TERM AND TERMINATION PROVISIONS – Class 7

Impact on  Providers by Termination Provisions in Managed Care Contracts that include Post Contractual Obligations:

  • Managed care contracts with providers may include termination provisions that include post contractual obligations.
  • Termination provisions that include post contractual obligations may require the provider to continue providing care to covered managed care members at the specified contract rate for an indefinite period following termination or expiration of contract.
  • Providers usually seek to limit post-termination services to a fixed length of period (example: 60 – 90 days).
  • Providers usually seek to limit post-termination services to a fixed length of period and demand usual and customary charges if required to provide services beyond the initial period.

Term and Termination provisions:

“Evergreen clause” – permitting automatic renewal unless one party gives written notice of termination prior to the renewal date.

If provider is unsure of stability of MCO – provider might want a short fixed term without renewals or fixed contract term for several years with a renegotiation of rates annually clause – here current rates would remain in effect until the parties reach agreement with the new rates being effective retroactively to the commencement of the new term.

Form termination provisions may lean in favor of MCO by specifying in detail events in which MCO may terminate contract, but be less detailed for providers.

Often providers may seek to terminate agreement for failure to make payments, upon dissolution or bankruptcy of MCO or payer, or upon loss of any insurance, HMO or other licensure.

Termination provisions often include post contract obligations – such as continue providing care to covered subscriber at contract rate for an indefinite period following termination or expiration of contract. Providers usually seek to limit post-termination services to a fixed length of period (example: 60 – 90 days) and demand usual and customary charges if required to provide services beyond the initial period.

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