Blog Archives

Medicare Advantage: “Termination At Will” Clauses Legal?

Providers who contract with Medicare Advantage Organizations (“MAO”) need to know that even though the MAO is a private company, because it manages federal Medicare money, the Medicare regulations are applicable – and, possibly, not the contract that you were forced to sign. When any entity accepts the responsibility of getting tax dollars – a firehose of tax dollars, no less – prepaid – then that entity answers to all tax payers for their actions and that entity must follow the Medicare regulations.

Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by MAOs that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D). Health care providers can contract to be in the plan’s network. MAOs include BCBS, Humana, Anthem, UnitedHealthcare, Cigna, and Aetna.

Just for an example, I pulled up the provider agreement for BCBS. Section 6.2 allows termination by either party with 60 days notice; this is the “termination at will” clause. Theoretically, BCBS or any MAO could terminate contracts with small providers and decide to contract only with larger providers. Or contract with only African-American providers. Or contract with only female-owned companies. Or contract with the providers that the CEO likes. I disagree with a termination at will clause that allows a company with so much Medicare money at its fingertips the authority to only contract with whom it wants or likes. In fact, I believe a termination at will clause violates the law.

The Courts are split on this issue. See blog.

42 CFR Section 422, et al, outlines the regulations for Medicare Advantage.

According to CMS, in order for a MAO to “Suspend, Terminate, or Not-renew Physician Contracts” specific requirements for an MA organization that operates a coordinated care plan or network MSA plan providing benefits through contracting physicians and that suspends, terminates, or non-renews a physician’s contract are as follows:

  1. The MA organization must give the affected physician written notice of the reasons for the action, including, if relevant, the standards and profiling data used to evaluate the physician and the numbers and mix of physicians needed by the MA organization.
  2. The MA organization must allow the physician to appeal the action, and give the physician written notice of his/her right to a hearing and the process and timing for requesting a hearing.
  3. The MA organization must ensure that the majority of the hearing panel members are peers of the affected physician.

42 CFR 422.202(c) and (d) and preamble of February 17, 1999, rule.

In sum, MAOs are required to provide appeal rights for any Medicare contract that is terminated. But, doesn’t that contradict with a “termination at will” clause?

Williams Mullen Hosts “The State of the State of Health Care” Panel Discussion

Williams Mullen is hosting a free panel discussion on “The State of the State of Health Care.”  Please see below!

The panelists will be Rep. Nelson Dollar, Steven Keene, General Counsel to the NC Medical Society, Barbara Burke, from BCBS, and me.  The panel discussion will begin at 4:00.  Then from 5:00-6:30 we will have free drinks and appetizers.

Please feel free to come and bring others.  But we do request that you register here by October 10th in order for us to have a correct head count.

panel