Health Net physicians recently received a contract addendum intended to bring the health plan into compliance with the RICO settlement agreement. CMA has analyzed the addendum and the underlying contract and found that both contain language that not only violates the settlement terms, but also in many ways violates the Knox-Keene Act.

Among other things, the definition of “medically necessary” in the addendum and the underlying contract are inconsistent with the terms of the settlement agreement. The contract requires contracting physicians to participate in all of Health Net’s products, despite the fact that the plan agreed in the settlement not to require universal participation in its products. And should physicians decide to terminate their Health Net contracts to renegotiate compensation rates, they could be slammed with a “renegotiation fee” that is equal to 3 percent of their Health Net payments for the previous 12 months.

CMA has filed a dispute with the compliance dispute facilitator. Stay tuned to future issues of CMA Alert for more information on the dispute and its resolution.

A detailed analysis of the contract, and its flaws, is available to members at the members-only website.

CMA reminds physicians that before signing a health plan contract, it is important to know what value that relationship will bring to your practice. Physicians do not have to accept bad contracts or contracts that are not mutually beneficial.

To help physicians negotiate and manage complex third-party payor agreements, CMA has published a contracting toolkit, “Taking Charge: Steps to Evaluating Relationships and Preparing for Negotiations—A Focus on Payor Contracting.”This toolkit is available free to members at the members-only website Nonmembers can purchase the toolkit for $100 in the CMA bookstore.

Contact: Aileen Wetzel, 916/444-5532 or awetzel@cmanet.org.