WUNSH: Healthcare, Contracts, more on the business side

By Anthony Wunsh, President/CEO Medical Pay Solutions, Consultant, Author, Speaker

JANUARY 9, 2014 – Today I want to delve into the way contracts are executed, agreed to and accepted in Healthcare. This is going to be an eye opener for many, so hold on tight. And not just payor contracts, technology, consulting and even employment contracts.

We are going to demonstrate some differences between healthcare and most any other contract with any other vertical you may enter in your everyday personal or business life.

Lets start with something we may all have dealt with in the past. Construction, remodeling or service contracts on your home.

Typically we will have three contractors come, review the work and give us an estimate. We compare these through many filters, credibility of the contractor, price, references, time to completion and quality of the work expected, just to name a few. We insist on a specific time line for completion, choose products within the contract to be used, demand insurance against defective work and usually add penalties for failing to meet objectives in time of completion and quality of work.

Take a moment and read the last paragraph again, for something as small as getting your home painted you insure you are not going to be harmed by the contractor, for a one time, defined dollar amount which many could absorb the damage if the contractor failed miserably to make you happy.

I might add the contractor has legal requirements added as well, like the ability to lien your home for lack of payment, guaranties of the ability to pay, financing and much more.

All negotiated, agreed to and added to the contract before work begins.

I suspect you have already determined where I am going, but lets continue to play the game.

In any contract in business, you likely demand clauses that guaranty success, you likely have your attorney review the contract and you likely negotiate for or against language you want added or removed before signing. You decide what you can and will live with and what are deal breakers.

Then we come to healthcare, and the myriad of contracts we are forced to execute in this vertical. I have to pause, take a deep breath and gather my angst over this issue before continuing.

Lets start with payor contracts. Not only do most not do any of the above, they actually do not even read them, they just assume they must live with everything that is in them. But even for those who do read them, they are usually only negotiating allowable dollars and not circumstances, hidden restrictions, added fees, how to handle disputes or even what their rights are under that contract. Sigh, a very alarming circumstance we have adopted as business as usual in healthcare. We agree to every paragraph written by the supplier of the service aimed at protecting the payor and written by a battery of attorneys paid by the payor with whose job is to protect the payor.

Why? Why can’t we add or remove language we don’t like? Why do we simply accept what is in them as the norm? Why don’t we ask the payor to explain the intent of each paragraph we don’t like and decide if we can live with the language or intent or ask for it to be changed to level the paying field?

And there are some ugly terms in these that I would never even consider agreeing to.

Here are just some basic contractual things I would demand in my business:

When am I to be paid on a claim, and what is the penalty if you fail to pay me on time?

What exactly are the allowed reasons to deny a claim, and what is my recourse if you deny a claim outside those parameters?

Why am I doing your administrative processing for no fees, I would seek to add an administrative fee if I have to do your work.

Why am I forbidden from certain activity which may thwart my ability to collect from patients in advance, why is the patient not responsible for filing claims for lower dollar amounts and getting reimbursed directly from you since they are contracted with you and I am not a party to that contract?

What are you offering me in terms of incentives to be in your network, specifically, how many patients will you bring me, will you guaranty that amount, how much revenue will it mean for my practice and what happens if you fail to meet the stated goals?

I ask, how many of you have actually attempted to get any of this resolved before signing that payor contract?????? And you probably can find more to add to the list.

And lest we forget with government payors you not only don’t question them, they are written as laws or regulations you agree to by signing the contract and probably don’t even understand all the ramifications to your practice if you fail to comply.

Now let us move to a technology vendor. Do you know in most other verticals language is added to restrict cost over runs, time commitments with penalties and a guaranty of service time down, (restrictions with major penalties for not meeting this). Are you reviewing them, adding these requiring language changes to terms and conditions to protect your operations?

I could go on and on, from malpractice insurance contracts to employment contracts, to consulting contracts, are you doing the same level of scrutiny and due diligence you would before hiring someone to paint your house.

If not why not, the worst that could happen is you learn more about the contract or perhaps decide not to enter it and move in a different direction.

Have you ever asked your payor to add a clause that allows you to add an administrative fee on top of the allowable amounts paid, ever wonder how they would respond when you ask them why the allowable does not consider what it costs you to be paid the reduced amount? Why not, you are paying for the process, so your allowable dollars are less as a result.

Maybe we should stop thinking only like a delivery of care vendor and start thinking like a business person and maybe we could level the playing field for all who want access to our patients and our dollars. The patient comes to see you, not your vendor and that includes you payors.


1 reply »

  1. Great points, Anthony. Your post is the flip side to what I’ve been saying for a long time: The linchpin of the entire CPT billing scam is the physician contract with the payer. Remove that and the entire scheme collapses; prices deflate and premiums fall to earth. If docs don’t participate and leave the contract between the subscriber and the insurer, then market forces will and do work.

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