235. Managed Care

235.975 Out-of-Network and Network Adequacy


A. Physicians’ freedom to establish their fees - Our CMS:

  1. Affirms that it is the basic right and privilege of each physician to set fees for services that are reasonable and appropriate, while always remaining sensitive to the varying resources of patients and retaining the freedom to choose instances where courtesy or charity could be extended in a dignified, ethical and lawful manner;
  2. Supports the concept, when the physician does not have a contract with the health insurance plan, that health insurance should be treated like any other insurance (i.e., a contract between a patient and a third party for indemnification for expense or loss incurred by virtue of obtaining medical or other heath care services); and
  3. Believes that the contract for care and payment is between the physician and patient.

B. Fees for medical services - A physician should not charge or collect an illegal or excessive fee. For example, an illegal fee occurs when a physician accepts an assignment as full payment for services rendered to a Medicare patient and then bills the patient for an additional amount. A fee is excessive when after a review of the facts a person knowledgeable as to current charges made by physicians would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:

  1. The level of training, education and experience of the physician;
  2. The circumstances and complexity of the particular case, including time and place of the service;
  3. Individual patient characteristics;
  4. Unusual circumstances;
  5. The physicians usual professional fees charged;
  6. The professional fee customarily charged in the locality for similar physician services; and
  7. Other relevant aspects of the economics of the physician’s practice.

C. Out-of- network charges – Notification of patient rights - CMS encourages physicians to assist consumers facing out-of-network charges by informing them of their rights under this statute. CMS recommends that when a physician is unable to accept the insurer’s payment as payment in full, then the physician should:

  1. Advise the consumer to contact their insurance plan directly for assistance; and
  2. Include the following message on the billing statement:

    “I do not participate with the your health insurance plan. If you received emergency services or services rendered by me at an in-network facility, then you may be entitled to certain out-of-network protections according to Colorado law. I have submitted a claim to your insurance plan on your behalf [if this is your normal procedure]. If there are questions concerning payment for the services please contact your insurance plan directly.”

(BOD-1, AM 2015)


235.976 Prior Authorization


CMS accepted the report of the CMS-CAHP Work Group on Prior Authorization (PA) and will continue the process of working with Colorado Association of Health Plans (CAHP).

Action steps

  1. Develop improved, ongoing PA communications between physicians and the health plans, with emphasis on secure electronic communications where feasible.
    1. Design a Portal/web page to be hosted by CAHP to allow a single point of entry for physicians, with links to all plans’ websites, and “drop-downs” to protocol-driven criteria for approval;
    2. Convene “expert” committee made up from physician and staff representatives and health plan staff, including medical directors, IT, legal, and utilization management staff, to develop detailed plan, format, content;
    3. Explore standardized “format” for PA entry pages;
    4. Ensure that all needed PA information is readily available on plans’ websites – list of medications requiring PA, patient data required, understandable criteria for approval, appeal process, correct form to be submitted, etc.  Goal is to make sure physicians and their staff have clear knowledge of what information is required for approval before the first submission.
  2. Improve timeliness of PA consideration, submission of needed patient data, and approval/denial of requests.  There is consensus that the principal reason for delay in decisions is the lack of complete patient data [given there is no existing incentive for plans to delay a determination once they have complete information] and the inefficient back-and-forth between prescribing physicians and health plans.

    1. Explore better systems to speed communication directly between health plans and physicians when more information is needed.  Focus on asynchronous forms of communication to avoid wait times in both directions.
    2. Review current federal mandates and NCQA and URAC guidelines for timing of urgent and non-urgent PA requests; consider applying the Medicare Part D standards, i.e. 24 hours for urgent requests and 72 hours for non-urgent requests [timeframes run from receipt of complete information].
    3. Monitor timing of PA actions as the improved system for communications outlined above is implemented.
  3. Confirm that ordering physicians receive timely, direct notice when a PA is rejected or requires additional patient data/information.  Work toward expanding secure electronic notices and option to transmit the data electronically [in addition to the notice to the patient, which is an accreditation and regulatory requirement].  See 2.a above.
  4. Contact PBM’s to bring them up to date on progress of the Work Group and include them in future meetings.  Consider adding other organizations/stakeholders.


  6. CMS and CAHP will develop an ongoing education program to enhance the knowledge of prescribing physicians and their staff on the PA process, content of plans’ websites, criteria for approval, drugs that require PA, etc.
  7. CMS and CAHP should stay informed on the work being done nationally to develop a standardized electronic transaction set for prior authorization.  If agreement is reached at the national level, this group should evaluate how the electronic transaction can be utilized to facilitate better electronic communication and more timely processing of requests.
  8. After solving the prescriptive PA problems, consider expanding the scope of the Work Group to include the other procedures requiring PA’s.

(BOD-1, AM 2012; Reaffirmed, BOD-1, AM 2014)


235.977 Physician Profiling


Following are recommendations for CMS advocacy regarding the profiling of physicians. As such, the Board of Directors may amend or add to these principles as they deem necessary.

  1. If the physician prevails during the investigation or appeal process and a proposed “negative” profile is changed/upgraded to a higher-level designation, THEN: That physician should be entitled to recover compensation for professional time and actual incurred expenses. Such recovery should be paid by the health plan/insurer upon receipt of an invoice from the physician. The physician need not litigate to receive such recovery. (If the physician is uncertain as a reasonable charge for his/her professional time we would refer them to the Colorado Workers’ Compensation fee schedule as a guideline.)
  2. If a test or procedure must be done in order for a physician to comply with profiling criteria, THEN:  The plan/insurer should actually pay for the cost involved.  Such payment should be “first-dollar coverage,” e.g. it cannot be a “non-covered service” and it cannot be assigned to “patient responsibility” under a “deductible” provision.
  3. If a test or procedure must be done in order for a physician to comply with profiling criteria, and such test/procedure requires compliance to a physician recommendation or order on the part of the patient, THEN: The physician need only to establish that the patient’s medical record documents the physician’s recommendation or order for such test or procedure. The plan/insurer should then be required to give the physician full “credit” in the profiling analysis for such test or procedure, whether or not the test or procedure was actually performed.
  4. Since physician advisors are involved in the selection of profiling criteria, the majority of such physicians should be based, actively practicing, and licensed in Colorado.  The names and professional qualifications of such physicians should be available upon request.  The names and professional qualifications of non-Colorado physician advisors should also be available upon request.

COPE further recommends that CMS leadership and staff shall engage in dialogue about physician profiling with the Colorado Association of Health Plans, and with individual plans as needed.  The goal of such dialogue shall be to attempt to secure adoption of as many of the above guiding principles as possible.  A report on these efforts shall be given to the Board of Directors prior to AM’11.
(COPE-1, AM 2010; Reaffirmed, BOD-1, AM 2014)


235.978 National Care Project Physician Input


(RES-10, AM 2008; Sunset, BOD-1, AM 2014)


235.979 Physician Networks


Colorado Medical Society supports physician networks based on the full complement of quality aspects, as described by the Institute of Medicine: safe, effective, efficient, patient-centered, timely and equitable.

CMS opposes physician networks that fail to include all of the Institute of Medicine’s quality aspects.
(RES-17, AM 2007; Reaffirmed, BOD-1, AM 2014)


235.980 Request for Ongoing Reporting from the UnitedHealthcare Physician Advisory Committee (PAC)


The Colorado Medical Society (CMS) continue to provide detailed updates on PAC meetings in Colorado Medicine and in written reports with minutes to the Council on Practice Environment (COPE) and CMS Board of Directors. The lack of progression on physicians’ concerns raised at the merger hearing be brought to the attention of both UnitedHealthcare and the Commissioner of Insurance and/or the American Medical Association.
(RES-15, AM 2006; Reaffirmed, BOD-1, AM 2014)


235.981 Drug Formularies


The Colorado Medical Society (CMS) supports legislation or other remedies to require all insurers in Colorado using drug formularies to fully disclose the basis for the decision to put a medication in the preferred position on the formulary, e.g., cite the studies demonstrating safety and/or efficacy, and disclose any financial and/or business arrangements between the health plan and pharmaceutical companies related to formulary choices. The CMS supports formularies that are evidence based and cost-effective for the patient. The CMS supports the use of less restrictive formularies by all insurers and supports the concept that senior health plan formularies for any insurance company licensed in Colorado cannot be more restrictive than the least restrictive commercial plan marketed by that company. The CMS supports the concept that pharmaceuticals that are “non-formulary” be made available at a higher co pay. The CMS supports the development of a uniform and state wide prior authorization and appeal process for non-formulary medications with no more than two appeal steps required prior to review by the plan physician medical director. The CMS encourages all insurers to standardize the format used in their formulary publication. The formulary publication should also include an informational page containing such information as:

  • Names of formulary committee members and meeting schedules
  • Appeals mechanism
  • Names and telephone numbers of contact people for problems requiring immediate attention, and
  • Administrative prescription drug polices.

The CMS encourages all insurers to limit the amount of updates to the formularies to no more often than quarterly, and that updates be published in a uniform format.
(RES-57, AM 1996, RES-25, AM 1997, Revised RES-6, AM 2002; Reaffirmed, BOD-1, AM 2014)


235.982 Admitting Officer and Hospitalist Programs


  1. Hospitalists systems when initiated by a hospital or managed care organization should be developed consistent with American Medical Association policy on medical staff bylaws and implemented with approval of the organized medical staff to assure that the principles and structure of the autonomous and self-governing medical staff are retained;
  2. Colorado Medical Society opposes any hospitalist model that disrupts the patient/physician relationship or the continuity of patient care and jeopardizes the integrity of inpatient privileges of attending physicians and physician consultants.

(RES-7, AM 2002; Revised, BOD-1, AM 2014)


235.983 Health Plan Opt Out


At the time of enrollment in a health plan, all lists of network providers contracted with a health plan shall be correct and up to date. The Colorado Medical Society shall support legislation or seek other means which would allow a person to opt out and change a health plan before that person’s policy expires if his/her physician’s participation is incorrectly represented in the insurance company provider list at the time the patient contracted with that health insurance plan.
(RES-9, AM 2002; Reaffirmed, BOD-1, AM 2014)


235.984 All-Products Clauses


The Colorado Medical Society opposes the inclusion of “all-products clauses” in managed care contracts.
(Revised RES-7, AM 2000; Reaffirmed, BOD-1, AM 2014)


235.985 Managed Care Contract Participation Listing Deadline


The Colorado Medical Society is opposed to health plans marketing physicians as members of their network without the written consent of the physician unless the physician is under signed contract 120 days prior to the effective date of the contract year of the health benefit plan.
(RES-8, AM 2000; Revised, BOD-1, AM 2014)


235.986 Accurate Reporting of Health Plan Expenditures for Patient Care


HMOs and health care insurers shall include in their calculation of plan expenditures only payments for patient care. The health plan shall exclude from the calculation of health care expense data, any funds retained by “carve out” or “carve in” managed care companies under contract with the insurer for administration and profit.
(RES-21, AM 1999; Reaffirmed, BOD-1, AM 2014)


235.987 Ethical Implications of Capitation


Physicians have an obligation to evaluate a health plan’s capitation payments prior to contracting with that plan to ensure that the quality of patient care is not threatened by inadequate rates of capitation. Capitation payments should be calculated primarily on relevant medical factors, available outcomes data, the costs associated with involved providers, and consensus-oriented standards of necessary care. Furthermore, the predictable costs resulting from existing conditions of enrolled patients should be considered when determining the rate of capitation. Different populations of patients have different medical needs and the costs associated with those needs should be reflected in the per member per month payment. Physicians should seek agreements with plans that provide sufficient financial resources for all necessary care and should refuse to sign agreements that fail in this regard.

Physicians must not assume inordinate levels of financial risk and should therefore consider a number of factors when deciding whether or not to sign a provider agreement. The size of the plan and the time period over which the rate is figured should be considered by physicians evaluating a plan as well as in determinations of the per member per month payment. The capitation rate for large plans can be calculated more accurately than for smaller plans because of the mitigating influence of probability and the behavior of large systems. Similarly, length of time will influence the predictability of patient expenditures and should be considered accordingly. Capitation rates calculated for large plans over an extended period of time are able to be more accurate and are therefore preferable to those calculated for small groups over a short time period.

Stop-loss plans should be in effect to prevent the potential of catastrophic expenses from influencing physician behavior. Physicians should ensure that such arrangements are finalized prior to signing an agreement to provide services in a health plan. Physicians must be prepared to discuss with patients any financial arrangements that could impact patient care. Physicians should avoid reimbursement systems that cannot be disclosed to patients without negatively affecting the patient-physician relationship.
(RES-24, AM 1997; Reaffirmed, BOD-1, AM 2014)


235.988 Managed Care Utilization Review and “Hold Harmless” Clauses


Based upon a complaint by a policyholder or participating provider, the Colorado Division of Insurance shall review any prospective utilization review requirement such as prior authorization, etc., for a denial rate. Any utilization review requirement, which does not result in a denial rate of at least five percent, shall be eliminated by the health plan. The Colorado Medical Society shall support legislation to prohibit “hold harmless” clauses in managed care contracts that hold physicians liable for harm to patients as a result of any utilization review decisions made by the payer.
(RES-17, AM 1997; Reaffirmed, BOD-1, AM 2014)


235.989 Position Paper: Prior Authorizations


The Colorado Medical Society (CMS) objects to any prior authorization process that is implemented solely for the purpose of creating a barrier to care. Prior authorization mechanisms created as barriers to care increase overall health care expenses by adding an unnecessary administrative burden.The CMS encourages all managed care organizations with a prior authorization process, to have the process contain at least the following elements:

  • Authorization of enough visits to complete a course of treatment for the specified condition;
  • There are circumstances when a health plan wants to know of the existence of a clinical condition. In these circumstances, notification is preferred to prior authorization unless there is a valid clinical rationale for prior authorization;
  • The criteria used for adjudication of prior authorization should be available to physicians in advance, and the process should be as streamlined as possible. Aids for the physician’s office such as worksheets are desired;
  • Admissions, referrals, and procedures that meet nationally or regionally accepted guidelines should be exempt from prior authorization; and
  • Compliance with time limit and written notification standards set forth in Colorado Regulation 4-2-17 “Prompt Investigation of Health Plan claims Involving Utilization Review”.

(RES-24, IM 1997; Reaffirmed, BOD-1, AM 2014)


235.990 Managed Care Policy


Use of a planned and coordinated approach to providing health care with the goal of quality care at a lower cost. Managed care techniques most often include one or more of the following:

  • Prior, concurrent, and retrospective review of the medical necessity and appropriateness of services and/or site of services;
  • Contracts with selected health care professionals or providers;
  • Financial incentives or disincentives related to the use of specific providers, services or service sites;
  • Controlled access to and coordination of services by a case manager; and
  • Payer efforts to identify treatment alternatives and modify benefit restrictions for high-cost patients (i.e., high-cost case management).

Disclosure Provisions

  • It should be the legal responsibility of both health insurance companies and benefit managers of businesses to make full disclosure to participants regarding the restrictions in access to health services that occur within managed health plans.
  • It is the patient’s responsibility to know pertinent details of his/her program. These may include (but not be limited to) insurance benefits under the plan, as well as requirements for:
    1. Pre-admission or pre-procedure certification
    2. Second surgical opinions
    3. Mandatory out-patient surgery for certain procedures
    4. Co-payments/payments
    5. Pre-existing condition exclusions
    6. Limits on Access to Specialty Care
    7. Utilization Management Policies
    8. Excluded Procedures

Selective Contracting

Participation Criteria

  • Physicians should have the right to apply to any health plan or network in which they desire to participate if that network needs additional physicians. Applications should be approved if they meet physician-developed and approved objective criteria and are based on professional qualifications, competence, and quality of care as well as cost efficiency of care.
  • Health care plans or networks should develop and use criteria to determine the number, geographic distribution and specialties of physicians needed.
  • Managed care organizations and third party payers should be required to disclose to physicians applying to the plan as well as to enrollees, the selection criteria used to select, retain or exclude a physician from a managed care plan, including the criteria used to determine the number, geographic distribution and specialties of physicians needed.
  • Health care plans or networks that limit the number, geographic distribution and specialties of participating physicians should be required to report to the public, annually, the impact that the limitation has on the access, cost and choice of health care services provided to patients enrolled in such plans or networks.
  • Managed care plans should not require physicians to contract exclusively with a single plan.

Disaffiliation Criteria

  • In those cases in which economic issues may be used for consideration of sanction or dismissal, participating physicians should have the right to receive profile information (including interpretation of that information) and education. They should have an opportunity to defend and/or modify practice patterns before action of any kind is taken.
  • All managed care contracts should include formal mediation or meaningful due process protections to prevent wrongful and arbitrary contract terminations that leave the physician without means of redress.

Financial Incentives

  • Managed care plans should provide incentives for cost effective decision making by consumers.
  • Managed health care plans should have limitations on the financial risk transferred to patients and physicians so that conflicts between utilization and quality issues require a burden of proof from the health plan.
  • Patient advocacy is a fundamental element of the physician-patient relationship that should not be altered by the health care system in which physicians practice, or the methods by which they are compensated.
  • Physicians should have the right to enter into whatever contractual arrangements with health care systems they deem desirable and necessary, but they should be aware of the potential for some types of systems to create conflicts of interest, due to the use of financial incentives in the management of medical care.
  • Financial incentives should enhance the provision of high quality, cost-effective medical care.
  • Financial incentives should not result in the withholding of appropriate medical services or in the denial of patient access to such services.
  • Any financial incentives that may induce a limitation of the medical services offered to patients, as well as treatment or referral options, should be fully disclosed by health plans to enrollees and prospective enrollees.
  • Physicians should disclose any financial incentives that may induce a limitation of the diagnostic and therapeutic alternatives that are offered to patients, or restrict treatment or referral options. Physicians may satisfy their disclosure obligations by assuring that the health plans with which they contract provide such disclosure to enrollees and prospective enrollees.
  • Financial incentives should not be based on the performance of physicians over short periods of time, nor should they be linked with individual treatment decisions over periods of time insufficient to identify patterns of care.
  • Financial incentives generally should be based on the performance of groups of physicians rather than individual physicians. However, within a physician group, individual physician financial incentives may be related to quality of care, productivity, utilization of services, and overall performance of the physician group.
  • The appropriateness and structure of a specific financial incentive should take into account a variety of factors such as the use and level of “stop-loss” insurance, and the adequacy of the base payments (not at-risk payments) to physicians and physician groups. The purpose of assessing the appropriateness of financial incentives is to avoid placing a physician or physician group at excessive risk, which may induce the rationing of care.
  • Physicians should consult with legal counsel prior to agreeing to any health plan contract that contains financial incentives, to assure that such incentives will not inappropriately influence their clinical judgment.
  • Physicians agreeing to health plan contracts that contain financial incentives should seek the inclusion of provisions allowing for an independent annual audit to assure that the distribution of incentive payments is in keeping with the terms of the contract.
  • Physicians should consider obtaining their own accountants when financial incentives are included in health plan contracts, to assure proper auditing and distribution of incentive payments.
  • Physicians, other health care professionals, and third party payers through their payment policies should continue to encourage use of the most cost-effective care setting in which medical services can be provided safely with no detriment to quality.

Case Management/Coordination of Care

  • Managed care plans should recognize the physician as the expert in selecting health care for the patient, allowing the physician to select a cost effective treatment plan consistent with quality of patient care. The physician should not be placed between the appropriate needs of the patient and the financial interests of the health plan.
  • Managed care plans should support continuity of care between physician and patient.

Utilization Management

  • Managed care plans should provide participating physicians access to detailed information concerning their own practice profile and comparisons with physicians with similar practices.
  • Utilization management under managed care shall be based on open and consistent review criteria developed from valid outcome studies that are acceptable to and have been created in concert with the medical profession. For reviews being appealed, managed care programs shall use actively practicing, Colorado licensed physicians engaged in direct patient care at least 20 hours per week in the same specialty as that of the physicians under review in any decision to deny or reduce coverage for services based on medical necessity or quality of care determinations. Doctor to doctor communication should be encouraged.
  • Administrative Issues
  • After a managed care company has communicated a decision to a physician’s office, the physician or his representative may request confirmation by printed document. This confirmation will be sent the same day, will contain decisions made in regard to benefits, authorization, pre-authorization, acceptance and/or denial of services, the reason for denial, and any other administrative decisions made in regard to the patient’s proposed treatment. This confirmation shall contain the name, phone number, extension, and signature of the person responsible for rendering the decision.
  • All managed care plans and medical delivery systems must include significant physician involvement in their health care delivery policies similar to those of self-governing medical staffs in hospitals. Participating physicians should nominate and elect physician members of the plan’s policymaking board.
  • Any physicians participating in these plans must be able, without threat of punitive action, to comment on and present their positions on the plan’s policies and procedures for medical review, quality assurance, grievance procedures, credentialing criteria and other financial and administrative matters, including physician representation on the governing board and key committees of the plan.

Exclusive Contracting

  • Managed care organizations and health plans that have exclusive contracts with outside entities to perform their diagnostic services such as laboratory, radiology, etc., should be required to allow physicians to do stat procedures in their offices for clinical decision making. Physicians should be provided reasonable reimbursement for these services. There should be no financial disincentive for physicians to provide such services.

Freedom of Choice

  • The public should be educated on the various types of health care delivery systems and afforded freedom of choice of delivery systems and physicians.
  • Employers should offer employees a choice of health plans.
  • The freedom of patients to select and to change their physician or medical care plan should extend to those patients whose care is financed through Medicaid or other tax-supported programs, recognizing that in the choice of some plans the patient is accepting limitations in the free choice of medical services.
  • Each plan that restricts access by enrollees or members to health care providers shall offer enrollees or members coverage for health care services provided by out-of-network providers through an alternative “Point of Service Option” coverage. In the case of an enrollee who elects this “Point of Service Option” coverage, the plan may charge an alternative premium to the enrollee or member to take into account the actuarial value of such coverage. The managed care plan should incorporate reasonable out-of-pocket patient expenses for choosing out-of-plan providers so as to preserve a measure of free choice of provider by the patient.

(RES-40, AM 1994, RES-7, IM 1997; Reaffirmed, BOD-1, AM 2014)


235.992 Access to Care (Gatekeeper Systems)


(RES-56, AM 1996; Sunset, BOD-1, AM 2014)


235.993 Ethical Issues in Managed Care



  1. The duty of patient advocacy is a fundamental element of the physician-patient relationship that should not be altered by the system of health care delivery in which physicians practice. Physicians must continue to place the interests of their patients first.
  2. When managed care plans place restrictions on the care that physicians in the plan may provide to their patients, the following principles should be followed:
    1. Any broad allocation guidelines that restrict care and choices-which go beyond the cost-benefit judgments made by physicians as a part of their normal professional responsibilities-should be established at a policy making level so that individual physicians are not asked to engage in ad hoc bedside rationing.
    2. Regardless of any allocation guidelines or gatekeeper directives, physicians must advocate for any care they believe will materially benefit their patients.
    3. Physicians should be given an active role in contributing their expertise to any allocation process and should advocate for guidelines that are sensitive to differences among patients. Managed care plans should create structures similar to hospital medical staffs that allow physicians to have meaningful input into the pan’s development of allocation guidelines. Guidelines for allocating health care should be reviewed on a regular basis and updated to reflect advances in medical knowledge and changes in relative costs.
    4. Adequate appellate mechanisms for both patients and physicians should be in place to address disputes regarding medically necessary care. In some circumstances, physicians have an obligation to initiate appeals on behalf of their patients. Cases may arise in which a health plan has an allocation guideline that is generally fair but in particular circumstances results in unfair denials of care, i.e., denial of care that, in the physician’s judgment, would materially benefit the patient. In such cases, the physician’s duty as patient advocate requires that the physician challenge the denial and argue for the provision of treatment in the specific case. Cases may also arise in which a health plan has an allocation guideline that is generally unfair in its operation. In such cases, the physician’s duty as patient advocate requires not only a challenge to any denials of treatment from the guideline but also advocacy at the health plan’s policy making level to seek an elimination or modification of the guideline. Physicians should assist patients who wish to seek additional appropriate care outside the plan when the physician believes the care is in the patient’s best interests.
    5. Managed care plans should adhere to the requirement of informed consent that patients be given full disclosure of material information. Full disclosure requires that managed care plans inform potential subscribers of limitations or restrictions on the benefits package when they are considering entering the plan.
    6. Physicians also should continue to promote full disclosure to patients enrolled in managed care organizations. The physician’s obligation to disclose treatment alternatives to patients is not altered by any limitations in the coverage provided by the patient’s managed care plan. Full disclosure includes informing patients of all their treatment options, even those that may not be covered under the terms of the managed care plan. Patients may then determine whether an appeal is appropriate or whether they wish to seek care outside the plan for treatment alternatives that are not covered.
    7. Physicians should not participate in any plan that encourages or requires care at or below minimum professional standards.
  3. When physicians are employed or reimbursed by managed care plans that offer financial incentives to limit care, serious potential conflicts are created between the physicians’ personal financial interests and the needs of their patients. Efforts to contain health care costs should not place patient welfare at risk. Thus, financial incentives are permissible only if they promote the cost-effective delivery of health care and not the withholding of medically necessary care.
    1. Any incentives to limit care should be disclosed fully to patients by plan administrators on enrollment and at least annually thereafter.
    2. Limits should be placed on the magnitude of fee withholds, bonuses, and other financial incentives to limit care. Calculating incentive payments according to the performance of a sizable group of physicians rather than on an individual basis should be encouraged.
    3. Health plans or other groups should develop financial incentives based on quality of care. Such incentives should complement financial incentives based on the quantity of services used.
  4. Patients have an individual responsibility to be aware of the benefits and limitations of their health care coverage. Patients should exercise their autonomy by public participation in the formulation of benefits packages and by prudent selection of health care coverage that best suits their needs.

(RES-8, IM 1996; Reaffirmed, BOD-1, AM 2014)


235.994 Quality of Care in Managed Care Plans


The Colorado Medical Society (CMS) urges physicians practicing in managed care plans and systems to take the initiative in developing and implementing criteria and peer review oriented processes to access and assure the quality of care provided in these plans. The CMS urges managed care plans, hospitals, review entities, third party administrators and any other organizations that are compiling information on physician performance to share that information with the practitioners concerned in order to enhance and modify practice patterns through education where needed.
(RES-41, AM 1994; Reaffirmed, BOD-1, AM 2014)


235.995 Managed Care and Antitrust


The Colorado Medical Society (CMS) shall support the following statements regarding changes to relevant antitrust laws:

  1. The CMS supports appropriate changes in relevant antitrust laws to allow physicians and physician organizations to engage in group negotiations with managed care plans.
  2. The CMS, through the American Medical Association, shall pursue enhanced roles for physicians in private sector health plans, including lobbying for appropriate modification of the antitrust laws to facilitate physician negotiation with managed care plans and for legislation requiring managed care plans to allow participating physicians to organize for the purpose of commenting on medical review criteria.
  3. The CMS shall advocate strongly to the Congress, the Colorado General Assembly, and other appropriate entities, the need for changes in relevant antitrust laws to allow physicians and physician organizations to engage in group negotiations with collective purchasers, managed care plans, insurers and other payers.

(RES-43, AM 1994; Reaffirmed, BOD-1, AM 2014)


235.996 Position Paper: Physician Affiliation/Disaffiliation


The Colorado Medical Society (CMS) supports in concept, the following position paper on the Affiliation/Disaffiliation from Managed Care Entities, developed to provide CMS a policy basis from which to continue deliberations with members of the Colorado Association of Health Plans (CAHP) on issues of concern to physicians:



A number of factors have resulted in expansion or contraction of panels of physicians which contract with HMOs. Such factors include, but are not limited to the following: growth in HMO enrollment; intense competition among HMOs and insurance carriers; PPO development; development of Physician-Hospital organizations; and Employer Report Card (Health Plan Employer Data Information Set (HEDIS).

Purpose and Scope
The purpose of this White Paper is to address issues of mutual concern arising in the affiliation/disaffiliation process among physicians and HMOs.

The Colorado Medical Society (CMS) and the Colorado Association of Health Plans (CAHP) recognize that the relationship between a physician and an HMO is voluntary and contractual in nature. It is not the intent of this White Paper to alter current contracting practices between HMOs and physicians. This White Paper should not be construed as endorsing physician disaffiliation solely “for cause” or an adversary hearing process for disaffiliation.

The CMS and the CAHP believe that issues arising among physicians and HMOs could be ameliorated by enhanced communication between physicians and HMOs. They wish to develop an alternative to the expensive and time consuming adversary hearing process, while emphasizing mechanisms for dispute prevention.

Affiliation/disaffiliation issues involving quality of care or professional competence of physicians that lead to termination “for cause” are outside the scope of this White Paper. Such matters have implications under both state and federal law.

This White Paper contains the view and commitments of CMS and the CAHP. However, each organization is comprised of individuals whose adherence to views stated herein may differ. Some HMOs contract with groups of physicians (e.g., IPAs) that have primary responsibility for affiliation/disaffiliation actions. The recommendations of this White Paper are applicable to such groups of physicians as appropriate. The actions contemplated by this White Paper are recommendations that may or may not be adopted by an individual physician, groups of physicians or each HMO.

HMOs and physicians recognize that two-way communication is a critical part of maintaining an effective working relationship in the provision of quality, cost effective health care to HMO members. The following recommendations are intended to enhance the communication process.

  1. Contracting Standards
  2. Contracting standards should be developed for primary care physicians and each physician specialty. Such standards should be utilized in determining physician selection, retention and disaffiliation. The standards may include, but not be limited to the following: medical education; post-graduate medical training; board certification and eligibility; geographic location; office hours; hospital staff privileges; needs of HMO members for accessible and available medical care; number of members receiving care from the physician; results of patient satisfaction surveys; medical utilization factors based as much as practicable on objective data collection and interpretation; and the HMO’s perception of a physician’s ability to work collaboratively in a managed care environment. An HMO or physician group may change such standards from time to time.
  3. Disclosure of Standards
  4. Contracting standards should be disclosed to current and prospective participating physicians and CMS. Amendments to contracting standards should be communicated to participating physicians in a timely manner. Disclosure is subject to reasonable limitations to protect trade secret information.
  5. Contracting Standards for Specialty Physicians
  6. Contracting standards for specialty physicians should be developed by an HMO in consultation with physicians within that specialty and primary care physicians. At the request of an HMO or physician group, CMS will identify specialist physicians from the community, academic institutions or specialty societies who will be available to consult in the development of contracting standards for specialist physicians.
  7. Data Collection and Analysis
  8. Specialty specific credentialing and contracting methodologies for data collection and analysis should be developed in consultation with physicians within that specialty and primary care physicians. Data systems for credentialing and contracting with primary care physicians should be developed in consultation with primary care physicians and appropriate specialist physicians.
  9. Evaluation of Physicians
  10. Each physician should be provided periodically (as appropriate for the nature and amount of data and the volume and scope of services provided by the physician for the HMO or physician group) with data regarding his/her performance within the HMO relative to stated criteria and to an appropriate group of comparable physicians. Upon presentation of such data, each physician should work cooperatively with the HMO or physician group to improve performance.
  11. Specialist Department Chair
  12. HMOs should consider utilizing a “department chair” or specialty consultant for each physician specialty. As determined appropriate by Medical Director of the HMO or physician group, the department chair or specialty consultant would act as an intermediary with specialty physicians to enhance communication and resolve issues relating to that specialty. The department chair or specialty consultant may also assist in the development of methodology for data collection and analysis and the interpretation of data regarding that specialty.
  13. Disaffiliation
  14. When making a decision to disaffiliate a physician, the most recent data available should be utilized and consideration given to such physician’s response over time to data presented to him/her.

When disaffiliation occurs because of change in network size or composition, the disaffiliated physician should be provided with the reason, including the criteria and methodology utilized for disaffiliation decision.

When a physician chooses to disaffiliate, the physician should provide the HMO or physician group with the reason for such action.

Joint Actions
The CMS and the CAHP will work collaboratively to undertake actions, which will foster communication between physicians and HMOs and provide for non-adversarial dispute resolution.

  1. Colorado Medical Society Physician Consultant
  2. HMO representatives will work with a physician “consultant” employed by CMS to develop “Physician Report Cards” and evaluate existing “Report Cards”. Such consultant should have expertise in managed care and statistical analysis. Such “Report Cards” will consist of a set of criteria utilizing data whereby physician performance is evaluated. The “Report Card” development will include, but not be limited to the following:
    1. Review of data collection and interpretation methodology;
    2. Review of data interpretation techniques to ensure that it is understandable and usable for guiding change in physician behavior; and
    3. Identify issues that are based on data.

    The CMS and the CAHP will work towards identifying and developing data collection and analysis methodologies to be utilized in connection with affiliation/disaffiliation of physicians.

    A physician consultant or other representative of CMS will be available to advise its member physicians regarding physician “Report Cards” and disaffiliation actions.

    The CMS and the CAHP will jointly establish a program to review and endorse data collection and interpretation methodologies established for evaluation of physicians.


  3. Mediation Process
  4. The CMS and the CAHP under the auspices of the Colorado Bar Association shall develop and jointly adopt a procedure for implementing a mediation program for physicians involved in the affiliation/disaffiliation process. Such procedure shall be voluntary on the part of each physician and each HMO or physician group and invoked only after exhaustion of any internal appeal process available to a physician. The CMS and the CAHP will identify and arrange for training of a panel of mediators who will be available to participate in the mediation process.

The CMS and the CAHP will annually review the mediation process and jointly implement any needed changes to it.


Colorado Medical Society and Colorado Association of Health Plans




The Colorado Medical Society/Colorado Association of Health Plans Joint Committee have agreed to the following mediation process as provided for in the “White Paper on Physician Affiliation/Disaffiliation”.

This is a voluntary process on the part of each physician and each HMO or physician group and invoked only after exhaustion of any internal appeal process available to a physician.

The steps involved in mediation usually include: (1) application or agreement to mediate, (2) selection of a mediator, (3) preparation for the mediation session, (4) conducting the mediation session, and (5) settlement. There are also separate fees for the services of the mediator.

Based on our needs, the American Arbitration Association (AAA) seems to be our best option. AAA has an outstanding reputation and is known as the oldest, wisest and best organization of its kind. It has been around for 69 years. It is also one of the most reasonably priced organizations.

AAA charges a $300.00* administrative fee per mediation and $175.00* per hour for the mediator. The length of the mediations will obviously depend on the individual case, but could be anywhere from a half day to a few days. All expenses would be shared equally between both parties.

As mentioned above, AAA maintains a panel of mediators from which the physician and the plan would mutually select an individual mediator for each mediation.

In summary, we recommend selecting AAA to provide for our mediation needs. The white paper states that CMS and CHMOA “shall develop and jointly adopt a procedure for implementing a mediation program for physicians involved in the affiliation/disaffiliation process”. By using AAA services, we have met that requirement while expending minimal effort and resources of our organizations.

* These charges were in effect in June 1995 when this document was developed.
(Motion of the Board, July 1994; Reaffirmed, BOD-1, AM 2014)


235.997 Discrimination Against Physicians by Health Care Plans


The Colorado Medical Society (CMS) opposes policies related to discrimination against physicians and other health care professionals with a history of physical or mental health issues. The CMS supports physicians who are being discriminated against based on any physical or mental health issue. The CMS supports providing appropriate assistance to physicians at the local level who believe they may be treated unfairly by managed care plans, particularly with respect to selective contracting and credentialing decisions that may be due, in part, to a physician’s history of physical or mental health issues. The CMS urges managed care plans and third party payers to refer questions of physician physical or mental health issues to state medical associations and/or county medical societies for review and recommendation as appropriate.
(RES-29, IM 1994; Reaffirmed, BOD-1, AM 2014)


235.998 Punitive Protections for Physicians Participating in Health Care Plans


All managed care plans and medical delivery systems must include significant physician involvement in their health care delivery policies similar to those of self-governing medical staffs in hospitals Any physicians participating in these plans must be able without threat of punitive action to comment on and present their positions on the plan’s policies and procedures for medical review, quality assurance, grievance procedures, credentialing criteria and other financial and administrative matters, including physician representation on the governing board and key committees of the plan.
(RES-16, IM 1994; Reaffirmed, BOD-1, AM 2014)


235.999 Point of Service Option for Managed Care Enrollees


The Colorado Medical Society encourages all health plans that restrict access by enrollees or members to health care providers to offer coverage for health care services provided by out-of-network providers through an alternative “Point of Service Option”. The benefit level of such plans shall not be set so low as to act as a prohibitive deterrent to patient utilization of this option.
(RES-30, IM 1994; Reaffirmed, BOD-1, AM 2014)