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Rather than suing each other, a growing number of providers and payers are opting to use alternative dispute resolution (ADR) mechanisms such as arbitration and mediation to settle their differences.
Organizations such as the New York City-based American Arbitration Association (AAA) and the American Health Lawyers Association (AHLA) in Washington, DC, say they have seen a major surge in health care-related dispute resolution agreements over the past five years.
"There has been a real boom in alternative dispute resolution between providers and health plans," maintains AAA vice president Robert Meade.
During the first 11 months of 2000, the AAA was involved in 368 non-patient-related health care disputes. Of those disputes, 337 cases involved conflicts between providers and managed care companies, Meade says. Those cases settled for a total of $374 million, or more than $1 million each.
The AHLA handled 67 such cases in 1999-2000, a 29% increase over 1998-1999.
"Recently, we’ve been seeing a significant increase in the number of cases that come to us," notes the AHLA’s Peter Leibold.
One reason for this increase is that more providers are demanding arbitration provisions be written into their contracts with insurers. (For suggested contract language, see "Dispute language suggested for contracts," in this issue.)
"I’d say this idea is growing tremendously among practices," says David Florin of law firm Crowell and Moring of Washington, DC.
Another ADR growth area involves practice-physician employment contracts. "I’ve noticed what seems to be a jump in employment contract-related disputes in the health care area, especially among physicians and their former medical groups over things like unfair termination of their contract or disagreements over non-compete agreements," Leibold says.
Many experts say these kinds of employment disputes are especially well-suited for ADR because this is typically a less expensive and faster way to settle differences than going to court..