By Chris Deacon
You can’t be bound by a contract you’ve never seen. Unless, apparently, you’re a self-funded employer.
In this recent lawsuit against Blue Cross and Blue Shield of Kansas City, AdventHealth is challenging, among other things, the idea that it’s bound by internal BCBS policies and billing guidance it never saw, didn’t agree to, and that didn’t even exist when the agreement was signed.
“BCBSKC has added, modified, discarded, and altered dozens of policies, guides, manuals and other ‘guidance’ and directives since the Agreement was adopted… Advent does not concede that any such later-adopted policies or guides have been properly incorporated into or become operative the terms of the Agreement…”
They cite a basic and long-standing principle of contract law:
A party cannot be bound by a contract or terms of a contract to which they were not privy to, did not assent to, and were never given the opportunity to review.
It’s common sense — and yet self-funded plan sponsors are told every day that they’re somehow “bound” by downstream provider agreements and reimbursement terms that:
▪️ They didn’t sign,
▪️ Can’t see,
▪️ And have no legal right to even request.
In fact, this was the exact argument made by BCBS of Minnesota when it was sued by DOL for adding provider taxes to claims, without the consent or knowledge of their ASO client.
BCBS explicitly argued that when employers sign administrative services agreements agreeing to pay “negotiated” rates, they are in fact agreeing to be bound by the provider contracts in which those rates are negotiated.
Say an employer asks to see the provider contracts to which they are allegedly bound – can you imagine the response if an employer asked to see BCBS’s contract with Advent Health or New York Presbyterian? If they didn’t laugh in your face, they would certainly laugh behind your back after an adamant “no, thats confidential.”
How can an employer be bound by the terms of a provider contract they never agreed to, saw, or had a chance to review? They can’t. And apparently, Advent agrees with me… at least on this point.
To be clear: I’m not passing judgment on this particular case — where Advent, an organization known for egregious billing practices and occasional upcoding, is suing a carrier for pushing back on those bills through questionable conduct.
No one is winning that fight but the lawyers.
But the point raised by Advent is an interesting one: Whether opaque, ever-changing contract terms can be enforced against parties who never saw or agreed to them.
Hospitals aren’t the only ones that should be availing themselves of well-settled contract law principles.
Self-funded employers should be demanding more loudly: whose contract are we actually in?
