Do You Understand Your Healthcare Payer Contracts?

You probably have a love-hate relationship with your healthcare payer contracts. While they are essential to your practice or medical group’s financial security, they also cause countless headaches and payment delays.

If the legalese and convoluted terms of your payer contracts are creating inefficiencies and uncertainty, you’re not alone. Our physician and medical practice lawyers help providers across Illinois resolve their contract disputes and get prompt payment for their services. In this blog, we discuss common issues that healthcare professionals encounter in their payer contracts and suggest ways you can improve your reimbursement systems.

Understand Your Contractual Rights to Simplify Your Revenue Stream

Roughly 91% of Americans have some form of health insurance, according to 2019 census data. So, managing insurance contracts is likely part of your everyday operations. Your practice probably has to navigate an array of pay-for-service, performance-based, and population-based contracts with both public and private insurance providers. Each one has its own terms, credentialing requirements, fee structure, and loopholes.

While your practice strives for clean claims—when the insurer can process them fully without additional information—it can be hard to navigate the dense terms and conditions of your payer contracts. To make matters worse, insurers typically give themselves the freedom to amend their agreements and fee structures unilaterally. If you don’t take a comprehensive approach to contract management, it’s easy to lose money.

Make Sure You Understand These 6 Elements of Your Healthcare Payer Contracts

We understand why some healthcare providers skim their payer contracts, rather than getting into the fine print. However, you do so at your own peril. These terms can dramatically impact your reimbursements, so we suggest that practices create a contract management system that identifies the following issues:

1. Unilateral Amendments

Many healthcare payer contracts let the insurance company change their terms at will. This can lead to unexpected changes in your payment rates and other requirements—sometimes with minimal notice. You typically have a limited time to object to the changes and renegotiate them.

2. Dispute Resolution Requirements

As an increasing number of payers are shifting to value-based or pay-for-performance systems, we’re seeing an increasing number of denied claims and disputes. Many healthcare payer contracts include detailed dispute resolution requirements, which you must follow when payment or other disputes arise. Look for mediation or arbitration clauses, which can limit your legal options.

3. Reimbursement and Fee Schedule Issues

Payers should always give you a detailed fee schedule and outline their reimbursement procedures. In addition to understanding each of your payer’s precise reimbursement requirements, look out for unilateral amendments to these terms.

4. Medical Necessity

Most healthcare payers will only reimburse providers for medically necessary care. However, their definition (and interpretation) of “medical necessity” can vary. Makes sure you identify each contract’s approach and note limitations that might impact your patients’ access to care.

5. Network Requirements

Network agreements and credentialing requirements are increasingly important, as more payers push managed care. Make sure you understand the exact parameters of each payer’s network and carefully monitor any changes to these networks and their credentialling requirements.

6. Renewal and Termination

Make sure you identify payer contracts that automatically renew—and those that do not. These clauses will impact your ability to renegotiate the contract’s terms or terminate contracts that are no longer beneficial for your practice.

RELATED: To Assert or Not to Assert Assignment in Out-of-Network Payer-Provider Disputes

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The content provided here is for informational purposes only and should not be construed as legal advice on any subject.

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