More contract terms you should know
In today’s economic climate, an awareness of the options available to physicians—as well as a willingness to negotiate—is key in executing acceptable physician contracts with insurance carriers.
Last month, I reviewed several contract terms and provisions that practice managers and physicians should know as they review insurance carrier physician contracts. These included the definition of usual and customary, down-coding protections, fee change procedures, special bundling procedures, the rules and regulations clause, and the look-back provisions. To review these terms, as well as the discussion of options for changing an unacceptable contract, see “Contracting: Beyond the basics”.
Defining “clean claims”
The definition of a “clean claim” is an important item that is frequently overlooked. Insurance companies can delay payment if the claim is not clean. With today’s technology, however, insurance companies should be able to reach this decision on a timely basis. A claim should be deemed clean if it is not returned or challenged within 30 days. This helps ensure that you receive payments promptly, and does not allow companies to delay payment for a claim by saying that it was not clean.
Timely payment requirements/penalties
Some states have enacted timely payment requirements. These rules are designed to support prompt payment of clean claims—and underscore the importance of knowing how the company defines a clean claim.
If, for example, the company does not pay for a clean claim within 45 or 60 days, the company may be required to pay interest on the payment. However, if the contract does not include a clean claim definition, it may be possible for the insurance company to say the claim was not clean, thereby avoiding the penalty.
Some practices have adopted internal procedures that involve the patient in ensuring timely payment of claims. One option is to require the patient to guarantee payment with a credit card or bank check authorization at the time of service, explaining that if the insurance company does not pay the claim within 90 days, the office will process the credit card or bank check.
Although this option cannot be used if the patient is insured under a federal or state health plan (such as Medicare or Medicaid), it can be effective when dealing with private insurers. A single call from an angry patient is worth many calls from your office.
Most favored nation status
A most favored nation status clause should guarantee that you will receive the same payments as other orthopaedic surgeons in your community. It is a useful clause to have in an addendum, but difficult to enforce. You must rely on the insurance company to inform you of contracts with other orthopaedic groups that have a higher fee schedule than your contract does.
Full fee disclosure
Full fee disclosure is easy for insurance companies to do, but most are reluctant to provide it. Companies have their fees on electronic databases and could easily provide them to you on request. Most companies, however, have rules limiting full fee disclosure to a specific number of codes. This makes it more difficult for practices to obtain and compare fee schedules for multiple companies.
Weighted average calculations
Although an announcement that the insurance company has increased fees for your specialty sounds like good news, a closer examination may prove otherwise. For example, a company may implement a 10 percent increase in payment for a rarely performed procedure at the same time that it cuts payments for a more common procedure by 5 percent. Although this results in a net 5 percent increase in the fee schedule, it may have a negative impact on your practice.
To assess the impact of any fee changes, your practice should regularly calculate the weighted average of any fee schedule changes. Simply take the fee change for each code and multiply it by the number of procedures you perform. This will accurately show you the impact of any fee changes.
Common credentialing is an important contract point. Credentialing agencies will do third-party credentialing of new practice members, as well as keep track of licenses, privileges, and the many other aspects of the credentialing process. Insurance companies should be willing to accept credentialing from your third-party agency, so that you do not have to do the paperwork for every company.
Automatic acceptance of new members is another contract parameter that benefits your practice. When a new member joins your group, the insurance companies you deal with should automatically accept him or her. Medicare, for example, will pay for services provided by a new group member once the paperwork is submitted, as long as the applicant is later accepted as a qualified provider. Insurance companies that have a 2-, 3-, or 4-month waiting process after you submit the credentialing papers are hindering the growth of your practice.
You should be able to terminate your contract with an insurance carrier with a minimum of 90 days notice. You should be able to terminate the contract immediately if the company breaches the contract, fails to make timely payments, issues a new fee schedule that you do not accept, or issues changes to the rules and regulations that you do not accept.
If you terminate your contract with an insurer, you should be sure to notify your patients that you will no longer accept a company’s coverage. This provides your patients an opportunity to change carriers, particularly if you make the decision in the fall, when open enrollment periods for many plans are common.
Insurance commissioner involvement
If you are having issues with timely payment, notice, or other provisions of your contract, you should notify not only your insurance company, but also the insurance commissioner of your state. In most states, the insurance commissioner has the authority to deal with these issues.
One last thought
Creating a checklist of these items to use when you evaluate contracts can be very helpful. Try to include as many as possible on every contract, and review your contracts on an annual basis. If you use the checklist when negotiating the contract, you can easily do a review without a complete analysis of every contract.
If a shortage of orthopaedists exists in your area, you should consider dropping the least desirable insurance company each year. Why not fill your office with patients whose insurance companies have better business practices and are willing to work with you? You will find that from year to year, different insurance companies will qualify for being the least desirable for your practice.
Charles E. Rhoades, MD, is president of Dickson-Diveley Midwest Orthopaedic Clinic, P.A., and a member of the AAOS Practice Management Committee. For more information on negotiating contracts, visit the online practice management center at www.aaos.org/pracman
Editor’s note: The information in this article is intended for general information purposes and is not legal or financial advice, nor should it be interpreted as such. Individuals who need legal or financial advice should contact a duly licensed professional.