Make insurer settlement agreements good for long term

If you have had any experience with insurer settlement agreements, you know this -- that just because you have an agreement doesn't mean things are actually settled.

An insurer settlement agreement is often signed by physicians and insurers to resolve litigation in regard to unpaid claims by the insurer. The agreement sets forth billing procedures and payment for all unpaid and future claims submitted.

So how does such a deal get undone? Changes in both the insurer and the practice can result in attempts to circumvent the deal, as one physician client of mine recently learned. For years, his insurer had adhered to its settlement agreement. But after that company was bought by another company, the physician noticed that he again was having problems with repeated denials and delayed payment of claims (past a 30-day window set in the deal).

This column will focus on the key contract areas that physicians should consider prior to executing a settlement agreement with an insurance carrier regarding payment terms, billing procedures and practices, releases, and successors and assigns. It also will talk about how to handle the situation if an insurer tries to wiggle out of the deal.

Payment terms. The settlement agreement my client signed specifically addressed each instance of claim denial and downcoding, and set forth review and payment provisions. In some instances, they were more favorable than the terms of the provider agreement. I also included specific language in the settlement agreement to hold the insurance company accountable for facilitating medical review of any disputed claims and timely processing of clean claims in relation to the provider agreement and state regulations. (Since the deal, my client's state has enacted a prompt-payment law, which almost all states have, requiring timely payment of "clean claims.")

In the settlement agreement, I had designated and identified a principal contact person to handle all claim and appeals processing. However, with the passage of time and merger of insurance companies the designated contact person was no longer employed by the insurance company.

Unfortunately, my client kept getting the runaround every time he contacted the insurance company because none of the company's current employees knew about the settlement agreement and its payment terms. I contacted the insurance company's legal department and had to provide a copy of the executed agreement.

One of the issues raised by the insurance company's attorney was payment for surgical procedures for claims submitted by a physician who had not been employed by the practice when the settlement agreement was executed. I pointed out to the insurance company's attorney that the settlement agreement encompassed all claims submitted by the current and future shareholders, employees, and independent contractors of the practice, including all professional services rendered by physicians and other health care professionals.

You should have that sort of language in your deal, as well as language that gives you sufficient latitude to bill for future professional services by other doctors and ancillary service providers pursuant to the agreed-upon terms. That way, your agreement is good for the long term.

Billing procedures and practices. With respect to all denied claims and to future claims, the insurance company did agree to promptly pay all claims and to notify the practice of any initial claim determination in writing within 30 days from the date of the submission of the claim.

The insurance company also agreed to accept billings and documentation by facsimile, which expedited the claims processing.

During my discussions with the insurance company's attorney regarding enforcement of the settlement agreement, I also indicated that the settlement agreement stated that the insurance company had agreed to cease and desist from denying claims on the grounds of medical necessity in the absence of a review by the insurance company's medical director.

To the extent that a potential issue of medical necessity arises in good faith as part of a claims determination, the insurance company had agreed to promptly request those records necessary for its medical director to make an informed professional judgment on the basis of medical necessity.

I had included language in the settlement agreement that provided that in the absence of good cause shown, the insurance company would not engage in repeated requests for medical documentation and would reimburse the physician and practice for the costs incurred by the practice with respect to any request for medical records beyond the initial request for documentation.

This language proved to be effective leverage during my discussions with the insurance company's attorney to enforce the agreement and reinstitute the previously agreed-upon billing procedures and practices.

Releases. In consideration of the settlement amount paid by the insurance company to the practice for the denied claims and the terms of the agreement, my client had agreed to dismiss the lawsuit filed against the insurance company within 30 days of signing the settlement agreement.

I had included mutual releases for both parties regarding the claims at issue up to and including the date of the agreement.

It is important that you reserve the right to pursue all available legal remedies, including administrative and judicial processes, if the insurance company violates the terms of the settlement agreement.

You might consider including a provision which states that the parties agree that the release in the settlement agreement does not operate to bar any claims arising out of the obligations and representations set forth in the agreement.

Successors and assigns. You should also consider including a provision in your settlement agreement that binds not only the insurance company to the terms of the agreement, but also binds any future individuals or entities with which the insurance company merges or transfers or assigns ownership.

If you have to contact an insurance company years after an executed settlement agreement to enforce agreed-upon payment and billing procedures and practices, you can make sure, with the right language, that you have the documentation you need to ensure a plan cannot try to wriggle out of a deal.