How closely do you look at your medical practice's insurance contracts before you sign on the dotted line? This can be a time-consuming effort but worth it to identify language or hidden agendas you may want to eliminate.
There is an imbalance of power between the insurance companies and physicians. Insurance companies are responsible first to the shareholders, second to the customers, and then last to the contracted vendors.
Identify Problem Payers
You’ll want to identify those payers that represent the highest percentage of volume in your practice. Calculate your revenue per visit by determining the total dollars you received for your work over the previous 12 months and then divide by total number of visits by each insurance company. These calculations will help you determine which insurance contract you need to focus on and which ones are the biggest financial burdens. Most likely it will identify four or five major plans.
Run reports to look at the top CPT® codes you bill and compare reimbursement with all your insurance contracts. This analysis will help you identify low payments for codes that you use frequently. The contract may pay a higher fee schedule for certain procedures but if your practice does not perform these procedures, negotiate a higher rate for those procedures performed in your practice.
Language of Contract
Many payer contracts have “evergreen” clauses that delineate deadlines for sending notice to discuss the contract’s renewal. An evergreen clause automatically renews the contract for another term, typically one year, if the contract is not terminated within a specified notice period prior to the end of the current term.
Look at the language pertaining to cancelling your contract. Write a 90-day "out" into the contract. If you find yourself in a bad contract where you're just losing money, you can get out in 90 days without reason.
Silent PPOs can be a major problem in contracts. Silent PPOs are organizations that access a discounted rate for services from a physician, hospital, or other healthcare provider without direct authorization from the provider. This is how silent PPOs work:
Your practice receives an explanation of benefits for the patient, claiming a discount based on the PPO fee schedule with which your practice has contracted. Your contract states you will not bill the contracted health plan enrollees for amounts in excess of the negotiated fee. This discounted fee is all you will receive in payment.
Retroactive denials are demands for refunds on claims that can be several years old. Make sure there is wording in your contact that would prohibit health plans from withdrawing payments more than 120 days after receiving the claim unless a problem is found with the claim.
Advanced written notification of changes to policies and procedures should be clearly defined with a reasonable notice such as 30 days.
Other Important Contract Considerations
•Which guidelines are used to process claims by the payer?
• Is timely filling of claims reasonable?
• Review the definition section for terms of medical necessity and what are considered covered services.
• Where must ancillary services be provided?
• Which fee schedules are used (some years may be more to your advantage than others)?
• Make sure frequently used modifiers are clearly defined in terms of how they are used and paid.
For the negotiations, I recommend involving the medical director, office manager, healthcare attorney, and coding/billing department. Often the coding/billing department is left out of these negotiations and they have vital information concerning claim denials, proper use of modifiers, diagnosis, etc. These individuals work daily with the insurance payers and know idiosyncrasies and frustrations of improper interpretations and unclear definitions.
These are just a few of the many areas that should be reviewed in insurance contracts and I recommend the legal guidance of a healthcare attorney. Consider renegotiating your contracts annually to make sure they have not reverted to original terms.
Melody S. Irvine, CPC, CPMA, CEMC, CFPC, CPC-I, CCS-P, CMRS, has over 30 years of experience in the medical profession. She specializes in physician auditing, education, curriculum development, and consulting services. She is the CEO and founder of Career Coders online medical billing and coding school. Irvine is an approved Professional Medical Coding Curriculum (PMCC) instructor with AAPC. She is also a member of the AAPC’s National Advisory Board. E-mail her here.