Network narrowing: How to fight a termination notice

Legally Speaking

Rob Portman

Rob Portman is a health care attorney with Powers Pyles Sutter & Verville in Washington, D.C., and serves as General Counsel for the AAD and AADA.

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As health insurers jockey for position in the changing health care environment, several of them, including many Medicare Advantage plans, have adopted the purported cost-saving strategy of narrowing the scope of the provider networks they offer their insureds. They have achieved this result by terminating their contracts with network physicians, usually stating they are doing so without “cause” and often without providing adequate notice. As a result, many dermatologists have been notified, either directly by the health insurer or indirectly by their patients, that they are being terminated from one or more of the health insurer’s products. These provider terminations have also frequently resulted in an inadequate number of specialists to treat the number of patients in the affected geographic area.

The American Academy of Dermatology Association has been actively working against these terminations. It has participated in a lawsuit challenging UnitedHealthcare’s narrowing of its Medicare Advantage networks in Connecticut in which a preliminary injunction was obtained. It has also been working for legislation and encouraging the Centers for Medicare and Medicaid Services to limit the ability of Medicare Advantage plans to terminate providers without cause and to ensure sufficiency of network coverage. But these advocacy efforts will likely take some time to achieve success. In the meantime, physicians do have some self-help options.

For instance, physicians who wish to challenge such terminations generally need to act quickly. Not only will this be necessary to protect the continuity of their relationships with their patients, but their participation agreements generally provide a short window for appeal. Moreover, physicians will often have to demonstrate that they have “exhausted” these contractual/administrative remedies before they can seek relief from a court or arbitrator.

While physicians will need to retain a lawyer for legal advice on their specific cases, the following step-by-step guide should provide helpful general information on how to respond:

1. Review the termination notice and calendar the date on the notice and the date you received it. The content of the notice is critical to determining whether the termination is “with cause” or “without cause.” If the termination is “with cause,” physicians are generally best advised to contact a lawyer, as such terminations often have profound repercussions, including but not limited to a report to the National Practitioner Data Bank, as well as adverse effects on hospital privileges and the ability to join or remain in other insurance networks. If the termination is “without cause,” physicians typically decide whether to challenge it based on the importance of the insurer to the physician’s patients and referral network. Either way, these dates will be important to determining the contractual deadlines with which the physician practice must comply.

2. Review the contract and calendar relevant deadlines. There should be a section in the provider participation agreement that lays out the health insurer’s obligations for termination, a section that discusses the physician’s appeal rights, and a section that discusses dispute resolution. Physicians should identify all relevant deadlines, and, calculating based on the dates noted above, put them on the calendar so that you do not miss them. These sections will also help determine whether the termination notice provided by the health insurer met its contractual obligations, what appeal rights, if any, the physician may have, and whether the physician’s remedies are limited to arbitration if the physician is unsuccessful in overturning the decision through the insurer’s internal dispute process.

3. Ask for more information. If the excluded physician decides to challenge the decision, it is always worth contacting the local medical director and network representative to find out the reason for the termination. Even “without cause” terminations usually occur for some reason; to the extent the physician understands the health insurer’s motivation for the termination, he or she will be in a better position to explain why the termination does not further the health insurer’s best interest.

If there is any chance the termination is based on the physician’s utilization patterns, the physician should ask for a complete copy of the claims data the health insurer has maintained on the practice. Physicians often find that this data is erroneous — it may include patients the physician has never seen; it may not include relevant risk factors, co-morbidities, and other information as to each patient’s circumstances; and it may misclassify the physician’s specialty or subspecialty. Particularly if the health insurer is “narrowing its network” and terminating many physicians based on their “efficiency,” errors in a physician’s “claims profile” may make an enormous difference. For example, Mohs surgeons will want to ensure they are being compared with other Mohs surgeons.[pagebreak]

4. Attempt to have the decision reversed by the medical director or network administrator. The easiest way to reverse a termination decision is informally. The physician should make a list of all the reasons he or she is an important asset to the health insurer’s network and emphasize the importance of continuity of care for the health insurer’s insureds that will be disrupted if the physician is terminated. The physician can emphasize the hole in the health insurer’s network that his/her elimination will create and focus on those things that make him/her unique — e.g., the physician’s special expertise, practice location, cultural competencies, practice efficiencies, high patient satisfaction levels, etc. The physician should look at the provider directory to see which dermatologists will remain in the network. The physician may be able to increase the strength of his/her position by communicating facts the health insurer may not know, such as whether one or more of the physicians who will purportedly remain are either unavailable or have only limited availability because they have died, moved or changed their practice, closed their practice to new patients, work only part-time, or are not in the physician’s subspecialty. Finally, as noted above, physicians should ensure they have been categorized correctly with respect to subspecialty and patient acuity, as both these factors are crucial to the health insurer’s obligation to maintain an “adequate network.”    

5. File a timely appeal. If informal efforts with the health insurer’s medical director and network administrator are unsuccessful in reversing the termination decision, the physician’s next step is a written appeal. Depending on the facts, this appeal may include:

  • Facts to correct health insurer errors, such as lack of current information concerning the practice demographics of a group practice, inaccurate specialty or subspecialty designation, or incorrect patient attribution;
  • Clinical information to supplement claims data that is incomplete, and fails to demonstrate unique practice attributes;
  • Contractual arguments that the health insurer’s notice was defective or the contract otherwise prohibits the termination;
  • Other legal arguments as to why the termination is prohibited, including any state or federal laws that may apply; and/or
  • The pragmatic arguments as to why the physician’s termination will harm the health insurer.

Physicians are best advised to consult an attorney experienced in these matters to assist with the formal appeal, particularly if the termination will have a significant adverse effect on the physician’s practice. If the appeal fails, the attorney will then be able to advise the practice on potential avenues for further action.

6. Consider asking for help from patients, colleagues, or regulators. Sometimes health insurers respond more favorably to requests from patients, colleagues, and public officials than they do to the terminated physician practice. Among other things, such requests confirm the practice’s description of its importance to the network. On the other hand, this may require significant effort and potentially bring unwanted focus on the practice.    

There is no guarantee these self-help steps will work. But they can be essential conditions to filing a lawsuit against an insurer and are undoubtedly less expensive and time consuming than litigation. To the extent that health plans reject physicians’ attempts to challenge their terminations, that only supports efforts by the AADA and other medical societies to obtain legislative or regulatory limits on the ability of health plans to narrow their provider networks without cause. AADA members should inform the association about their experiences in challenging network terminations, whether good and bad, so that the AADA may track and use these stories to bolster advocacy efforts in this area. Email David Brewster at

Every month, Dermatology World covers legal issues in Legally Speaking. This month’s author, Catherine I. Hanson, JD, is a health care attorney and of counsel with the Whatley Kallas firm in San Francisco and is serving as a consultant with the AADA on the provider network termination issue. Robert M. Portman, JD, MPP, is a health care attorney and principal with Powers Pyles Sutter & Verville PC in Washington, D.C., and is outside counsel for AAD and AADA.