Undoubtedly, there are many ways that legal confrontations with health insurers or liability insurers can drain a doctor's wallet, damage the quality of care, or simply make practicing difficult. And just as certainly, doctors are always on the lookout for ways to avoid them. We gathered six tips from physician-focused attorneys to help keep you in the clear.

1 Look Out for Down-Coding.
"The top five insurance companies in California agreed not to do any down-
coding" as a result of a class-action settlement, says Chris Angelo, a Manhattan Beach lawyer with Angelo and DiMonda. In down-coding, a health insurance company pays for the service or procedure whose code lies immediately below the code reported by the physician in seriousness or complexity.

Of course, the main antidote to down-coding is familiar to all doctors. "There's an old saying, 'If it's not in writing, it never happened,'" says Angelo. I'd be very oriented toward good note-taking if I was a physician who wants to maximize the rate of reimbursement."

2 Understand Payment for Special-Needs Children.
Doctors who deal with special-needs children in California should know that there is no longer any limit on payment. "The only limit for treating childhood disabilities-mental and nervous disorders-is medical necessity," Angelo says. "The only language that the claims adjuster knows is what he's taught in his insurance policy-Physicians must know that if they know the law, they can say, 'Well, that's not enforceable in California, see AB 88,'" Angelo recommends. He also suggests that doctors who deal with special-needs children visit www.greaterlongbeach-asa.org for more information.

3 Beware of Silent PPOs.
A silent PPO is a specific kind of sub-contractor that a physician signs with, but which is not a health plan itself. In the silent PPO's contract with a health plan, there may be requirements or restrictions that the physician doesn't know about. "Make sure you know which health plan you're agreeing to contract with, and know what payment rates you're going to be getting from each of them," suggests Larry Conn, special counsel with Foley and Lardner in Los Angeles. For example, a physician may assume that a contract with Health Net only pertains to that insurer, he says. "But it turns out that [the contract] also binds you with Blue Cross, and the rates are lower than what you could've gotten from Blue Cross." Conn recommends that doctors ask for something in writing in a health plan's agreement that clearly states that it binds them only to certain plans or HMOs.

4 Remove Gag Clauses.
"This is something that the California Department of Managed Healthcare takes a very stern view of," says Conn. Gag clauses are provisions that prevent the physician from discussing certain options with the patient, such as ways to get treatment that may not be covered by the HMO.

In another example from Conn, a physician who is ending a particular health plan contract will sometimes want to tell patients which insurance carriers he continues to accept, should they want to continue seeing this doctor. "The physician isn't supposed to tell the patient to cancel, [or say], 'You should switch from Health Net to Blue Cross'-that's not appropriate," Conn says. "But it's certainly appropriate for the physicians to let the patients know what insurance he takes and how the patient can continue to see the physician if the patient wants to. The law would prohibit health plans from putting in a lot of these gag clauses, but sometimes they're in there anyway."

5 Locate a Contract's 'Gotchas.'
"To me, the biggest problem that physicians have when contracting with health insurance plans is that they fail to carefully review and understand all of the provisions in the particular contract, from operational, to financial, to termination," says Mike Bernstein, an attorney with Schiff & Bernstein in Los Angeles. "You may not be able to negotiate many changes to the agreement, but wouldn't you want to know what the obligations are before signing?"

An experienced lawyer can see some things that might not stand out to every doctor, and Bernstein cites some common ones related to terminating a contract: doctors may be required to give advance notice; doctors must send a letter to notify patients; doctors may have obligations to store medical records; doctors may be required to provide medical records to new providers.

6 Beware Burning Limits.
In doctors' liability insurance, every dollar spent in defending you can reduce-dollar-for-dollar-whatever your indemnity limits are, says Angelo. This leaves doctors with less coverage to settle a case, if necessary. These "burning limits" can be delayed by a credit for a certain amount of legal defense coverage, so that the amount of money available for a settlement does not begin to reduce until the credit is exhausted, he says.

In the 1996 case Lipton v. Lawyers Mutual Insurance Company, Angelo successfully argued that if an insurer believes that a probable liability case's damages may exceed policy limits, it is the insurer's duty to inform the plaintiff that it has a burning-limits policy that is about to start reducing. For example, a physician's liability insurer might say, "Here's $1 million-we're offering it to settle the case, and if you don't settle now, it's going to burn, burn, burn away so that there will only be $750,000 by the time you go to trial," explains Angelo. "And if there's an appeal, there will only be about 500K after you exhaust appeal, so take the money now," he says. "Then, if the insurance company refuses to settle right then and there, you have activated the doctor's right to sue for bad faith, and have the insurance company pay for the entire amount recovered above his policy limits later on, because that's the measure of damage."