Time for a New Managed-Care Contract? 3 Mistakes You Should Avoid

Michelle Hopkins

If you're a physician, you probably think you have all the information you need to negotiate a favorable managed-care contract. Unfortunately, that might not necessarily be true. In fact, you might be losing money on your contract. Before you sign on the dotted line for your next managed-care contract, make sure you're getting the best possible deal for your money. Here are three mistakes that seriously undermine your bottom line when it comes to managed-care contracts.

Provisions That Allow the Payer to Arbitrarily Adjust Payments

Before you sign a contract for managed care, you need to understand the way that payment adjustments are made. Some contracts allow automatic payment adjustments once the claim is submitted. If that happens, you may end up being paid a lower fee for services that you've already provided. To prevent that from happening, make sure that your contract requires the payer to notify you before they adjust a payment for services rendered. It's also important that you include a requirement that the payer allows you the opportunity to dispute payment adjustments.

Provisions That Allow for Unlimited Take-Backs

Occasionally, an overpayment will occur. If your contract includes a provision for unlimited overpayment recovery, or take-backs, you could find yourself being hit with overpayment charges months, and even years, after the overpayment occurred. You may also find yourself being penalized for current payments in order to offset a previous overpayment. Both of those activities can seriously undermine your bottom line. Before you sign a contract for managed care, make sure you have a provision that places a limit on the time in which your provider can submit an overpayment.

Not Understanding the Capitation Limits

If your new contract is going to have capitation limits—a fixed amount of money that will be paid for each member per month—you need to understand exactly what's included in those limits. For instance, you know that you'll receive a fixed payment each month no matter how many times the member comes in for a visit. However, you also need to know if ancillary services are included in those limits. For instance, do lab visits count as part of those visits? If so, you'll need to determine if the additional visits can be billed separately.

Now that it's time to negotiate a new managed-care contract, make sure you do the best for your practice. The information provided here will help you avoid some of the most common mistakes while negotiating your contract.