Medicare/Medicaid Contracts: When the Contract Can Benefit the Provider

Depending on the clauses, contracts can be your worst enemy or your savior.

Today I pose a very important question to you. Do your participation contracts that you sign with Medicare/Medicaid, managed care organizations (MCOs), and Medicare Administrative Contractors (MACs) – do they even matter? Are these boilerplate contracts worth the ink and the paper upon which they written?

The answer is yes and no.

To the extent that the contracts are aligned with applicable federal and state regulations, they are enforceable. To the extent that the contracts violate federal regulations, those clauses are unenforceable. The contracts can even, at times, be more stringent or contain more limitations than the federal regulations. One thing is for sure: these contracts can be your worst enemy or your savior, depending on the clauses.

An Idaho client provider of mine has been the victim of Optum “black hole-ism.” In this case, a contract provision will save my client from paying $500,000 it does not owe.

My client is the leading substance abuse mitigation provider in Idaho. Optum is managing Medicaid dollars, which makes it the agent of the “single state agency,” the Department of Health of Idaho, pursuant to 42 C.F.R. 431.10.

The Optum provider contract states that “it is agreed that the parties knowingly and voluntarily waive any right to a dispute if arbitration is not initiated within one year after the dispute date.” What a great clause. If only all contracts had this limiting clause.

In our dispute, as noted, Optum argues we owe $500,000. The first demand we received was dated December 2018, for dates of service (DOS) in 2016 and 2017. Notice that Optum was timely back in 2018. That was when the client hired my team, and we submitted a rebuttal and initiated the informal appeal to Optum.

Here was where Optum got sloppy. Months passed. A year passed. I hear crickets in the background. A year and a half passed. Who knows why Optum took a year and a half to respond? COVID happened. Was it bureaucracy and red tape? Apathy? Ineptness?

Finally, we get a response in September 2020. We respond in October 2020. Our new response included a novel argument that was not included in the 2018 rebuttal. Our argument went something like: “you’re too late, per section 7.1 of the Optum contract.” If we could have included a raspberry, we would done so.

Remember the clause? “It is agreed that the parties knowingly and voluntarily waive any right to a dispute if arbitration is not initiated within one year after the dispute date.”

Well, 2020 is 3-4 years after the initial DOS at issue: 2016-2017. This time, the boilerplate contract was our friend.

Since there is also an arbitration clause, which is not your friend, we will be wholly dependent on an arbitrator to interpret the one-year limiting clause in a logical, reasonable fashion. But I will be shocked if even an arbitrator doesn’t throw out this case with prejudice.

Programming Note: Listen to Knicole Emanuel’s RAC Report on Mondays on Monitor Mondays, 10 Eastern.