Physicians and Contracts: A Cautionary Tale

A conversation yesterday with one of my colleagues reminded me of this issue. So forgive me if I reference some articles that are a few weeks old.

The relevant news article by Lisa Girion was in the Los Angeles Times the beginning of November. The issue was that a major California insurer, Blue Cross of California, a subsidiary of Wellpoint Inc, was accused of putting a confidentiality provision into its contracts with physicians and hospitals that prevented them from consulting lawyers for their help in contract negotiation:

The state stepped into a bitter battle Thursday between Blue Cross of California and the doctors, hospitals and medical labs that serve about 700,000 people covered by the state's largest health plan.

At issue is the contentious financial relationship between medical providers and Blue Cross, which the state's top HMO regulator warned might worsen the plight of California's struggling hospitals.

The dispute began this year when Blue Cross sought to require hospitals, physicians and labs to sign a confidentiality agreement that would prevent them from publicly discussing fee negotiations.

But the providers balked, saying it prevented them from using lawyers and other outside consultants to represent them in fee negotiations, a routine practice.

If they refuse to go along with the rules Blue Cross lays down for the negotiations, the providers say, the health plan threatens to stop sending them patients.

On Thursday, the Department of Managed Health Care issued a cease-and-desist order forbidding Blue Cross to continue its efforts.

This tactic seems, at a minimum, grossly unfair to the physicians and hospitals. It is not the first time a Wellpoint insurer has been accused of unfair practices that seem to contradict its high toned statement of "commitments"

Note that a recent American Medical News article discussed some of the technical aspects of confidentiality provisions that may appear in contracts.

But the larger issue here to me is the problems physicians have when confronted with the prospect of signing contracts. As Lisa Girion wrote in the LA Times article,

Francisco Silva, a legislative advocate for the California Medical Assn., said the physicians' organization was disappointed that the order failed to address contracts that already had been signed by providers.

'We were hoping for something broader,' he said of the order. 'While it clearly indicates that the confidentiality agreement in the contracts was illegal, it did not go back and declare the existing contracts void.'

Silva said he believed hundreds of physicians had signed contracts that they negotiated on their own because they felt they had no choice. 'For some of these physicians, particularly if they are small offices, they don't have the ability to negotiate with the most powerful insurance company in the state,' he said.

This alludes to two linked phenomena:

• Physicians are often confronted with contracts that others, including large and powerful organizations, wish them to sign.
• Physicians often feel they MUST sign these contracts, even if they do not understand them, or fear they contain provisions that will disadvantage the physicians or their patients.

This was discussed in a Medscape article on physicians' learned helplessness [Bond C. The training of the "helpless" physician. Medscape General Medicine 2007; 9(3):47] that we posted about here:

In place of old-fashioned fee-for-service medicine in virtually every medical market in America, the economic lifeblood of today's medical practice depends almost entirely on contracts. Almost all of a physician's private patient flow depends on his or her contractual relationships: Private patients are provided either under an employment contract with an employer or they come into the practice through a contract between the physician and a health maintenance organization (HMO) or preferred provider organization (PPO). However, few young physicians are trained in how to analyze contracts, or when, where, and how to get the appropriate help with their contracting relationships. Instead, unfortunately, they are blithely following the model of older physicians who literally signed away fee-for-service medicine and continue, for the most part, to accept what health plans offer without significant legal or economic scrutiny.

In fact, yesterday my colleague told me yesterday about a case in which some physicians were handed a contract, and they "just folded," in her words, signing the contract without completely understanding it, even though it probably contained objectionable provisions.

I have personally witnessed several other anecdotes in which seemingly smart, dedicated physicians were willing to sign complex contracts which they clearly did not understand, usually with the excuse that "we would not be given this contract to sign if it were not in our best interest." The contracts were long, written in complex legalese, and contained numerous questionable provisions, including provisions about confidentiality.

In the words of my son, "what were they smoking?"

Maybe it was because I grew up in a family full of lawyers, but I always thought one should never sign a contract when in doubt about any aspect of its meaning, and one should never feel compelled to sign a contract.

What is going on here? Were the physicians so conditioned by their prior hierarchical, ascetic training (as described in the Bond article above) that they really believed no one would ever give them a contract to sign that was not in their and their patients' best interests? Were they too busy and tired to put in the effort to read the contract? Were they embarrassed to admit they did not understand it? Were they too conflict averse to contemplate refusing to sign the contract until they understood it and found it satisfactory?

As Bond wrote, I believe we physicians let many aspects of the health care system go bad because we were too busy, too embarrassed, or too intimidated to refuse to sign contracts that were bad for us or our patients.

So here is my (non-legal) advice to all physicians.

• Read fully any contract which you are asked to sign
• If you do not fully understand it, or have trouble reading it, do not sign it. (Hint, it is likely that any contracts longer than 1-2 pages single spaced in 12 point font may be difficult to understand.)
• If you still think there may be value to you in signing it, consult a lawyer and again, do not sign the contract unless the lawyer can explain it to you, and his or her explanation leaves you with confidence that signing it would be good for you and your patients.
  

ADDENDUM (19 November, 2007): see comments here on the Covert Rationing Blog.