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The termination of a contract with a managed care provider

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There are specific reasons based on which a managed care organization (MCO) could terminate a contract with a provider. Choose two of the main reasons, and explain under what circumstances this termination of a managed care contract would occur. Provide reasons for your answer. What are some of the ramifications of contract termination from a consumer's perspective, a provider's perspective, and a managed care perspective?

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A termination of a contract with a managed care provider is examined.

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MCOs and Provider Contracts
Managed care relationships are stipulated and defined in the contract that stipulates the rules and parameters under which a provider and its managed care organization (MCO) will do business and operate going forward. In terms of provider responsibilities, contracts tend to vary. As such, it is critical that during the contract process the provider understands the true burden of risk involved in the contract. In deciphering the contract language, providers should give due consideration to their business, goals, objectives, capabilities, costs, financial requirements and the potential value of contracting with the MCO in question (MCR, 2012). In essence, such issues will surface in the evaluation of the contract term and termination clauses. To this end, it is recommended that before agreeing to any term or termination stipulations, providers should have a broad perspective and determine the combination of provisions that will best address the requirements of both the MCO and provider. The idea and purpose should always be to create the most mutually beneficial and enduring relationship (MCR, 2012).

All contracts will be presented with terms that define the period of time during which the contract will be enforceable. MCO contracts are typically written with an initial term of a year usually, and some will allow an automatic renewal of the contract unless one party gives notice a specified number of days prior to the end of any annual period. This is a special reason for providers to be mindful of automatic renewal provisions (MCR), 2012).

Contract Termination
Contract termination provisions are the abilities of the contracted parties to terminate the contract. The most common reasons that MCOs experience right of immediate termination are loss of license, malpractice suit, failure to pay claims, bankruptcy, criminal activity, ...

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