Contracting: Beware these contract pitfalls

Q. What are some red flags in payer contracts?
 - 
Friday, October 21, 2016

A. In addition to contracted rates, there are key items often found in payer contracts that can significantly affect and often reduce reimbursements. Here are a few to look for:

• Retrospective review. Watch out for clauses limiting the amount of time the payer can review paid claims for mistakes (and overpayments). A time limit for a retrospective review could prevent you from having to pay for indefinite claims errors on the part of the payer.

• Termination for cause. You want to make sure to have a 90-day notice to terminate without cause, when 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.  

• Payer’s proprietary fee schedules. Make sure the payer is required to adhere to specific contracted rates. Look out for clauses like “100% of payer X’s fee schedule.” Get the rates for your key contracted codes/services so when the claims come in, you can appropriately adjudicate and make sure they are paying you according to contract.

• 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. 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.

• Bundled codes: Many contracts indicate the payer will use a combination of Medicare specific and payer proprietary coding methodologies. The fallout: The increases you negotiated are negated by bundling multiple services into one code, thus reducing your reimbursement.

Steve Selbst is CEO/co-owner, Healthcents Inc. Reach him at selbst@healthcents.com