What To Look For In Your Medical Contract

Every medical professional eventually has one payer that is rather difficult to manage. In such a situation, you’ll often find that you can’t use the contract to help you – that is unless you were involved in negotiating it. If the relationship does fall apart, you may have trouble getting the money that you lost. This is why it’s so important to never let a payer have you sign a physician contract that you never had a say in. The professional relationship goes both ways, and you should know how to negotiate terms that both parties can agree on. Here are some things you should know:

Stay away from physician contracts with an indefinite life

A lot of contracts incorporate an evergreen clause, which basically means that the contract renews indefinitely until something happens and results in termination by one or the other party. There may even be contracts that are so hard to terminate that you are never able to, even if you want to.

An evergreen clause on its own doesn’t mean you need to throw out the entire contract. However, it does mean that you should look for a defined number of days needed for either party to effect a chance, an acceptable termination period, and an opportunity for either party to correct a breach of contract within a certain number of days.

Limit the credentialing period

A lot of new doctors have to deal with tons of denials and adjustments on credentialing issues. Sorting out such adjustments can take anywhere from a couple months to an entire year! When you limit the credentialing and enrollment process in your contract, however, you’ve got something working on your side. Make sure the physician contract states the elements required by the payer as well as the forms set to be completed. Include a deadline that requires the payer to review then accept and deny an application within. In the case that the enrollment process is slower than anticipated, make sure the payer is able to guarantee that they will pay claims between the completion of the enrollment process and the closing of the specified period.

If the payer doesn’t agree to process claims between the periods, see if it is possible for the enrollment application to be submitted before the physician’s enrollment. This will keep you safe from losing out, especially during the beginning period of the new physician’s employment.

Have a firm grasp of discounted payment rates

The payment process in the medical industry can be rather challenging to understand. There often aren’t any fixed prices. Instead, the payer often reimburses you on a certain discounted rate. It’s crucial for you to understand these discounted payment rates in order to streamline your payment process.

Discounted payment rates are also often referred to as “allowable rates” because it is the money that your practice is permitted to collect. You have to know how to steer clear of contracts that only state that the payer rates will be set at 115% of Medicare. You need more detail than that. Ask for a payment formula or even a report of the procedure codes that will be used. Make sure the payer is able to produce its rate for each. It’s also useful to request all their payment policies, especially the recognition of procedure codes and the related guidelines.

There are also quite a few states that demand that payers grant physicians’ requests for their rate schedules. Make sure the payer knows to inform you before there are any changes made to the rate schedule. If you are not informed, you should be paid the difference with interest on top.

Make lump-sum reimbursements an option for underpayments

A lot of medical clinics don’t get paid all the money that they are due. When negotiating a contract, try to include the ability to ask for lump-sum reimbursements so you don’t have to waste time resubmitting every single claim.

Define medical necessity

Oftentimes the term medical necessity is understood differently between different parties. A payer may not define it the same way as you would. To avoid any issues related to this in the future, make sure the definition of the term is made clear beforehand.

Romanowsky Law specializes in Physician Contracts in the New Jersey & New York area – get in touch today to see how we can help.