High Impact Provisions, Leverage, and Why Providers Should Be Looking Beyond the Contract
Contracts are long and complicated, often missing or obscuring key information a provider needs to make an informed decision about whether to agree to the contract’s terms. In addition, insurance companies are incredibly resistant to modifying their contracts. Contract negotiation employees often say “no” to even minor changes, expecting that the provider will back down. It takes a significant amount of pushing back to gain access to the staff with the power to make changes. Many providers, we know, simply negotiate the fee schedule, and sign the payer contract without a full understanding of its content. We think that is a mistake—these contracts can have legal and financial impacts unrelated to the fee schedule rates, which outlive the contract itself. But, it's not always clear what parts of these gargantuan documents medical practices should be looking for to reduce their risk. Below, we have described specific types of provisions to read carefully and consider, how easy it will be to change them, and why you may be agreeing to more than the language inside the contract:
High Impact Provisions
- Benefit plans. Does your contract require that you participate in ALL of the payer’s benefit plans? If so, are there additional administrative burdens imposed by the other benefit plans? If so, you may want to opt out.
- Utilization Management. Read carefully the requirements for pre-authorization and referral procedures. They can be burdensome or even risky when they are accompanied by penalties for failure to submit clean claims. In addition, some utilization management provisions have the potential to interfere with a practice’s method of delivering care. You should push back on any provisions that could prevent a physician in your practice from doing what is appropriate for the care and well-being of his or her patients. An example is a “medical necessity” provision that gives the payer the authority to determine what is medically necessary for reimbursement purposes.
- Prompt payment. Make sure the contract promises to pay you at least as soon as is statutorily required by your state law. Find out your options for redress if the payer fails to pay promptly.
- Timely filing. Examine the timely filing requirements, and make sure that the time period is long enough to give your practice time to submit all claims. Ninety days is a reasonable length of time, but the longer the time period, the better for your practice. Some plans will allow up to a year to submit timely claims.
- Retroactive denials. For some contracts—Medicare Advantage in particular—the provider must agree to repay any amounts granted for claims that are incorrect or improperly submitted. In most contracts, you can place a time limit on how far back a payer can go to audit and recoup any fees paid for disallowed services. You may want to reject retroactive denials altogether, except in the case of fault or fraud.
- Contracting payer. Payers will often “rent” their network providers with other entities—e.g., large employers. Make sure you understand the payer’s definition of “contracting payer”, and that you have a clear idea about who (beyond the payer itself) has access to the fee schedule you negotiate with the payer.
- Most favored nation. This is a clause that requires that you offer the payer the lowest rate you’ve negotiated with any other payer. It is rarely a good idea to accept this clause in your contract.
- Audits. It will be important to understand the payer’s rights to audit your practice. This process could be administratively or financially burdensome, depending on their scope and frequency.
- Term and Termination. You should consider whether a multi-year or single-year contract makes sense for your practice. You also want to make sure you understand how you terminate the contract and any related repercussions. Pay particular attention to the notice period required prior to termination—some contracts will impose notice period of up to a year, which can seriously hamper a practice’s ability to get out of a contract that is losing them money or time.
- General provisions. General contract provisions such as indemnification, limitation of liability, dispute resolution, assignment, and disclaimers should be carefully considered. Make sure that these provisions provide mutual protection for both parties.
When evaluating whether or not the language in your contract is acceptable, you should also consider whether you have the power in the transaction to negotiate a change in the contract terms. Like any other negotiation, a party with no leverage is unlikely to get any concessions. Before you ask for any changes in your contract, consider what kind of leverage you have. Obviously, the more of that payer’s members you serve, the larger impact there would be if you suddenly dropped that payer. These companies want to prevent gaps in access, which leads to unhappy members who may choose other payers in retaliation. If your specialty or practice is unique or desirable in your region, you may also be able to argue that loss of your business would displease their members. If the plan is just starting to gain a foothold in your region, that gives you significant leverage. In addition, in the era of “value over volume”, payers are forced to innovate to try to bend the health care cost curve—if you can demonstrate that your practice is providing high quality, low cost care, and preventing patients from seeking or requiring more expensive care, that can grant you leverage as well.
Beyond the Contract
After you have reviewed the contract in its entirety, keep in mind that there may be other documents referenced in the contract that are "incorporated by reference". For instance, your contract will most likely reference the payer’s policies and procedures. Request a copy of these items, as their requirements are incorporated into the contract as if you were signing them, too. They can have important details about how to comply with the contract provisions.