Medical Practice Management
May 07

Contract’s Language is as Important as the Contracted Rates

The provisions of a managed care contract are nearly as important as the rates the contract pays. For example, one clause in managed care contracts requires that all referrals to other doctors be in-network. As insurance companies have lost payment battles in large class action suits, they have tried to add language to contracts that puts them in control. The mighty Health System in the area may have the power to refuse to accept onerous language, such as that all referrals must go to doctors on an insurance company’s panel, and if patients go out of network, the insurance company can charge the cost of referral back to the doctor on its panel who made the referral, or that the insurance company can change providers’ fees at any time in the future. But less powerful negotiators must take care to read their contracts carefully to be aware of just what they are agreeing to.

The managed care contract should answer the following questions about submitting claims and making payments:

1. Within how many days after services are provided must the provider submit the claim, and what is the grace period, if any?

2. What documentation must the provider supply to the payer?

3. Within how many days after a claim is submitted must the payer remit payment?

4. Will interest be added to any late payments?

5. Will the payer be required to post a performance bond or other guaranty of payment?

6. Who will be responsible for determining the existence of other insurance coverage for a particular patient and calculating any billing allocations under coordination of benefits rules?

7. How long does the insurance company have to reclaim monies that it claims might be overpayments

8. Does a practice have to accept the insurance at all locations and for all practice members.

9. Who determines what is medically necessary.

10. What type of credentialing is needed to be a network physician.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →