• Health Care Providers' Bill of Rights Helps Physicians with HMO Contracts
  • December 9, 2003 | Author: Frank E. Gamma
  • Law Firm: Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP - San Francisco Office
  • California physicians will benefit when the "Health Care Providers' Bill of Rights" (A.B. 2907), a bill sponsored by the California Medical Association, becomes effective on January 1, 2003. The bill will prevent HMOs from including in their contracts several problematic provisions that have become common in HMO contracts. The new law applies to contracts that are issued, amended or renewed on or after January 1, 2003. The following are some of the key protections included in the bill:

    1. Unilateral Contract Amendments
    Physicians may not be required to accept unilateral contract amendments except when the amendment is necessary to comply with state or federal law, regulations or accreditation standards. Many HMO contracts have allowed the HMOs to unilaterally amend key provisions, including compensation terms. The bill's protection applies to any "material change" to the contract. Although this standard is subjective, it basically means that a material change is a provision that a reasonable person would find important. If a Plan wants to make a change by amending a manual, policy, or procedure document that is referenced in the contract, the Plan now must provide at least 45 business days' notice of its intent to amend, and physicians must have the right to terminate the contract prior to the implementation of the change.

    2. PPO Contract Amendments
    Although the bill primarily covers HMO contracts, physicians may not be required to accept unilateral contract amendments to PPO contracts, except on 45 business days' notice, and the physician must have the right to terminate the contract prior to the implementation of the change.

    3. Assignment of Patients
    Physicians may not be required to accept additional patients beyond the contracted number. If there is no contracted number, then the physician may refuse to accept more patients if, in the physician's "reasonable professional judgment," accepting additional patients would endanger patients' access to, or continuity of, care. As many IPAs and HMOs have gone bankrupt, health plans have tried to reassign large blocks of patients to IPA and other medical groups.

    4. Quality Improvement and Utilization Management Provisions
    Physicians may not be required to comply with such QI or UM programs or procedures unless they are fully disclosed at least 15 days before the contract is executed. Usually HMO contracts would make reference to these documents, thus incorporating them by reference as part of the contract, but would never provide copies unless the physician requested such copies. This provision requires an affirmative act by the HMO to provide the provisions or they will not be enforceable. Any changes to these programs may only be made in compliance with the above-referenced amendment provisions.

    5. Waiver of Knox-Keene Protections
    Physicians may not be required to agree to contract terms that waive or conflict with any provision of the Knox-Keene Act. There are protections built into the Knox-Keene Act for providers; for example, the Act requires payment of a complete claim within a certain number of days. HMOs have tried to have providers waive the protections by including such waivers in the contract. Those provisions will not be enforceable in most cases.

    How to Determine if Your Contracts will be Covered By The New Law
    Physicians and medical groups must realize that this bill applies only to contracts "issued, amended, or renewed on or after January 1, 2003." As noted above, the bill applies primarily to health plans regulated by the Knox-Keene Act. These plans include all the HMOs but also Blue Cross of California and Blue Shield of California.

    Many HMO contracts, including IPA contracts, have been in place for many years and have rolled over automatically. There are also many contracts that do not formally roll over from year to year, but rather continue on unless one of the other parties provide a without-cause termination notice or the contract is terminated for cause.

    Physicians should carefully review the term and termination provisions in their HMO contracts to determine whether they continue indefinitely, renew automatically, or are renewed only with a specific action by one or both parties. If the contract will not be renewed or amended any time soon, it may be possible to initiate some sort of action that will trigger an amendment or renewal and thus trigger the protections in this new law.