CY 2019 Medicare Advantage and Part D Readiness Checklist, at 20

Providers N/A Yes, for Providers

Sponsor must provide for continuation of enrollee health care benefits: (a) for all enrollees, for the duration of the contract period for which CMS payments have been made, and (b) for enrollees who are hospitalized on the date its contract with CMS terminates, or, in the event of an insolvency, through discharge.

42 CFR 422.504(g)(2) MMCM, Ch. 11, §100.3 Providers N/A Yes, for Providers

For pharmacy contracts, include: • Language governing the provision of Part D enrollee access

to negotiated prices as defined in 42 CFR § 423.100. • Language regarding charging or applying the correct cost-

sharing amount, per 42 CFR § 423.104. • Language governing informing the Part D enrollee at the point

of sale (or point of delivery for mail order drugs) of the lowest-priced, generically equivalent drug, if one exists for the enrollee’s prescription, as well as any associated differential in price, per 42 CFR § 423.132.

42 CFR § 423.104(g) 42 CFR § 423.132 Application for New Prescription Drug Plan Sponsor, Appendix XI-XV

N/A Pharmacy contracts Yes, in pharmacy contracts

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Provider FDR shall comply with all applicable requirements, including Medicare regulations and guidelines, regarding provider communications and marketing to Members and/or prospective Members. Providers shall remain neutral when assisting Members or prospective Members with enrollment decisions. Note: Prior CMS guidance indicated that Sponsors should require providers to act based on an objective assessment of the needs and interests of the individual (which appears to be practical way of articulating the requirement that Providers act in a “neutral” manner).3

42 CFR 422, Subpart V, including 42 CFR § 422.2260 (Definition of “marketing”, which refers to Downstream Entity activities), § 422.2262 and § 422.2268(b)(7), (b)(11) and (b)(14) 42 CFR 423, Subpart V, including § 423.2260 (Definition, Marketing), § 423.2262 and § 423.2268(b)(7), (b)(11) and (b)(14) Medicare Communications and Marketing Guidelines, Section 60, including Section 60.3 73 Fed. Reg. 16440, 16630 (April 16, 2018)

Provider FDRs Provider FDRs (Pharmacists) Yes 4

3 See Section 70.5.1 of the June 20, 2017 Medicare Marketing Guidelines (available at https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY-2018-Medicare-Marketing-Guidelines_Final072017.pdf) (last assessed January 23, 2019). 4 Section 60.3 of the September 5, 2018 Medicare Marketing and Communications Guidelines states Sponsors “must advise contracted providers, through their agreements with those providers, of the need to remain neutral when assisting with enrollment decisions.” (available at https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY2019-Medicare-Communications-and-Marketing-Guidelines_Updated-090518.pdf) (last accessed January 23, 2019).

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PROMPT PAYMENT, CLAIMS SUBMISSION, AND PRICING STANDARDS

Include a prompt payment requirement, as applicable, the terms and conditions of which are (1) in the Medicare Advantage context, developed and agreed to by Sponsor and its contracted providers, and (2) in the Part D context, specified by regulation.

Note: This would only be applicable to the extent Sponsor or the FDR makes claims payment.

42 CFR § 422.504I 42 CFR § 422.520(b)(1) MMCM, Ch. 11, § 100.4 Medicare Advantage Contract Amendment, Section 7 42 CFR § 423.505(i)(3)(v) 42 CFR § 423.520

All FDRs All FDRs

Yes, where claims are paid to or by the

FDR under the contract

The contract must describe the payment or other consideration the FDR will receive for performance under the contract. The contract must also be signed. Note: Although not expressly stated, such payment term may be necessary in the Medicare Advantage context as well in order to establish the consideration necessary to effectuate a binding contract.

PDP Application, Section 3.1.1.E.5 and Appendix X N/A All FDRs Yes

Contracts where the FDR will establish the pharmacy network or selects pharmacies to be included in the network, include:

• Language that payment to pharmacies shall be issued, mailed, or otherwise transmitted with respect to all clean claims submitted by or on behalf of pharmacies within 14 days for electronic claims and within 30 days for claims submitted otherwise.

• A provision that requires updates to the prescription drug pricing standard for reimbursement occur not less frequently that one every 7 days beginning with an initial update on January 1 of each year, to accurately reflect the market price of the acquiring drug. The agreement must identify the source used by the Part D Sponsor for prescription drug pricing standard of reimbursement if one is used.

• Language requiring sponsors to disclose all individual drug prices to be updated to the applicable pharmacies in advance of their use for reimbursement of claims, if the source for any prescription drug pricing standard is not publicly available.

• Language requiring network pharmacies to submit claims to the Sponsor or the FDR whenever a membership ID card is presented or on file at the pharmacy, unless the member expressly requests that a particular claim not be submitted.

• Language requiring network pharmacies to submit claims to a real-time claims adjudication system. Note: Sponsor may indicate that for Indian, Tribal and Urban Indian Organization (I/T/U) pharmacies, and for certain other

42 CFR § 423.505(i)(3)(v) 42 CFR § 423.520(a)(i) and (ii) PDP Application, Section 3.1.1.E.15

42 CFR § 423.505(b)(21)(i) 42 CFR § 423.505(i)(3)(v ii) PDP Application, Section 3.1.1.E.16 and 18

42 CFR § 423.505(b)(21)(iii) 42 CFR § 423.505(i)(3)(v ii) PDP Application, Section 3.1.1.E.17

42 CFR § 423.120(c)(3) PDP Application, Section 3.1.1.E.19 42 CFR § 423.505(j) 42 CFR § 423.505(b)(17) PDP Application, Appendix XI

N/A Applicable network

pharmacy agreements

Yes, in applicable network pharmacy

agreements

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pharmacies that are allowed to submit claims in the X12 format, claims may be batch processed.

For long term care pharmacy agreements: • Language providing a long term care pharmacy at least 30 days

and up to 90 days to submit claims to the Sponsor for reimbursement under the Part D plan.

• Language requiring that such pharmacies dispense drugs and report information as required by 42 CFR § 423.154.

42 CFR § 423.505(b)(20) 42 CFR § 423.505(i)(3)(v i) PDP Application, Appendix XIV 42 CFR § 423.154 PDP Application, Appendix XIV

N/A Applicable LTC

pharmacy agreements

Yes, in applicable network LTC agreements

For home infusion pharmacy access contracts:

• Language providing that before dispensing home infusion drugs, pharmacy ensures that the professional services and ancillary supplies are in place.

• Language providing that home infusion drugs are delivered within 24 hours of discharge from an acute care setting, or later if so prescribed.

42 CFR § 423.120(a)(4)(iii) PDP Application, Appendix XIII 42 CFR § 423.120(a)(4)(iv) PDP Application, Appendix XIII

N/A Applicable to Home Infusion Pharmacy

agreements

Yes, in applicable Home Infusion

Pharmacy agreements

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DELEGATION REQUIREMENTS

If Sponsor’s activities or responsibilities under the CMS contract is delegated to other parties, written arrangements must:

• Specify delegated activities and reporting responsibilities of the FDR. If a function is only partially delegated, a description of the responsibilities that have been delegated and which remain with Sponsor.

• Either provide for revocation of the delegation activities and reporting responsibilities described above or specify other remedies in instances when CMS or the Sponsor determine that the parties have not performed satisfactorily.

• Specify that the sponsor on an ongoing basis monitors the performance of the parties.

• Specify that the related entity, contractor, or subcontractor must comply with all applicable laws, regulations, and CMS instructions. Note: Part D contract must refer to federal laws, regulations, and program instructions, while MA contracts must refer to Medicare laws, regulations, and program instructions.

42 CFR § 422.504(i)(4) 42 CFR § 423.505(i)(4) MMCM, Ch. 11, § 100.4 and § 100.5 Medicare Advantage Contract Amendment, Section 9(ii) MMCM, Ch. 21, § 40 and § 50.6.1 PDBM, Ch. 9, § 40 and § 50.6.1 PDP Application, Sections 3.1.1.E.2, 3.1.1.E.8, 3.1.1.E.12, and 3.1.1.E.13

All delegated FDRs All delegated FDRs Yes, for all

delegated FDRs

If Sponsor delegates selection of its providers, contractors, or subcontractors, the contract must state that Sponsor retains the right to approve, suspend, or terminate any such arrangement.

Note: For Part D, this is limited to just “prescription drug providers” rather than “providers, contractors, or subcontractors.”

42 CFR § 422.504(i)(5) 42 CFR § 423.505(i)(5) Medicare Advantage Contract Addendum, Section 9(v) PDP Application, Section 3.1.1.E.14

All delegated FDRs

Prescription drug providers only

Yes, for all delegated FDRs

Contract must specify either (1) the credentials of medical professional affiliated with the party or parties will be either reviewed by the Sponsor, or (2) the credentialing process will be reviewed and approved by the Sponsor and that the Sponsor must audit the process on an on-going basis.

42 CFR § 422.504(i)(4)(iv) MMCM, Ch. 11, § 100.5 Medicare Advantage Contract Amendment, Section 9(iv)

Delegated FDRs for

credentialing only

N/A Yes, for credentialing only

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PHARMACY SPECIFIC REQUIREMENTS

Please refer to the PDP Application, Appendix X-XV for crosswalks for retail pharmacy access contracts, mail order pharmacy access contracts, home infusion pharmacy access contracts, long-term care pharmacy access contracts, and I/T/U pharmacy access contracts.

• Article XIV sets forth detailed elements/terms specific to LTC pharmacy contracts, to which the LTC pharmacy must agree.

• I/T/U pharmacy contracts must contain language consistent with the I/T/U contract model, including with respect to specified topic areas.

PDP Application, Appendix X-XV PDP Application, Appendix XIV PDP Application, Appendix XV

N/A Pharmacy contracts

Yes, in applicable pharmacy contracts.

OTHER SUGGES TED PROVISIONS The following provisions are not specifically required to be in the FDR contract, but are suggested to be either in the FDR contract or in policies and procedures incorporated into the contract (usually through the provider manual) in order to support Sponsor's regulatory obligations to CMS.

For Medicare Advantage: FDR agrees to comply with the reporting requirement in 42 CFR § 422.516 and the requirement in 42 CFR § 422.310 for submitting data to CMS. Note: Given the importance of accurate risk adjustment and encounter data, MA plans may choose to include more robust provisions regarding FDR obligations to provide accurate and complete information relating to delegated services.

For Medicare Part D: FDR agrees to comply with the disclosure and reporting requirements in 42 CFR §§ 423.505(f), 423.514, and the requirements in 42 CFR § 423.329(b) for submitting current and prior drug claims and related information to CMS.

42 CFR § 422.504(a)(8) 42 CFR § 423.505(b)(8)

All FDRs, as applicable to

services provided

All FDRs, as applicable to

services provided

No

The FDR shall certify that any data and other information submitted to the Sponsor and/or CMS are accurate, complete and truthful based on the best knowledge, information, and belief.

42 CFR § 422.504(l)(3) MMCM, Ch. 21, § 40 42 CFR § 423.505(k)(3) PDBM, Ch. 9, § 40

All FDRs All FDRs No

The FDR shall comply with federal laws and regulations designed to prevent and ameliorate fraud, waste, and abuse, including, but not limited to, applicable provisions of federal criminal law, the False Claims Act (31 USC § 3729 et seq.), the anti-kickback statute (Section 1128B(b) of the Act), and the HIPAA administrative simplification rules at 45 CFR Parts 160, 162, and 164.

42 CFR § 422.504(h) 42 CFR § 423.505(h)

All FDRs All FDRs No

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Any entity that receives, processes, transfers, handles, stores, or accesses PHI offshore shall notify the Sponsor of any activities conducted outside the United States by the contractor or under subcontract to the contract where PHI is received, processed, transferred, handled, stored, or accessed offshore.

See CY 2019 Medicare Advantage and Part D Readiness Checklist, Page 13

All FDRs All FDRs No

FDRs may, by contract with the Sponsor, be obligated to require all officers, directors, employees, contractors, and agents of the FDR who have involvement in administration or delivery of health care or health plan services to participate upon hire, and annually thereafter, in training and education with respect to Medicare compliance and anti-fraud and abuse initiatives. Upon the Sponsor’s request, the FDR may be asked to certify compliance with these anti-fraud training and education requirements. Note: CMS has deleted prior regulation formally requiring FDR training. MA and Part D Sponsors may, at their option, continue to impose formal compliance and fraud, waste, and abuse (FWA) training obligations. Sponsors will continue to be obligated to ensure that FDRs engage in certain types of specialized training as a prerequisite to providing certain services (e.g. brokers and agents).

83 Fed. Reg. 16440, 16618-16620 (April 16, 2018) addresses the deletion of the prior FDR compliance and FWA training requirement

All FDRs All FDRs No

The FDR represents and warrants that it does not employ or contract with, and shall not employ or contract with, individuals or entities to perform delegated services who are excluded from participation in federal health care programs or, if applicable, who appear on the CMS preclusion list. 5 FDR shall review the DHHS OIG List of Excluded Individuals and Entities (LEIE list), GSA Excluded Parties List System (EPLS), and, if applicable, the CMS preclusion list prior to the hiring or contracting of any new employee, temporary employee, volunteer, consultant, governing body member, or subcontracted FDR; and monthly thereafter to ensure that none of these persons or entities are excluded from federal health program participation or, if applicable, included on the CMS preclusion list.

FDR shall notify Sponsor immediately of any excluded or precluded individual or entity assigned to perform delegated services and remove such individual or entity from performing such delegated services.

42 CFR § 422.224 and § 422.752(a)(8) 42 CFR § 423.752(a)(6) MMCM, Ch. 21, Section 50.6.8 MPDM, Ch. 9, Section 50.6.8 MA Application, Section 3.4.1 Part D Application, Section 3.1.3

All Contractors (Broader than

FDRs)

All Contractors (Broader than

FDRs)

No, but strongly advised (particularly in light of the new

payment prohibition)

5 MA and Part D sponsors may be subject to intermediate sanctions and civil monetary penalties for employing or contracting with an individual or entity who is excluded from participation in Medicare under Section 1128 or 1128A of the Social Security Act (or with an entity that employs or contracts with an excluded individual or entity).

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Sponsor shall not pay for items or services furnished by the FDR directly or through an excluded or precluded individual or entity.

The FDR acknowledges and agrees that payments received under the agreement are, in whole or in part, from federal funds, and that claims data submitted by Provider will be used for the purposes of obtaining federal reimbursement.

MMCM, Chapter 11, Section 120 All FDRs All FDRs No

FDRs shall not discriminate against enrollees based on their payment status (e.g., providers may not discriminate against enrollees because they receive assistance with their Medicare cost sharing from a state Medicaid agency).

MMCM, Ch. 4, Section 10.5.2 2019 MA/Part D Checklist, p. 21 Providers N/A No

FDR shall comply with obligations under applicable law in furnishing services under the Agreement, including applicable anti-discrimination laws, rules, and requirements, such as Section 1557 of the Patient Protection and Affordable Care Act.

See, MCMG, Section 30.1 MMCM, Ch. 21, Appendix B

All FDRs All FDRs No

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In the Final Compliance Program Guidelines (available at CMS.gov), the Centers for Medicare and Medicaid Services (CMS) specifies the following regarding the terminology it uses: the word "must" reflects requirements created by statute or regulation and the word "should" indicates expectations created by the Compliance Program Guidelines. The last column of this document addresses whether standards are required elements of the compliance program, not necessarily whether they must be included in a contract. The guidance is si lent on whether many of these

elements have to be in the contract. Instead, presumably many of the elements will be brought into the contract through cross references to policies, procedures, manuals, compliance with laws, guidance provisions, etc. CMS will consider a sponsor's size, structure, business model, activities, the extent of its delegation of responsibilities to other entities, the breadth of its operation, and the risks it faces in evaluating whether adequate resources have been devoted to the compliance program.

REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

CORE REQUIREMENTS CMS describes seven elements or "core requirements" that a compliance program must have:

Element 1: Written Policies, Procedures, and Standards of Conduct; Element 2: Compliance Officer, Compliance Committee and High Level Oversight; Element 3: Effective Training and Education; Element 4: Effective Lines of Communication; Element 5: Well Publicized Disciplinary Standards; Element 6: Effective System for Routine Monitoring and Identification of Compliance Risks; and Element 7: Procedures and System for Prompt Response to Compliance Issues.

CMS will not view a compliance program to be effective unless sponsors devote adequate resources to the program. Adequate resources include those that are sufficient to do the following:

1. Promote and enforce its Standards of Conduct; 2. Promote and enforce its compliance program; 3. Effectively train and educate its governing body members, employees and First Tier, Downstream, or Related Entity

(FDRs); 4. Effectively establish l ines of communication within itself and between itself and its FDRs; 5. Oversee FDR compliance with Medicare Part C and D requirements; 6. Establish and implement an effective system for routine auditing and monitoring; and 7. Identify and promptly respond and to risks and findings.

§ 30 Required

1 Section citation is a reference to Chapter 21 of the Medicare Managed Care Manual (MMCM) and Chapter 9 of the Prescription Drug Benefit Manual (PDBM). Chapter 21 is applicable to Medicare Advantage plans and Chapter 9 is applicable to Medicare Part D plans. Identical provisions apply to both.

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

Sponsor Accountability and Oversight of FDRs: • Sponsors may not delegate compliance program administrative functions (e.g., compliance officer, compliance

committee, compliance reporting to senior management, etc.) to entities other than its parent organization or corporate affi l iate.

o However, sponsors may use FDRs for compliance activities such as monitoring, auditing, and training. • Sponsors maintain the ultimate responsibility for fulfi l ling the terms and conditions of its contract with CMS and for

meeting the Medicare program requirements. o CMS may hold the sponsor accountable for the failure of its FDRs to comply with Medicare program

requirements. • Sponsors should have clearly defined processes and criteria to evaluate and categorize all vendors with which they

contract.

§ 40 Required and Expected

ELEMENT I: WRITTEN POLICIES, PROCEDURES, AND STANDARDS OF CONDUCT

Sponsors must have the following in written policies and procedures or in Standards of Conduct that: 1. Articulate the sponsor’s commitment to comply with all applicable federal and state standards; 2. Describe compliance expectations as embodied in the Standards of Conduct; 3. Implement the operation of the compliance program;

4. Provide guidance to employees and others on dealing with suspected, detected, or reported compliance issues; 5. Identify how to communicate compliance issues to appropriate compliance personnel; 6. Describe how suspected, detected, or reported compliance issues are investigated and resolved by the sponsor; and 7. Include a policy of non-intimidation and non-retaliation for good faith participation in the compliance program,

including, but not l imited to, reporting potential issues, investigating issues, conducting self evaluations, audits and remedial actions, and reporting appropriate officials.

§ 50.1 Required

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

• Standards of Conduct should: o Description of the sponsor's expectations that all employees conduct themselves in an ethical manner; that issues of

noncompliance and potential Fraud, Waste, and Abuse (FWA) are reported through appropriate mechanisms and that reported issues will be addressed and corrected.

o Be updated to incorporate changes in applicable laws, regulations, and other program requirements. • Standards may be stated in a separate Medicare-specific stand-alone document or within the corporate Code of Conduct.

o Use top-down approach for compliance such that approval should be by full governing body.

§ 50.1 Expected

Policies and Procedures. Sponsors should update policies and procedures to incorporate changes in applicable laws, regulations, and other program requirements. § 50.1.2 Expected

Distribution of Compliance Policies and Procedures and Standards of Conduct: • Effective, compliance policies and procedures and Standards of Conduct must be distributed to employees who support

the sponsor's Medicare business. o Sponsors should have a method to demonstrate these documents were distributed to employees. o Standards of Conduct should be written in a format that is easy to read and comprehend and translated into

other languages, if necessary. • Sponsors may make their Standards of Conduct and policies and procedures available to their FDRs. Alternatively,

sponsors may ensure that FDRs have comparable Standards of Conduct and policies and procedures of their own. • In order to communicate the sponsor's compliance expectations for FDRs, sponsors should ensure that Standards of

Conduct and policies and procedures are distributed to FDRs' employees. o Sponsors should have a method to demonstrate that Standards of Conduct and policies and procedures were

distributed to FDRs' employees. • Best Practice: Include appropriate contract provisions in the FDR contract, coupled with periodic

monitoring of a sample of FDRs based on risk assessment, including a review of the FDRs' compliance policies and procedures and Standards of Conduct.

50.1.3 Required and Expected

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

ELEMENT II: COMPLIANCE OFFICER, COMPLIANCE COMMITTEE, AND HIGH LEVEL OVERSIGHT

The sponsor must designate a compliance officer and a compliance committee who report directly and are accountable to the sponsor's chief executive or other senior management.

1. The compliance officer, vested with the day-to-day operations of the compliance program, must be an employee of the sponsor (preferred), parent organization, or corporate affi l iate. The compliance officer may not be an employee of an FDR. Sponsors may not delegate the compliance officer position or compliance program functions to first tier or downstream entities.

2. The compliance officer and the compliance committee must periodically report directly to the sponsor's governing body on the activities and status of the compliance program, including issues identified, investigated, and resolved by the compliance program.

3. The sponsor's governing body must be knowledgeable about the content and operation of the compliance program and must exercise reasonable oversight with respect to the implementation and effectiveness of the compliance program.

§ 50.2 Required

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

Compliance Officer: • Sponsors must assess the scope of the existing compliance officer's responsibil ities, the size of the organization, and the

organization's resources when determining whether a single compliance officer can effectively implement the Medicare compliance program and the sponsor's commercial or other governmental business compliance programs.

• The compliance officer must: o Be an employee of the sponsor (which is preferred) or of its parent company or corporate affi l iate. o Have express authority to provide unfiltered, in-person reports to the sponsor's most senior leader, and to the

sponsor's governing body be made through the compliance infrastructure. o Have express authority to provide unfiltered, in person reports to the sponsor’s governing body at his/her

discretion. o The sponsor must ensure that reports from the compliance officer reach the sponsor's senior-most leader. o Be free to raise compliance issues without fear of retaliation.

Best Practice: Require governing body approval before the compliance officer can be terminated from employment.

• The compliance officer should: o Be independent. The compliance officer should not serve in both compliance and operational areas (e.g.,

where the compliance officer is also the Chief Financial Officer (CFO), Chief Operating Officer (COO) or General Counsel (GC)).

o Have training and/or experience working with Medicare Advantage (MA), Medicare Advantage Prescription Drug Plan (MA-PD) or stand-alone Prescription Drug Plan (PDP) programs and with regulatory authorities.

• Best Practice: The compliance officer is a member of senior management

§ 50.2.1 Required and Expected

Compliance Committee: • Sponsors must have a compliance committee in place that oversees the Medicare compliance program. • The compliance committee should:

o Include individuals with a variety of backgrounds that reflects the size and scope of the sponsor. o Be composed of members who have decision-making authority in their respective areas of expertise. o Be composed of members of senior management (e.g., CFO, COO), as well as auditors, pharmacists, registered

nurses, and nationally certified pharmacy technicians on the compliance committee (to the extent their organization has those positions on staff.).

Other committee members might include personnel experienced in legal issues and statistical analyses and staff/managers from various departments within the organization who understand the vulnerabil ities within their respective areas of expertise.

§ 50.2.2 Required and Expected

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

Governing Body: • The sponsor's governing body (e.g., Board of Directors or Board of Trustees) must:

o Exercise reasonable oversight with respect to the implementation and effectiveness of the sponsor's compliance program.

o Receive training and education as to the structure and operation of the compliance program.

• The governing body is not l imited to, but should at a minimum: o Be knowledgeable about compliance program structure, audit results, and enforcement activities. o Understand the measurements of performance to be able to gauge the effectiveness of the compliance

program. o Collect and review measurable evidence that the compliance program is detecting and correcting Medicare

program noncompliance on a timely basis. Best Practice: The governing body should be provided with data showing that the program has

reduced the risks of program noncompliance and fraud, waste, and abuse.

§ 50.2.3

Required and Expected

Senior Management Involvement in Compliance Program: • The CEO and senior management must recognize the importance of the compliance program in the sponsor's success. • When the contract holder engages in multiple l ines of business (e.g., commercial, Medicare, etc.), with each l ine of

business having its own CEO, the senior-most leader of the contract holder must be engaged in compliance program oversight.

• The CEO must: o Receive periodic reports from the compliance officer of risk areas facing the organization, the strategies being

implemented to address them, and the results of those strategies. o Be advised of all governmental compliance enforcement activity, from Notices of Non-compliance to formal

enforcement actions.

§ 50.2.4 Required

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

ELEMENT III: EFFECTIVE TRAINING AND EDUCATION

• The sponsor must establish, implement, and provide effective training and education for its employees, including the CEO, senior administrators or managers, and governing body members.

• The training and education must occur at least annually and be made a part of the orientation for new employees, including the chief executive and senior administrators or managers, governing body members, and FDRs.

• Sponsors must ensure that employees are aware of the Medicare requirements related to their job function.

§ 50.3 Required

General Compliance Training: • The sponsor's employees (including temporary workers and volunteers) and governing body members must, at a

minimum, receive general compliance training within 90 days of initial hiring and annually thereafter. • Sponsors must be able to demonstrate that their employees have fulfi l led these training requirements.

o Examples of proof of training may include copies of sign-in sheets, employee attestations, and electronic certifications from the employees taking and completing the training.

• Sponsors must ensure that general compliance information is communicated to their FDRs. o The sponsor's compliance expectations can be communicated through distribution of the sponsor's Standards

of Conduct and/or compliance policies and procedures to FDRs' employees.

§ 50.3.1 Required

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

Fraud, Waste, and Abuse (FWA) Training: • The sponsor's employees (including temporary workers and volunteers) and governing body members, as well as

FDRs' employees who have involvement in the administration or delivery of Parts C and D benefits must, at a minimum, receive FWA training within 90 days of initial hiring (or contracting in the case of FDRs) and annually thereafter.

• Sponsors have two options for ensuring its FDRs have satisfied the general compliance and FWA training requirement: o FDRs and its employees can complete the general compliance and/or FWA training modules located on the

CMS Medicare Learning Network (MLN). Once the individual completes the training, the system will generate a certificate of completion. The MLN certificate of completion must be accepted by all sponsors.

• FDRs may download, view, or print the content of the CMS standardized training modules from the CMS website to incorporate into their organization’s existing compliance training materials/systems. The CMS training content cannot be modified to ensure the integrity and completeness of the training. However, an organization can add to the CMS training to cover topics specific to their organization. The training materials are available at CMS.gov. Sponsors must provide MLN system-generated completion of certificate or an attestation.

• Sponsors are accountable for maintaining records for a period of 10 years of the time, attendance, topic, certificates of completion (if applicable), and test scores of any tests administered to their employees. Sponsors must require FDRs to maintain records of the training of the FDRs' employees.

• There are exceptions for FDRs who have met the FWA certification requirements through enrollment into Parts A or D of the Medicare Program or through accreditation at a supplier of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS).

§ 50.3.2

June 17, 2015 CMS Memo

Required

ELEMENT IV: EFFECTIVE LINES OF COMMUNICATION

• The sponsor must establish and implement effective l ines of communication, ensuring confidentiality between the compliance officer, members of the compliance committee, the sponsor's employees, managers and governing body, and the sponsor's FDRs.

• Such l ines of communication must be accessible to all and allow compliance issues to be reported including a method for anonymous and confidential good faith reporting of potential compliance issues as they are identified.

§ 50.4 Required

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REQUIREMENTS / ELEMENTS Reference 1 Required (Must) v. Expected (Should)

Effective Lines of Communication Among the Compliance Officer, Compliance Committee, Employees, Governing Body, and FDRs: • Sponsors must have an effective way to communicate information from the compliance officer to others. • The dissemination of information from the compliance officer must be made within a reasonable time and to all

appropriate parties.

§ 50.4.1 Required

Communication and Reporting Mechanisms: • The sponsor's written Standards of Conduct and/or policies and procedures must require all employees, members of

the governing body, and FDRs to report compliance concerns and suspected or actual violations related to the Medicare program to the sponsor.

• Sponsors must have a system in place to receive, record, respond to, and track compliance questions or reports of suspected or detected noncompliance or potential FWA from employees, members of the governing body, enrollees, and FDRs and their employees.

• Reporting systems must maintain confidentiality (to the greatest extent possible), allow anonymity if desired (e.g., through telephone hotlines or mail drops), and emphasize the sponsor's /FDR's policy of non-intimidation and non-retaliation for good faith reporting of compliance concerns and participation in the compliance program.

• Sponsors must adopt, widely publicize throughout the sponsor’s or FDR’s facil ities, and enforce a no-tolerance policy for retaliation or retribution against any employee or FDR who in good faith reports suspected FWA.

o Employees and FDRs must be notified that they are protected from retaliation for False Claims Act complaints, as well as any other applicable anti-retaliation protections.

• Sponsors must make the reporting mechanisms user friendly, easy to access and navigate, and available 24 hours a day for employees, members of the governing body, and FDRs.

o Best Practice: Sponsors establish more than one type of reporting mechanism to account for the different ways in which people prefer to communicate or feel comfortable communicating.

o Best Practice: When a suspected compliance issue is reported, sponsors should provide the complainant with information regarding expectations of a timely response, confidentiality, non-retaliation, and progress reports.

§ 50.4.2 Required

Enrollee Communications and Education: • Sponsors must educate their enrollees about identification and reporting of potential FWA. Education methods may

include flyers, letters, and pamphlets that can be included in mailings to enrollees (such as enrollment packages, Explanation of Benefits (EOB), and information published on sponsor websites).

§ 50.4.3 Required

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ELEMENT V: WELL-PUBLICIZED DISCIPLINARY STANDARDS

Sponsors must have well-publicized disciplinary standards through the implementation of procedures that encourages good faith participation in the compliance program by all affected individuals. These standards must include policies that:

1. Articulate expectations for reporting compliance issues and assist in their resolution; 2. Identify noncompliance or unethical behavior; and 3. Provide for timely, consistent, and effective enforcement of the standards when noncompliance or unethical behavior is

determined.

§ 50.5 Required

Disciplinary Standards: • Sponsors must establish and implement disciplinary policies and procedures that reflect clear and specific disciplinary

standards. • The disciplinary policies must:

o Describe the sponsor's expectations for the reporting of compliance issues (including noncompliant, unethical or i l legal behavior), employee participation in required training, and employee assistance in the resolution of reported compliance issues.

o Identify noncompliant, unethical or i l legal behavior through examples of violative conduct that employees might encounter in their jobs.

o Provide for timely, consistent, and effective enforcement of the standards when noncompliant or unethical behavior is found.

o Establish disciplinary actions that are appropriate to the seriousness of the violation.

§ 50.5.1 Required

Methods to Publicize Disciplinary Standards. Standards must encourage good faith participation in the compliance program and sponsors must publicize disciplinary standards for employees and FDRs. The standards should include the duty and expectation to report issues or concerns.

§ 50.5.2 Required

Enforcing Disciplinary Standards: • Sponsors must be able to demonstrate to CMS that disciplinary standards are enforced in a timely, consistent, and

effective manner. • Records must be maintained for a period of 10 years for all compliance violation disciplinary actions, capturing the date

the violation was reported, a description of the violation, date of investigation, summary of findings, disciplinary action taken, and the date disciplinary action was taken.

• Best practice: Publish de-identified disciplinary action in employee publications, such as a newsletter, in order to demonstrate to employees that disciplinary action is imposed for violations.

§ 50.5.3 Required

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ELEMENT VI: EFFECTIVE SYSTEM FOR ROUTINE MONITORING, AUDITING, AND IDENTIFICATION OF COMPLIANCE RISKS

• Sponsors must establish and implement an effective system for routine monitoring and identification of compliance risks. • The system should include internal monitoring and audits and, as appropriate, external audits to evaluate the sponsor's and

FDRs' compliance with CMS requirements, including the overall effectiveness of the compliance program. § 50.6 Required

Routine Monitoring and Auditing: • Sponsors must:

o Undertake monitoring and auditing to test and confirm compliance with Medicare regulations, sub-regulatory guidance, contractual agreements, and all applicable federal and state laws, as well as internal policies and procedures to protect against Medicare program noncompliance and potential FWA.

o Develop a monitoring and auditing work plan that addresses the risks associated with the Medicare Parts C and D benefits.

o Have a system of ongoing monitoring and auditing that is reflective of its size, organization, risks, and resources to assess performance in, at a minimum, areas identified as being at risk.

The monitoring and auditing work plan must be coordinated, overseen and/or executed by the compliance officer, assisted if desired by the compliance department staff and/or the compliance committee. The compliance officer may coordinate with the audit department, if any, in connection with these activities.

• The compliance officer must receive regular reports from the audit department or from those who are conducting the audits regarding the auditing results, including the status and effectiveness of corrective actions taken.

• Compliance officer should provide updates on monitoring and auditing results to the compliance committee, the CEO, senior leadership, and the sponsor’s governing body.

§ 50.6.1 Required

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Development of a System to Identify Compliance Risks: • Sponsors must establish and implement policies and procedures to conduct a formal baseline assessment of the sponsor's

major compliance and FWA risk areas, such as through a risk assessment. • The sponsor's assessment must take into account all Medicare business operational areas.

o Each operational area must be assessed for the types and levels of risks the area presents to the Medicare program and to the sponsor.

• Risks identified by the risk assessment must be ranked to determine which risk areas will have the greatest impact on the sponsor, and the sponsor must prioritize the monitoring and auditing strategy accordingly.

• There must be ongoing review of potential risks of noncompliance and FWA, as well as a periodic re-evaluation of the accuracy of the sponsor's baseline assessments.

• Risk areas identified through CMS audits and oversight, as well as through the sponsor's own monitoring, audits, and investigations, are priority risks. o The results of the risk assessment inform the development of the monitoring and audit work plan.

§ 50.6.2 Required

Development of Monitoring and Auditing Work Plan: • Once the risk assessment has been completed, a monitoring and auditing work plan must be developed. • Sponsors must include in their work plans a process for responding to all monitoring and auditing results and for

conducting follow-up reviews of areas found to be non-compliant to determine if the implemented corrective actions have fully addressed the underlying problems.

• Corrective action and follow-up should be led or overseen by the compliance officer and assisted, if desired, by the compliance department staff. It should include actions such as reporting findings to CMS or to the National Benefit Integrity (NBI) MEDICS, if necessary.

§ 50.6.3 Required and Expected

Audit Schedule and Methodology: • The work plan must include a schedule that l ists all of the monitoring and auditing activities for the calendar year. • Sponsors must audit their operational areas and those of their first tier entities.

o Best Practice: Sponsors use a combination of desk and on-site audits, including, as appropriate and as permitted by contractual agreements, unannounced audits or "spot checks" when developing the work plan.

• Sponsors should prepare a standard audit report that includes items such as: audit objectives, scope and methodology, findings, condition, criteria, cause, effect, and recommendations.

• In developing the types of audits to include in the work plan, sponsors must: o Determine which risk areas will most l ikely affect the sponsor and prioritize the monitoring and audit strategy

accordingly. o Util ize appropriate methods in:

Selecting sponsor facilities, pharmacies, providers, claims, and other areas for audit;

§ 50.6.4 Required and Expected

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Determining appropriate sample size; Extrapolating audit findings using statistically valid methods that comply with generally accepted auditing

standards to the full universe; and Applying targeted or stratified sampling methods driven by data mining and complaint monitoring.

o Use special targeted techniques based on aberrant behavior. o Assess compliance with internal processes and procedures. o Examine the performance of the compliance program, including a review of training, reporting mechanisms (e.g.,

hotline log); investigation fi les; OIG/GSA exclusion l ist screenings; evidence of employee receipt of Standards of Conduct and conflict of interest disclosures/attestations; and sampling for evidence in support of attestations, if the sponsor uses attestations to monitor compliance.

o Conduct follow up review by auditing, monitoring or otherwise of areas previously found non-compliant to determine if the implemented corrective actions have fully addressed the underlying problem.

Audit of the Sponsor's Operations and Compliance Program: • The compliance officer and compliance committee must ensure the implementation of an audit function appropriate

to the sponsor's size, scope, and structure. • Adequate resources must be devoted to the audit function considering factors such as size and scope of the

sponsor's Medicare Part C and D programs, its compliance history, current compliance risks, and the amount of resources necessary to meet the goals of its annual work plan.

• Participants in the audit function must be knowledgeable about CMS operational requirements for the areas under review.

• Sponsors must: o Ensure that auditors are independent and do not engage in self-policing.

Operations staff may assist in audit activities provided the assistance is compatible with the independence of the audit function.

o Audit the effectiveness of the compliance program. The results must be shared with the governing body. • Audits of the compliance program should occur at least annually.

§ 50.6.5 Required

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Monitoring and Auditing FDRs: • Sponsors are responsible for the lawful and compliant administration of the Medicare Parts C and D benefits

under their contracts with CMS, regardless of whether the sponsor has delegated some of that responsibility to FDRs.

• The sponsor must: o Develop a strategy to monitor and audit its first tier entities to ensure that they are in compliance with all

applicable laws and regulations, and to ensure that the first tier entities are monitoring the compliance of the entities with which they contract (the sponsors' "downstream" entities).

o Monitor any related entities to ensure those entities are compliant with all applicable laws and regulations. o Include in its work plan the number of first tier entities that will be audited each year and how the entities will

be identified for auditing. Best Practice: Sponsors should conduct a number of on-site audits.

o Conduct specific monitoring of first tier entities to ensure they fulfi l l the compliance program requirements. When a sponsor has a large number of first tier entities, thereby making it impractical and/or cost

prohibitive to monitor or audit all first tier entities for all compliance program requirements, the sponsor may perform a risk assessment to identify its highest risk first tier entities, then select a reasonable number of first tier entities to audit from the highest risk groups.

Monitoring of first tier entities for compliance program requirements must include an evaluation to confirm that the first tier entities are applying appropriate compliance program requirements to downstream entities with which the first tier contracts.

• Best Practice: When FDRs perform their own audits, sponsors should obtain a summary of the audit work plan and audit results that relate to the services the FDR performs.

§ 50.6.6 Required

Tracking and Documenting Compliance and Compliance Program Effectiveness: • Sponsors should track and document compliance efforts. • Best Practice: Sponsors should regularly track and document compliance using dashboards, scorecards, and self-assessment

tools that the sponsor creates or purchases, as well as other mechanisms that show the extent to which operational areas and FDRs are meeting compliance goals.

• Compliance of operational areas should be tracked by management and publicized to employees.

§ 50.6.7 Expected

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OIG/GSA Exclusion: • Sponsors must review the U.S. Department of Health and Human Services Office of Inspector General (DHHS OIG)

List of Excluded Individuals and Entities (LEIE l ist) and the System for Award Management (SAM) prior to the hiring or contracting of any new employee, temporary employee, volunteer, consultant, governing body member, or FDR. Sponsors must review these l ists monthly thereafter to ensure that none of these persons or entities are excluded or become excluded from participation in federal programs. NOTE: The Excluded Parties List System (EPLS) was replaced on Nov. 21, 2012 by the System for Award Management (SAM), which combines federal procurement systems and the Catalogue of Federal Domestic Assistance into one new system.

§ 50.6.8 Required

Use of Data Analysis for Fraud, Waste, and Abuse Prevention and Detection: • Sponsors must perform effective monitoring in order to prevent and detect FWA. • Sponsors may accomplish this through the use of data analysis.

o Data analysis should: Establish baseline data to enable the sponsor to recognize unusual trends, changes in drug util ization,

over time, physician referral or prescription patterns, and plan formulary composition over time; Analyze claims data to identify potential errors, inaccurate TrOOP accounting, and provider bil l ing

practices and services that pose the greatest risk for potential FWA to the Medicare program; Identify items or services that are being over util ized; Identify problem areas within the plan such as enrollment, finance, or data submission; Identify problem areas at the FDR (e.g., pharmacy benefit manager (PBM), pharmacies, pharmacists,

physicians, other health care providers and suppliers); and Use findings to determine where there is a need for a change in policy.

• Sponsors should routinely generate and review reports to identify FDRs that need further review.

§ 50.6.9 Required and Expected

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Special Investigation Units (SIUs): • An SIU is an internal investigation unit, often separate from the compliance department, responsible for conducting

surveil lance, interviews, and other methods of investigation relating to potential FWA. • Depending on the size of and resources available within the organization, sponsors must either establish a specific SIU

or ensure that responsibilities generally conducted by an SIU are conducted by the compliance department. • Sponsors are not expected to perform law enforcement activities and may refer all matters indicative of FWA to the NBI

MEDIC or law enforcement. • SIUs must:

o Be accessible through multiple channels such as via phone or text, email, Internet message submission, and regular U.S. mail.

o Ensure that suspicions of FWA can be reported anonymously to the SIU. o Ensure that the SIU and compliance department communicate and coordinate closely to ensure that the Medicare

Parts C and D benefits are protected from fraudulent, abusive and wasteful schemes throughout the administration and delivery of benefits, both at the sponsor and FDR levels.

§ 50.6.10 Required and Expected

Auditing by CMS or its Designee: • Sponsors must allow access to any auditor acting on behalf of the federal government or CMS to conduct an on-site

audit. • Sponsors and FDRs must provide records to CMS or its designee. • Sponsors and FDRs are required to cooperate with CMS and CMS's contractors, such as the NBI MEDICs. This

cooperation includes providing CMS and/or the NBI MEDICs or other contractors access to all requested records associated in any manner with the Parts C or D program.

§ 50.6.11 Required

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ELEMENT VII: PROCEDURES AND SYSTEM FOR PROMPT RESPONSE TO COMPLIANCE ISSUES Sponsors must establish and implement procedures and a system for promptly responding to compliance issues as they are raised. investigating potential compliance problems as identified in the course of self-evaluations and audits, correcting such problems promptly and thoroughly to reduce the potential for recurrence, and ensuring ongoing compliance with CMS requirements.

1. If the sponsor discovers evidence of misconduct related to payment or delivery of items or services under the contract, it must conduct a timely, reasonable inquiry into that conduct.

2. The sponsor must conduct appropriate corrective actions (for example, repayment of overpayments, disciplinary actions against responsible individuals) in response to the potential violation referenced above.

3. The sponsor should have procedures to voluntarily self-report potential fraud or misconduct related to the Medicare program to CMS or its designee (such as the NBI MEDIC).

§ 50.7 Required

Conducting a Timely and Reasonable Inquiry of Detected Offenses: • Sponsors must:

o Conduct a timely and well-documented reasonable inquiry into any compliance incident or issue involving potential Medicare program noncompliance or potential FWA.

o Initiate a reasonable inquiry as quickly as possible, but not later than two weeks after the date the potential noncompliance or potential FWA incident was identified.

o Report the matter within 30 days to NBI MEDIC if the sponsor does not have time or resources to investigate timely. o Monitor for FWA and Medicare program noncompliance within their organizations.

• When serious noncompliance, waste, or potential fraudulent or abusive activity is identified, CMS strongly encourages sponsors to refer the matter to CMS or the appropriate MEDIC.

§ 50.7.1 Required and Expected

Corrective Actions. Sponsors must undertake appropriate corrective actions in response to potential noncompliance or potential FWA. • Corrective actions must:

o Be designed to correct the underlying problem that results in program violations and to prevent future noncompliance. o Be tailored to address the particular FWA, problem or deficiency identified. The corrective actions must include

timeframes for specific achievements. • Sponsors must:

o Ensure that FDRs have corrected their deficiencies. o Continue to monitor corrective actions after their implementation to ensure they are effective. o Document the elements of the corrective action, along with ramifications if the corrective action is not satisfactorily

implemented, when noncompliance or FWA is committed by the sponsor's employee(s) or FDRs. o Enforce effective correction through disciplinary measures, including employment or contract termination, if

§ 50.7.2 Required

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warranted. o Thoroughly document and maintain all deficiencies identified and corrective actions taken.

Procedures for Self-Reporting Potential Fraud, Waste, and Abuse and Significant Non Compliance: • Self-reporting of FWA and Medicare program noncompliance is voluntary. • CMS nonetheless strongly encourages self-reporting as an important practice in maintaining an effective

compliance program. • Sponsors should self-report potential FWA discovered at the plan level and potential fraud and abuse by FDRs, as

well as significant waste and significant incidents of Medicare program noncompliance. • Sponsors are required to investigate potential FWA activity to make a determination whether potential FWA has

occurred. • Sponsors must conclude investigations of potential FWA within a reasonable time period after the activity is

discovered. o If after conducting a reasonable inquiry, the sponsor (e.g., the compliance officer or SIU) determines that

potential FWA related to the Medicare Parts C or D programs has occurred, the matter should be promptly referred to the NBI MEDIC. Sponsors should also refer potential FWA at the FDR levels to the NBI MEDIC so that the NBI MEDIC can help identify and address any scams or schemes.

§ 50.7.3 Required and Expected

NBI MEDIC. Sponsors should refer cases involving potential fraud or abuse that meet any of the following criteria to the NBI MEDIC:

• Suspected, detected, or reported criminal, civil, or administrative law violations; • Allegations that extend beyond the Parts C and D plans, involving multiple health plans, multiple states, or widespread

schemes; • Allegations involving known patterns of fraud; • Pattern of fraud or abuse threatening the l ife or well-being of beneficiaries; and • Scheme with large financial risk to the Medicare program or beneficiaries.

§ 50.7.4 Expected

Responding to CMS-Issued Fraud Alerts: • When a Fraud Alert is received, the sponsor should review its contractual agreements with the identified parties

and must review past paid claims from entities identified in a Fraud Alert. • CMS guidance states that it would be appropriate for the sponsor to consider terminating the contract(s) with the

identified parties if law enforcement has issued indictments against particular parties and the terms of the sponsor's contract(s) authorizes contract termination in those circumstances.

§ 50.7.6 Expected

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Identifying Providers with a History of Complaints: • Sponsors must comply with requests by law enforcement, CMS and CMS’s designee regarding monitoring of

providers within the sponsor's network that CMS has identified as potentially abusive or fraudulent. • Sponsors should maintain fi les for a period of 10 years on both in-network and out-of-network providers who

have been the subject of complaints, investigations, violations, and prosecutions.

§ 50.7.7 Required and Expected