Knowing terms can lead to successful negotiations
Executing acceptable physician contracts with insurance carriers has become an increasingly important and difficult task for private practice managers and physicians. Although negotiating changes in a carrier’s routine contract is not easy, it can be done.
When presented with an unacceptable contract, you have three choices—to decline it, to change it, or to create an addendum. Keep in mind that if you decline the contract, you can still see patients insured by that company. Patients, however, will usually have an increased co-payment or deductible, which could affect your collections.
Because insurance companies are reluctant to alter their standard contract, adding an addendum is usually easier to do. Simply sign the standard contract, and create an addendum for problem areas.
As you review the contract, you should pay particular attention to the following issues and clauses:
- the definition of usual and customary
- down-coding protections
- fee change procedures
- special bundling procedures
- rules and regulations clause
- look-back provisions
- the definition of a clean claim
- timely payment
- most favored nation
- full fee schedule disclosure
- dispute resolution
- common credentialing
- automatic addition of new members to your group
This article will address the first six items; next month, we’ll examine the remaining items.
What is “usual and customary”?
Many insurance company contracts base their payments on “usual and customary” fees. But what is “usual and customary”? Is it the usual and customary charges submitted by your group? The usual and customary charges submitted within your city or other geographic area? Or is it a number generated by a third-party organization?
Because variations of up to 300 percent in “usual and customary” payments can be found in a single geographic area, it behooves you to probe into both the definition and the methodology the company uses to determine “usual and customary.” One third-party company eliminated the highest charges as outliers, but kept the lowest charges, and included charges and payments to physician assistants and nurse practitioners (usually 80 percent of the physician level) in their calculations. This systematic down-coding can affect your reimbursement.
Protect yourself from arbitrary down-coding by monitoring all insurance company payments. Physicians have filed class action litigation against insurance companies for arbitrarily down-coding charges.
Your accounts receivable staff should monitor all payments to determine if the company has changed your submitted codes and/or changed reimbursement for the code. If your office has an electronic billing system, the fee schedule for each major carrier should be entered into the system, and a line item posting of payment done to monitor adherence to the schedule. Your contract should specify that the company provide individual notice of any Current Procedure Terminology (CPT) code changes or diminished payments.
Change of fee procedures
Ideally, no insurance company should be able to change your fee schedule without notifying you by certified mail of the specific CPT codes being changed and the changed payment amount. Many companies, however, will send notices of changes in the fee schedule by regular mail, e-mail, or fax. Without proof of receipt, you have no confirmation that the mailing was sent, that you received the mailing, or that the mailing included all of the pertinent information.
To avoid time-consuming and costly litigation over arbitrary fee changes without notice, be sure your staff is aware of the company’s procedures and include a provision for signed acceptance of fee change notifications before they can be implemented.
Special bundling procedures
Avoid contracts that include special bundling procedures. The bundling rules adopted by Medicare should be the standard. An insurance company that adopts its own bundling scheme may be attempting to decrease reimbursements.
Rules and regulations clause
Be sure to watch out for a clause that references rules and regulations. Usually, such a clause says that you will abide by the company’s rules and regulations as they are amended. Unfortunately, you will rarely receive a copy of those rules and regulations—or a copy of any changes and amendments.
Your addendum to the contract should specify that the company will provide you with a copy of its rules and regulations (either digitally or on paper) on request. You should also specify that if any changes are made to the rules and regulations, you will receive a digital redline copy so that you can see exactly what was changed and review both the old and new wording.
The length of the look-back period should be the same for both you and the insurance company. Many standard insurance contracts specify a 90-day look-back period for the physician, but no specified look-back period provision for the company. If you can only challenge claims for 90 days for additional payment, the company should be required to meet a similar deadline when challenging claims for decreased payment.
Don’t give up!
Reviewing and negotiating insurance company contracts is an ongoing process that is never completed. Orthopaedic surgeons in private practice should work with and train your office manager or administrator to monitor these issues and raise them with carriers so that contract review does not consume an inordinate amount of your time and detract from the time you spend providing patient care.
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