Susan Charkin, MPH, president of Healthcents, an ASC and physician specialty hospital contracting and consulting group, shares four clauses providers should watch for when contracting with third-party payers.
1. Retrospective review. Watch for clauses limiting the amount of time the payer can review paid claims for mistakes (and overpayments). A time limit for retrospective review could prevent you from having to pay for indefinite claims errors on the part of the payer.
2. Termination for cause. You want to make sure to have a 90 day notice to terminate without cause, says Ms. Charkin. If possible, avoid tying the 90 day notice to the anniversary date of your agreement. Many contracts are written to require termination within 180 days of the anniversary date of the agreement. This requires you to have to figure out what the anniversary day / month is and then kick back 180 days to be sure you have renegotiated or terminated prior to this date. Many times, this window is missed and then you’re stuck with your contract for another year. The payers often do this so that you miss your window to terminate or to renegotiate in time. If this “180 day prior to the anniversary date” clause is included, but the payer isn’t’t paying you according to contract, you can still terminate for cause.
3. Payor proprietary fee schedules. Make sure the payer is required to adhere to the contracted rates. “A lot of times what you’ll see is they’ll pay you the payer’s proprietary fee schedule, which means absolutely nothing because they can jerry-rig that rate any way they want,” says Ms. Charkin. “You want to make sure that after you finish with your negotiations, your payer gives you the rates for the contracted codes so when the claims come in, you can appropriately adjudicate and make sure they are paying you according to contract.”
You also want to make sure they can’t change the rates, she says. Oftentimes a payer will reserve the right to modify the fee schedule.” Why contract if they have the ability to change the rates?” she says. “Sometimes they won’t be willing take that out, but you can say that if you modify your fee schedule, you have to give us 60-days notice by certified mail and if you do that, then we have the ability to terminate without cause. You want to make sure this kind of language is in there as well.”
4. Silent PPO provisions. If payers include this clause in your contract, it gives them the right to sell the contract to other payers who can then access your contract and the rates you agree to. “The way these payers make money is not only selling to the employer groups but they sell these contracts to all of these self-insured companies,” says Ms. Charkin. By doing so you may be agreeing to give discounts to low volume patients or employer groups that would otherwise come to your center through another agreement at higher rates.
5. Bundled Coding: Many contracts indicate that they payer will use a combination of Medicare specific and payer proprietary coding methodologies. The fallout from these is that they can, in many instances, negate the increases that you negotiate by allowing the payers to take unbundled services and bundle them into one code, thus reducing your reimbursement. Make sure that there is language in your agreement which specifically indicates that any coding changes must be sent to you per the notice provision in your agreement and that any reduction in reimbursement over the current terms is not allowed under the terms of your existing agreement or, at the very least, allows you, the provider, to either renegotiate the contract midterm or terminate the contract without cause.
“If you can, negotiate these provisions away,” she says. “That’s usually pretty hard to do, so if you can’t, you can still use that as leverage to do other things in your agreements such as increase CPT code reimbursement and get implants added as additional reimbursement.”
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