Therefore an important goal for any provider during the contract process is to understand the true burden of risk represented by the agreement. These issues come in to play in the evaluation of contract term and termination clauses. Before agreeing to any term or termination stipulations, it's important for the provider to have a broad perspective and determine the combination of provisions that will best address the requirements of both the MCO and provider. The intent should always be to create the most enduring relationship. We present here an overview of contract term and termination clauses, plus some provider guidelines for successful negotiation of these contract items.
All contracts identify a contract term.
The contract term is the period of time during which the contract is enforceable. Typically, managed care contracts are written with an initial term, usually one year. However it is usual to see language that provides for an automatic renewal of the contract unless one party gives notice a specified number of days prior to the end of any annual period. Providers should be mindful of automatic renewal provisions and their advantages and disadvantages. Automatic renewal provisions can set the stage for a long term relationship that requires little administrative effort from the parties while also providing the parties flexibility to re-negotiate terms if necessary.