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Practice Management Alert

Turn the Tables:

Tailor Third-Party Contracts to Pay You More

Published on Tue Apr 01, 2003

You've done everything to improve your collections trained your staff, cleaned up your claims, posted appeals but there's still a mysterious leak in your revenue barrel. It's time to go back to the drawing board and your third-party contracts, and plug up limitations to collect profits.

Did you know that contractual issues cause 20 to 30 percent of potential revenue to go uncollected? That's what statistics from the Medical Group Management Association (MGMA) showed consultant Marsha Diamond, CPC, owner and instructor of Coding Programs, Medical Professional and MD Consultative Services. Third-party contracts stipulate what you can and can't seek payment for, which means they can legally hamper collection possibilities. When you expect payment, the payer can deny it if your contract doesn't specifically cover it. Or you can miss out on payment guaranteed in your contract because you're unfamiliar with its fine print.

To avoid this pitfall and boost accounts-receivable revenue, take control of third-party contracts with these three strategies:

  • Learn your contracts inside and out
  • Develop methods for increasing reimbursement within them
  • Design a method of contract compliance.

    Begin your new contract approach with this preliminary rule of thumb: Deny, scrap or revise future standard contracts. Remember, the payer is looking out for its best interest, Diamond warns, so the standard contract its representative presents is a bargaining pact, not a final deal. It will usually offer two different methods for paying so that the carrier can pay the lesser of the two.

    If a payer's representative does hand you a standard contract, request the changes that you'd like to see benefit your office and minimize payer limitation guidelines.

    Know Your Contracts

    "Knowledge is control," Diamond says. Know what your contract does and doesn't address, so you can revise any specific deficiencies and ensure adherence to all of the contract guidelines, she advises. Here's what you should look for when assessing your contracts:

    1. Coding limitations. Unclear, ambiguous or missing statements in the contract can limit how much payers reimburse for certain codes, Diamond warns. Check to see if your contract explicitly addresses:

  • what the global package encompasses
  • coverage for your practice's unusual services
  • bundling and unbundling issues
  • modifier use (For more topics your contract should address, see "Include These 'Must-Haves'in Third-Party Contracts" in article 2).

    2. Contract language. Ensure that the wording of your contract addresses coding and not just legal issues. The standard contract is several pages long but deals mainly with legal issues, and "too little coding means too little reimbursement," Diamond says. To further reduce ambiguity, tailor contract language to your specialty's needs, she adds.

    3. Coding and billing guidelines. For all services listed in your contract, you want to know exactly which guidelines or methodologies a payer is using to determine payment, Diamond says, and you want those guidelines in writing. If the contract doesn't spell them out, then payers can reserve the right to interpret them as they see fit, Diamond warns. But if the contract stipulates a guideline for payment, you can reference it when filing appeals for denials.

    Increase Reimbursement in Contracts

    To guarantee payment before you even post a charge, include explicit payment policies for routine coding and billing scenarios in your third-party contracts, Diamond says. ("Include These 'Must-Haves'in Third-Party Contracts" in article 2 lists the policies that your contracts should address.)

    Watch out for codes that your contracts don't address, because payers usually deny them on the grounds that your contract doesn't include them, Diamond says. Carriers can deny payment on codes that are not specified in the contract. Address the following "common contract losers" in your contracts:

  • Unrelated E/M visit during the global period. Patients may visit the same physician for many unrelated issues. The physician should receive payment for those services billed with modifier -24 (Unrelated evaluation and management service by the same physician during a postoperative period).
  • Starred procedures performed at the same session with an E/M service. Find out if payers follow Medicare, because its guidelines could limit E/M service payment.
  • Reimbursement for multiple procedures done at the same session and the percentage of reimbursement for the second and third procedures.
  • Patients who don't give you the correct insurance information, and whether you can send the claim in as an appeal.
  • Time limits for filing claims.
  • E/M services that result in a decision for surgery on that date or the following day with modifier -57 (Decision for surgery).
  • Non-fee schedule reimbursement, which typically isn't in your contracts.

    Ensure Third-Party Compliance With Contracts

    Keep an eye on your third-party payers to verify that they're holding up their end of the bargain, which they agreed upon in your contracts. Implement these practices:

  • Keep a working contract on hand to make notations on items not being paid, Diamond says. Trace discrepancies between payment and contracts or payment issues not adequately addressed in them. Look at your denials for services included in the surgical package, for example, and note if the payer automatically bundles all services rendered during the global period into the procedure.
  • Monitor payers with forms. Document payment discrepancies on forms and detail the problem so you can distinguish between contract and internal problems, Diamond says. Use a managed-care contract review sheet to keep track of covered services and contractual fees so you can monitor how that information compares to payments you receive.
  • Bring payment issues to the negotiating table. When you face contract renegotiations, determine what you're biggest payment problems are, such as reimbursement, timely payment, and the appeals process, and decide what you're willing to accept in each category of concerns, says Margaret Fisher, CCS-P, who works in billing at a physician practice near Tacoma, Wash. Write a letter to the medical director of each plan detailing what the contract already says and changes you propose, she adds. If you have all of your information in one spot,  you'll be sure to hit all the issues you want handled in your contract, Diamond says. Always request written clarifications regarding contract ambiguities.

    You should also review a contract at least annually and try staggering your different payer reviews to minimize confusion, she adds. If your contracts renew automatically, contact the provider representatives at least 30 to 60 days before the roll-over date to let them know  that you have some ambiguities you'd like to clarify or topics you'd like incorporated into the contract, Diamond says. Invite the representatives to the first meeting and have a list of prepared items you'd like to discuss.

    "This will be a back-and-forth process," Diamond says, so don't expect the representative to be OK with all of your suggestions upon first glance.

     

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