Managed Care Contracting

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 remain in the market, are aggressively trying to reduce costs. One method is risk sharing pools, accountable care organizations (ACOs) and other gainsharing pools. Other methods include additional conditions of payment and frequent audits to identify reasons for overpayment recoupment and claims denial. Add to this, state regulations also impact payor contracts. Therefore, providers/payees should ensure they understand the requirements of their contracts and negotiate terms to prevent future disputes and/or loss of profits.

Our attorneys work with practices of all sizes to help negotiate fair contract terms with payors and represent providers during contract disputes and reimbursement issues. Failure to negotiate payor contracts will likely result in boilerplate contracts that are disfavorable 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.

Initial Contracting

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, however, all have pros and cons. Therefore, new practices should heavily 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 profitability. 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 dispute and termination terms can lead to costly litigation. All of these issues will have a significant impact on the practice’s profits. Therefore, practices should ensure their payor contracts provide fair terms that 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 bargain 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.

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; and
  • Gainsharing bonuses.

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. Our attorneys seek to resolve disputes as quickly and efficiently as possible and help 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.

How We Can Help

Chapman Law Group’s attorneys have significant experience in payor contracting. Prior to joining the firm, many of our attorneys 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. We know all too well the frustration providers can experience due to late payment, claims denials, intense administrative requirements, and contract disputes with payors. Chapman Law Group represents practices during contract review, negotiation, and dispute and help reduce the frustration involved in payor contracting. Having represented providers during contract disputes, Chapman Law Group can easily identify potential issues during initial contract review. We help providers negotiate fair and favorable terms and help them understand their requirements under the contract to prevent potential issues from arising.

If you need assistance with review, initial negotiation, renegotiation, or dispute resolution, contact our payor contract attorneys today.


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