Managed Care Contracting

Healthcare Managed Care Contracting

Our Experts Explain Why Providers and Payees Must Understand Their Contracts to Thwart Future Disputes, Potential Profit Loss

At Chapman Law Group, we know all too well the frustration providers  across the U.S. can experience due to late payment, claims denials, intense administrative requirements, and contract disputes with payors.

In recent years, contracting with payors has become increasingly complex and frustrating. Long-established payors are significantly reducing coverage or leaving the market, while new, inexperienced payors enter the market. Payors that do remain in the market are aggressively trying to reduce costs via:

  • Risk-sharing pools
  • Accountable care organizations (ACOs)
  • Gainsharing pools
  • Additional conditions of payment
  • Frequent audits to identify reasons for overpayment recoupment and claims denial

In addition, state regulations also impact payor contracts.

With so many pitfalls, providers and payees must understand the requirements of their contracts and negotiate terms to prevent future disputes and potential loss of profits.

But how?

That’s where Chapman Law Group’s healthcare attorneys come in. Prior to joining the firm, many of our lawyers worked as in-house counsel for large hospitals and ambulatory surgical centers. There, they gained first-hand experience in payor contracts and disputes from the provider’s perspective.

Our attorneys work with national healthcare practices of all sizes to help negotiate fair contract terms with payors, and we represent providers during contract disputes and reimbursement issues.

Why Have an Attorney on Your Side for Payor Contracts?

Because failure to negotiate payor contracts will likely result in boilerplate contracts that are unfavorable to the provider.

Issues that can result from boilerplate or poorly negotiated payor contracts include:

    • Unfair dispute resolution processes
    • High administrative burden
    • High condition of payment requirements
    • Unbalanced financial risk on the provider
    • Unnecessary recoupments
    • Anti-trust concerns
    • Failing to respond to amendment notices
    • Declined reimbursement
    • Early termination

What is Involved in the Initial Contracting Process?

Negotiating favorable terms in third-party health care contracts is critical to your organization’s success. In today’s practice setting, there are multiple payment options available for providers and practices, including traditional fee-for-service, capitation, and risk sharing pools.

Each method has a different impact on risk allocation and how the practice generates profit. Some payment methods are better for certain specialties, but all have pros and cons. Therefore, new practices should take the time to weigh the risk and benefits associated with each option before contracting. Similarly, existing practices should regularly evaluate their profitability under current contracts and consider renegotiating their payor contracts.

Providers often focus on the fee schedule and scope of services when contracting. While the fee schedule has a significant impact on profitability, other contract provisions can equally affect it.

For example, reimbursement denials and partial payments for “not within scope of services” or “not medically necessary,” can hamper income — especially if the contract does not provide for fair dispute resolution. Additionally, contracts that require increased administrative resources can increase expenses. In the event a dispute or early termination arises, unfavorable terms can lead to costly litigation.

All these issues will have a significant impact on the practice’s profits, which is why practitioners must ensure their payor contracts provide fair terms to allow the practice to profit.

Many providers fail to negotiate the terms of their payor contracts because they do not feel they have bargaining power. While this feeling is understandable, it is not true; hospital systems and super groups certainly have bargaining power and more resources and experience in contracting. However, small practices also have bargaining power and should not feel as though payor contracts are “take it or leave it.”

Our attorneys have experience negotiating payor contracts and can help small practices understand proposed terms, identify potential issues, and negotiate more favorable terms.

What About Reimbursement and Contract Disputes?

Unfortunately, contract disputes are ever increasing as payors seek to reduce costs, providers seek to maximize profits, and states increase regulations to curb rising health care costs for patients. While negotiation of contract terms can reduce the likelihood of contract disputes, dispute nonetheless may arise. Common disputes include:

  • Reimbursement disputes (underpayment and denials based on — not within — scope of services, not medically necessary, no prior authorization, bundling, etc.)
  • Overpayment recovery
  • Early termination
  • Gainsharing bonuses

With our attorneys’ experience in negotiating payor contracts, we can help small and mid-sized healthcare practices understand proposed terms, identify potential issues, negotiate more favorable terms, and come up with strategies when disputes arise.

For Healthcare Contracts, a National Law Firm That Only Deals with Healthcare is Your Best Choice

Payor disputes often involve a significant number of claims and multiple issues. This can make resolution slow and costly. When the parties have pending claims and wish to continue their contractual relationship, slow resolution only leads to further issues.

Because we only handle clients in the healthcare sector, the lawyers at Chapman Law Group know what it takes to make the contract process fair for you. We work to resolve disputes as quickly and efficiently as possible, all the while helping the parties maintain a good working relationship. Often, this involves reaching a settlement that satisfies both parties and allows the parties to continue their contractual relationship.

We work with doctors, pharmacists, dentists, and other practitioners across the U.S. who deal with third-party payors. Our offices are in Detroit (where we serve Dearborn, Troy, Ann Arbor and Grand Rapids, and the rest of Michigan); Miami and Sarasota, Florida (for Jacksonville, Tampa, Orlando, West Palm Beach, and all of Florida); Los Angeles/Southern California; and Chicago

Contact us today and let us put our decades of experience to work for you.

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