Clinical Validation Audits Are Growing Exponentially and Quite Often Hospitals Remain Powerless to Stop Them.

Author: Kendall Smith, MD | Chief Medical Officer & Chief Physician Advisor – PayerWatch & AppealMasters

Informed Consent and Managed Care Contracts: A Call to Action
Informed consent is about ensuring patients know the risks, benefits, and alternatives of their treatments. This concept is rooted in the principles of patient autonomy and ethical treatment, ensuring that individuals can make well-informed decisions about their healthcare. Now, let’s apply this concept to managed care contracts, particularly in the complex world of clinical validation audits. These audits require a thorough understanding of the terms and conditions outlined in the contracts, as well as a commitment to transparency and patient-centered care. By extending the principles of informed consent to managed care, we can enhance the integrity and accountability of healthcare practices.

Understanding Clinical Validation Audits

Clinical validation audits are reviews by insurers to make sure medical records meet their criteria for diagnoses like sepsis, congestive heart failure, and malnutrition. If your documentation doesn’t match their standards, they can deny your claims. The tricky part? These standards often differ from accepted clinical guidelines and can change at any time without notice.

The Impact of Provider Manual Changes

Insurers often update provider manuals with new policies and guidelines that affect how conditions are defined and how claims are processed. These unilateral changes can catch hospitals off guard, impacting revenue and operations. Here’s how it can impact you:

Sepsis: Stricter definitions could mean more denied claims, even with accurate diagnoses.
Congestive Heart Failure: Revised criteria can disrupt your documentation and coding practices, leading to more denied claims.
Malnutrition: New documentation requirements make it harder to meet standards, resulting in more denied claims.

The Case for Mutual Agreement Clauses

To protect your interests, mutual agreement clauses in provider manuals are essential. They ensure hospitals have a say in any revisions. Including these clauses will:

Prevent Unilateral Changes: Promote fairness and transparency.
Ensure Clinical Alignment: Minimize disputes and support consistent coding practices.
Enhance Communication: Foster better communication between hospitals and insurers.
Reduce Revenue Risk: Help hospitals prepare for changes and mitigate revenue loss.

Implementing Mutual Agreement Clauses

When negotiating contracts, hospital revenue cycle executives should advocate for the following clauses:

  1. Engage Legal and Clinical Teams: Ensure that proposed clauses are robust and enforceable.
  2. Communicate Clearly with Insurers: Emphasize the advantages of mutual agreement.
  3. Monitor Provider Manual Updates: Establish a process for timely responses and negotiations.
  4. Document Agreements: Maintain detailed records for future reference and dispute resolution.


Informed consent is a cornerstone of ethical patient care, and applying this principle to managed care contracts is essential for maintaining integrity and transparency in healthcare. By understanding the intricacies of clinical validation audits and the ongoing impact of provider manual changes, healthcare providers can better navigate these challenges. Implementing mutual agreement clauses is a critical strategy to safeguard against unilateral changes that can affect revenue and operational efficiency. By fostering collaborative and transparent relationships with insurers, hospitals can ensure more consistent and fair practices that ultimately benefit both providers and patients.