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Reviewing Contract Terms: Knowing What To Look For

January 2017

CRE TA Center

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After contract negotiations, your agency will receive a contract for signature. The contract should be reviewed by the appropriate leadership and legal counsel before it is signed to ensure that the contract terms are clear and acceptable. Contract terms are the specifics that outline roles, requirements, and responsibilities assigned to the insurer and your agency. Here are some contract terms to be sure to review.

  • Billing Codes - Some contracts include specific Healthcare Common Procedure Coding System (HCPCS), Current Procedural Terminology (CPT) or International Statistical Classification of Diseases and Related Health Problems (ICD) 10th Edition codes that will be covered for payment. Review these codes to ensure that the codes your agency bills most frequently are listed. Ask your insurer to add any missing codes.
  • Payment Models - Understand the contract’s payment model and what it means for cost-sharing, financial risk, and payment. Two common types of payment models include fee-for-service (FFS) and prepaid capitation payments.
    • FFS - The fee schedule should be included in the contract or a source should be referenced, such as a document posted on the insurer’s provider website. If not, request that the contract be revised to include a reference to a specific fee schedule.

    • Capitation - A fixed payment per patient per unit of time (usually per month) paid in advance for the delivery of healthcare services. The payment amount, as well as frequency of payment, should be included in the contract.

  • Filing Terms - Ensure your agency is aware of and can meet the requirements for claims to be submitted for payment.
  • Medical Necessity - Determine how the insurer defines medical necessity and under what circumstances the insurer must assess and determine if the requested procedure meets the criteria for medical necessity.
  • Prior Authorization (PA) – Review in what circumstances PA is required, necessary documentation and the process for submission.
  • Excluded Services - Review services that the insurer does not cover. If the excluded services include services your agency provides, check to see if they can be added to your contract. Remember, services may be excluded due to lack of coverage, such as with some Medicaid programs.
  • Appeal Process - Be sure that you understand the appeal process. The appeal process includes the period in which an appeal must be filed and where appeals should be sent. Even if not specified in the contract, send a copy of the Explanation of Benefits (EOB) showing the original payment, documentation of services provided, and the payment amount specified in the fee schedule. Confirm receipt of the appeal materials by the required deadline.

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