September 3, 2021 | By Melody Irvine, CPC, CPMA, CEMC, CFPC, CPB, CPC-I, CCS-P, CMRS, CMRS, CMCS
Often physicians’ groups sign insurance contracts without analyzing or performing an in-depth review of the agreement before they sign on the dotted line. Make sure you clearly understand the contract and language. Without fully understanding the contract, this could put your practice at a financial risk.
A couple of questions to consider:
- Are we getting reimbursed appropriately compared to other payers?
- Do you understand the language and definitions of the contract?
Contracts are very important to review, but one step that is often missed is not involving the billing and coding department in these processes. This group of individuals can be a wealth of information and identify common problems with carriers, including improper payment of modifiers, incorrect reimbursement rate, and unpayable diagnosis codes.
First, you need to determine which insurance carrier is the most financially burdensome for your organization. Run reports to look at the top CPT codes you bill for your specialty and compare reimbursement with all your insurance contracts. Some contracts may pay higher for CPT codes you rarely use and this needs to be negotiated. This analysis will help you identify low payments for codes that you use frequently.
To help identify these payer reimbursements of CPT coding, calculate each payer by the total dollars you received over the previous twelve months and divide by the total number of visits. Perform these calculations for each insurance payer and this will assist your practice where to start.
Understand the terms and language of the contract. These are some examples to be aware of:
- An evergreen clause will identify deadlines for contract negotiations or could even automatically renew the contract every year. Indicate in the contract that it must be renegotiated every year. This is important to ensure the contract does not revert to an older version
- The contract should give you the option and ability to cancel the contract. It is recommended to write a ninety-day “out” clause in the contract
- It’s very important to eliminate any “Silent PPO’s” from the contract. These are organizations that are allowed to have access to the providers at a discounted rate for physician, hospital, or other health care provider services without direct authorization from the provider. Typically, the providers are not notified they are part of the contract, and the organization must accept assignment
- Require payer to give a 30-day advanced notice of any changes to policies and procedures in writing. This is especially important for any notification of fee schedule changes.
- Eliminate Retroactive Denials from the contract. This is a huge burden to a practice. Sometimes health plans determine mistaken payments then demand refunds. Prohibit rescinding payments more than 120 days. Offset and withholds provisions. Review any language of the healthcare organization withholding funds and set time limits.
The insurance company may indicate “we can’t do that” or “we have one fee schedule for all providers”. In general, these statements are not true. It may be worth your time and money to hire a healthcare attorney to assist in reviewing the legal terminology that could eliminate costly errors for your practice. This is a time-consuming job but once you understand the language and know what to view in future contracts, this becomes much easier.