REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
November 5, 2024
FROM
ANDREW GOLDFRACH, ARMC Chief Executive Officer, Arrowhead Regional Medical Center
SUBJECT
Title
Non-Financial Terms and Conditions with American Association of Professional Coders for a Software Platform
End
RECOMMENDATION(S)
Recommendation
Approve non-financial Terms and Conditions, including non-standard terms, with the American Association of Professional Coders for the use of its software platform for Codify Pro Fee Coder software, beginning upon execution of a quote and continuing until terminated by either party.
(Presenter: Andrew Goldfrach, ARMC Chief Executive Officer, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost) as the Terms and Conditions (Agreement) with American Association of Professional Coders (AAPC) is non-financial in nature.
BACKGROUND INFORMATION
Approval of the Agreement for the Codify Pro Fee Coder (Codify) software platform licensed by AAPC provides the Health Information Department, as well as Clinical Documentation Information staff at Arrowhead Regional Medical Center (ARMC) with access to a medical coding application that offers tools for inpatient and outpatient coders. The platform includes add-ons such as Dorland's Illustrated Medical Dictionary and Current Dental Terminology (CDT) Code. The Codify platform also has a Historical Code Sets feature that allows users to access medical coding data from 2018 forward. This platform is the newest revenue cycle platform, providing ARMC with the fastest tool for code look-up.
AAPC is the nation’s largest education and credentialing organization for medical coders, billers, auditors, practice managers, documentation specialists, compliance officers, and revenue cycle managers. Medical codes are accurately assigned by coders, determine payment charged by billers, and are monitored and verified by auditors and compliance officers. Standardized medical codes expedite information gathering, billing, and data collection. This system allows ARMC to accurately determine proper billing modifiers to reduce insurance claim denials.
The Agreement is AAPC’s standard commercial contract, which includes terms that differ from the standard County contract and omits certain County standard contract terms. The Agreement is a non-negotiable clickwrap accepted by signing up for, using, visiting, browsing, of logging into the service. The non-standard and missing terms include the following:
1. The Agreement is silent on governing law
• The County standard contract requires California governing law.
• Potential Impact: Having no specified governing law in the Agreement results in uncertainty over which state’s laws will govern the interpretation of the Agreement, and leads to ambiguity in interpretation of the Agreement terms. AAPC is a professional association headquartered in Salt Lake City, Utah. The Agreement could be interpreted under any state law depending on where the claim is brought, including Utah or California. Any questions, issues or claims arising under this Agreement could require the County to hire outside counsel competent to advise on the applicable state law, which may result in fees that exceed the total Agreement amount.
2. AAPC may change the Agreement terms without notice at any time.
• County Policy 11-06 requires that any changes to the contract to be reduced to writing, executed and attached to the original contract and approved by the person(s) authorized to do so on behalf of the contractor and County.
• Potential Impact: The County could be agreeing to new terms without review by anyone, including County Counsel, and without approval of the new terms by the Board of Supervisors. County Counsel cannot advise on whether and to what extent any non-California state law may affect the enforceability of unilateral changes to the terms.
3. AAPC may assign the Agreement without notice to the County and without the County’s approval.
• The County standard contract requires that the County must approve any assignment of the contract.
• Potential Impact: AAPC could assign the Agreement to a third party or business with which the County is legally prohibited from doing business due to issues of Federal debarment or suspension and conflict of interest, without the County’s knowledge. Should this occur, the County could be out of compliance with the law until it becomes aware of the assignment and terminates the Agreement. County Counsel cannot advise on whether and to what extent any non-California state law may permit or restrict a party’s right to assign without an express provision in the Agreement.
4. There is no provision in the Agreement addressing each party’s responsibility for paying attorneys’ fees.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: County Counsel cannot advise on, whether and to what extent, any non-California state law may affect a party’s requirement to pay the prevailing party’s attorneys’ fees and costs in a legal action where no specific provision is provided in the Agreement.
5. All disputes arising under the Agreement must be settled by binding arbitration.
• The County standard contract does not require arbitration.
• Potential Impact: Binding arbitration decisions are not appealable. In addition, disputes that might otherwise be settled in small claims court would incur arbitration costs that could exceed the costs of a small claims action, and the Agreement amount. County Counsel cannot advise on whether and to what extent such arbitration provisions may be enforceable against a government entity under any non-California state law.
6. The Agreement does not require AAPC to indemnify the County, as required by County Policies 11-05 and 11-07, including for intellectual property infringement claims.
• The County standard contract indemnity provision requires the contractor to indemnify, defend, and hold County harmless from third party claims arising out of the acts, errors or omissions of any person. The standard contract provision for intellectual property indemnity is: Contractor will indemnify, defend, and hold harmless County and its officers, employees, agents and volunteers, from any and all third party claims, costs (including without limitation reasonable attorneys’ fees), and losses for infringement of any United States patent, copyright, trademark or trade secret (Intellectual Property Rights) by any goods or services.
• Potential Impact: AAPC is not required to defend, indemnify or hold the County harmless from any claims, including indemnification for claims arising from AAPC’s negligent or intentional acts and intellectual property infringement. If the County is sued for any claim, including intellectual property infringement based on its use of AAPC’s software or services, the County may be solely liable for the costs of defense and damages, which could exceed the total Agreement amount. County Counsel cannot advise on whether and to what extent any non-California state law may allow the County to require AAPC to defend or indemnify it absent an express provision in the Agreement.
7. The County is required to indemnify AAPC against all claims arising out of: (a) the County’s use of the services, (b) any use of the County’s account, (c) the County’s connection to the services via the Internet, (d) the County’s violation of the Agreement, (e) the content submitted by the County to the services, and (f) the accuracy, quality, and performance of the services.
• The County standard contract does not include any indemnification or defense by the County of a contractor.
• Potential Impact: By agreeing to indemnify AAPC, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against AAPC without such limitations and the County could be responsible to defend and reimburse AAPC for costs, expenses, and damages, which could exceed the total Agreement amount. County Counsel cannot advise on, whether and to what extent, any non-California state law may limit or expand this Agreement term.
8. The Agreement does not require AAPC to meet the County’s insurance standards as required pursuant to County Policies, 11-05, 11-07 and 11-07SP.
• County policy requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department and as set forth in County policy and in the County standard contract.
• Potential Impact: The County has no assurance that AAPC will be financially responsible for claims that may arise under the Agreement, which could result in expenses to the County that exceed the total Agreement amount.
9. AAPC disclaims all liability to the County, including direct damages.
• The County standard contract does not include a limitation of liability.
• Potential Impact: The County is financially liable for all claims arising under the Agreement. County Counsel cannot advise on, whether and to what extent, any non-California state law may limit or expand the exclusion of limits to the extent prohibited by applicable law.
10. There is no stated venue in the Agreement.
• County Policy 11-05 requires venue for disputes in Superior Court of California, County of San Bernardino, San Bernardino District.
• Potential Impact: AAPC is headquartered in Salt Lake City, Utah. Having no express venue in the Agreement means that Salt Lake County, Utah venue could be applied to disputes arising under this Agreement, which may result in additional expenses that exceed the amount of the Agreement.
11. AAPC provides the services and/or products “AS IS” and “AS AVAILABLE” and disclaims all warranties of any kind.
• County Policy 11-05 requires a contractor to fully warrant its services and products.
• Potential Impact: The County’s use of the services and/or products is solely at its own risk. County Counsel cannot advise on, whether and to what extent, any non-California state law may limit or expand the disclaimers of warranty to the extent prohibited by applicable law.
ARMC recommends approval of the Agreement, including non-standard terms, to allow the Health Information Department of ARMC to optimize productivity, minimize risk, and maximize revenue, which translates into improved clean claim rates, reduced administrative costs, and maximized reimbursements.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Bonnie Uphold, Supervising Deputy County Counsel, 387-5455) on September 30, 2024; Risk Management (Gregory Ustaszewski, Staff Analyst, 386-9008) on October 2, 2024; ARMC Finance (Chen Wu, Finance and Budget Officer, 580-3165) on October 10, 2024; Finance (Jenny Yang, Administrative Analyst, 387-4884) on October 11, 2024; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on October 16, 2024.