Previewing the American Arbitration Association's New Healthcare Payor Provider Arbitration Rules

Article excerpt

Payment disputes can often arise between businesses that pay healthcare providers for their services ( such as health maintenance organizations, indemnity insurers and the like) and healthcare providers and vendors. These parties want an efficient and cost-effective dispute resolution system to address their disputes. As a result, new arbitration rules were developed by the AAA Healthcare Dispute Resolution Advisory Council. This article explains how the rules came about, how they differ from the AAA Commercial Arbitration Rules, and the benefits of this special process.

Given the complexity and sensitivity of business relationships in the healthcare industry, arbitration is an increasingly favored means of dispute resolution. Arbitration clauses are routinely found in a variety of commercial healthcare relationships from relocation agreements,1 to physician employment agreements,2 and to service provider agreements.3

In particular, arbitration clauses are prevalent in contracts between payors, such as health maintenance organizations, indemnity insurers and the like, and providers, including physicians, hospitals and health systems.4 The relationships between these contracted or "network" providers and payors often lead to reimbursement and other disputes. Reimbursement disputes are also prevalent between out of network medical pro - viders (known as non-contracted or "non-par"- for non-participating-providers), including emergency healthcare workers, who provide healthcare services to insured patients.5

Early in 2009, the American Arbitration Association (AAA) formed a Healthcare Dispute Resolution Advisory Council made up of healthcare industry leaders to lend their expertise in fostering and developing dispute resolution solutions for the healthcare industry. One of the first initiatives the council considered is the need to develop a streamlined arbitration process for resolving payor-provider disputes. As a result, the council formed a "bi-partisan" subcommittee to create a new set of payor-provider rules that are specifically tailored to resolve such disputes with great efficiency and economy. The members of the subcommittee included the general counsel for the American Hospital Association, the associate general counsel for the American Medical Association, representatives of insurers United Healthcare and Blue Shield of California, and the author of this article.

After many months of productive discussion, on Jan. 31, 2011, the AAA released the new Healthcare Payor Provider Arbitration Rules. The advice and recommendations of the subcommittee were incorporated into the final rules. For example, the committee recommended that the AAA allow non-par providers and payors to agree after a dispute arises to submit their dispute to the AAA for administration under the new rules. This is only one of many provisions in the rules that benefited from the expertise of the healthcare subcommittee. This article discusses the features and benefits of these rules and how they differ from the AAA Commercial Arbitration Rules.

Differences from Commercial Rules

Although disputes between payors and pro - viders are commercial disputes, these parties should not assume that the new rules are simply a carbon copy of the AAA commercial rules. They are not. Because the differences in the two sets of rules are significant, they are summarized here.

* The parties can agree to use one of three tracks established especially for payor-pro vider disputes. These are the Desk/Tele phonic track, the Regular track, and the Complex track. The amount in controversy does not affect this decision. The parties can agree to any track, regardless of the size of the claims.

* To reduce costs, the parties may agree to forego in-person hearings and opt instead for a "desk and/or telephonic hearing."

* Discovery is more streamlined.

* Parties may group claims involving different patients and the same provider and payor in a single arbitration. …