Healthcare companies prepare for ICD-10 with hold harmless clauses

For some healthcare systems, the conversion from ICD-9 to ICD-10 may seem like the latest Y2K problem – fail to get it right and the consequences could be fatal. So many organizations are being cautious by developing hold harmless clauses to protect against any consequences of errors with the new conversion.

[See also: ICD-10 Budgeting: Account for direct and indirect ICD-10 transition costs.]

Victoria Vance, an attorney with Tucker Ellis LLP in Cleveland, said she knows of several healthcare organizations and vendor companies that are developing hold harmless clauses in their contracts, and are in fact mutually indemnifying each other.

Why? While each side is willing to take responsibility for their end of things, ICD-10 is unchartered territory, and Vance said, healthcare systems worry whether their vendor partners will be there for the long haul. The longevity track record of many vendors in the healthcare space has not always been reassuring, she noted.

While hold harmless clauses are fairly commonplace in contracts of all types, organizations need to remember to be very exact in the language of these conversion contracts and clauses.

“Often these agreements are more likely to include a limitation related to the type or nature of an indemnification or hold harmless duty. What appears on its face to be a standard clause can be a hotly-contested part of contract negotiations,” said Sarah E. Swank, an attorney with Ober Kaler in Washington D.C.

The biggest concerns raised during contract negotiations, she said, relate to negligent or intentional acts or omissions during the conversion that cause downstream problems. “These provisions come down to risk shifting and the amount of liability that (each) party is comfortable taking on,” Swank said.

Swank recommends a careful review of who is being indemnified and for what actions and type of indemnification, and that attention be paid to representation and warranties, dispute resolution, insurance and limitations of liability provisions.