Contract Clutter Don't sign until you take a closer look

by Shellie Pruden, DCMS director of medical practice relations

With enrollment season over and this round of mega-mergers and acquisitions complete, you probably have a frightening number of new managed care contracts on your desk. Many physicians have the urge to close their eyes and start signing away. Don't-it could ruin your practice. Every contract should have three reviews: legal, operational, and financial. With this three-pronged approach and some teamwork, you can regain control of the managed care maze.

Legal advice is wise when managed care comprises the bulk of your practice. When negotiating a managed care contract, the only service you need from an attorney is a legal review that strikes one-sided and unfavorable language and suggests alternate language. To keep expenses down, physicians with the same contract can hire the review and split the bill.

Legal expertise is just as valuable as an accountant in a time where wordsmithing and manipulation of the laws and insurance codes are standard from some insurance companies. An attorney wrote every contract you look at with the other party's interests at stake. You unknowingly can sign away many rights and it will hold up in a court of law, no matter how unreasonable it might seem. Texas Medical Association has contracted with Michael Stern, an Austin-based attorney, to review managed care contracts for $150. Mr Stern can be reached at 512-469-9006. You can request a model contract and contracting checklist from the TMA Legal Department at 800-880-1300.

The second review is operational. Look at each clause in the contract, the provider manual, and any medical management policies to which you will be held responsible. Sometimes contracts bind you to policies in a provider manual that may not work for you. Pay close attention to filing, appeal deadlines and processes, and utilization management. Medicine is the only business that service is performed and payment can be denied because you sent the bill in on the 61st day. Walk away from plans that don't fit your expectations for service, claims payment, patient mix, and reimbursement.

It's an unpleasant reality that the art of healing has become the business of healing. Financial consideration must be given to every contract. To determine if a contract is financially viable, you have to know the relative value of the services you provide. With that information, create a list of every CPT code you use in your office. Do not sign a contract until you have a fee schedule for every CPT code used in your office, not just the top 10. It is not unreasonable to know what you will be paid for the services you provide under the contract. Some managed care companies provide an "example" fee schedule-that's pie in the sky. Your fees should be an attachment to the contract and changeable only by amending the contract.

As the Texas Department of Insurance completes the rule-making process concerning clean claim legislation, contracts will be amended to include this information. You can inadvertently contract away your rights to the protection this law provides. A summary of the provisions of this legislation is available on the DCMS Web site or by calling 214-948-3622.

Many physicians rely on independent physician associations to negotiate on their behalf. The basic premise of an IPA is to represent enough physicians to negotiate favorable contracts. Hold your IPA to the highest standards in managed care contracting. Rates are not the critical factor in accepting an IPA negotiated contract. Value your IPA for walking away from bad contracts. It should be negotiating better contracts for you than you can get on your own.
Don't be afraid to weed your garden. Quantify your payer mix so you understand what percentage of your net revenue comes from each payer. Plan to keep a good mix without letting one payer be a large percentage of your revenue. Terminate the plans that have a history of poor claims payment and customer service, or are in financial trouble. Limit the number of patients on plans with high hassle factors.

When you begin negotiations, keep one thing in mind: Every contract is negotiable. Don't be intimidated by provider relation's representatives when the future of your practice is at stake. It's becoming more and more difficult to get out of contracts-know what you're getting into before you can't get out.