Decipher Confusing Payer Contract Language & Get Paid More

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Decipher Confusing Payer Contract Language & Get Paid More

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Managed care contracts

If you’re among the medical practice staffers who groan when it’s time to review managed care contracts, that could be because you know payers bury confusing language into the documents. One step to understanding what these contracts say is to break down each section and look for key phrases that can help you reduce confusion and finalize contracts faster.

Decipher confusing language in your managed care contracts with a few important insights.


When you see notation of “term” in a payer contract, it refers to how long the contract will be in effect. So if you’re looking for a contract that ends after one year, make sure you find that under the “term” section of the contract. In addition, this section will give you information about when and how the contract renews. Does it renew automatically if the payer doesn’t hear from you? Is it immediately cut off and set for renegotiation after the term expires? Look for clear explanation of these issues in the “term” section of your contract.


The “termination” section of your managed care contracts will explain what you can do to get out of a contract (if anything). When it comes to contract termination, some payers can be very specific about how to get out, and they don’t make it easy. They may use legalese to bury details in it, such as saying you must notify within three days of the last calendar day of the quarter, or that the contract can’t be terminated until the end of the subsequent quarter. If you see termination language like that in a contract, ask for a revision. The payer may also require you to terminate “only with cause,” meaning that you have to have a reason to call off the contract. If this is the case, review the causes extremely carefully.

Ideally, the termination period will be 90 days at any time without cause. The closer you can get to that type of language, the better the situation will be for you.

Fee Schedule

The fee schedule language in your payer contract will be optimally important, because it describes how you’re getting paid and what those payments are based on. If it’s based on the current year Medicare schedule, for instance, think through any carve-outs and make sure they’re clearly delineated. Are there exclusions or withholds in the contract? If so, how will they hurt your practice’s income? Review these in depth to ensure you won’t lose money by signing the contract.


Amendments refer to changes to the contract, either by you or by the payer. You must know how you (and the payer) can amend the contract if needed. For instance, suppose you decide to open a lab and begin performing pathology services halfway through your contract term. Will you be able to collect for those if they weren’t in the original contract?

Make sure you can also make amendments in cases of new providers or acquisitions. Adding additional practitioners or locations could be problematic if the contract doesn’t allow for updates throughout the contract term.

Filing Timelines

Your practice should evaluate what is reasonable from a filing limit perspective, because this dictates how long you have to file your claims. If you want a 180-day filing limit, make sure it’s in the contract, because some payers try to whittle practices down to 45 days. Then, if you submit a claim on the 46th day, it will immediately be rejected for falling outside the filing timeline.

Balanced Billing

Balanced billing refers to your ability to charge patients directly for money they owe you. Some payers will include language in the contract about balanced billing rules, even for noncovered services. If your practice wants to be able to decide what to bill patients for noncovered services, make sure they don’t have restrictive balanced billing language in the contracts about that

Offsets and Adjustments

Payers can use offsets and adjustments to recoup money from your practice for a variety of reasons, and you should make sure the terms of offsets and adjustments are clearly noted in the contract. In some cases, they’ll want to be able to make adjustments indefinitely (whereas you may only want them to be able to make adjustments for 60 days after the original remittance), so confirm the time limits and terms of offsets and adjustments.

You should also ensure that these terms are amenable on your end in case you need to ask the payer for money it should have paid you. If, for instance, you’re contracted to collect 120 percent of the Medicare rate and you realize you’ve only been getting 110 percent, you should be able to request the missed income back. But if your offset/adjustment period is too short, you won’t be able to do that.

Litigation Clauses

Litigation clauses explain how your payer will respond to your interest in suing another party or being the subject of a lawsuit. Sometimes, managed care contracts will prevent you from becoming a party to a class action lawsuit. Make sure you understand what your position is there as you review the litigation clauses to evaluate how the payer would react to any legal claims.

Coding Penalties

In some cases, insurers will charge you for coding inaccuracies, with some penalties ranging from $3,000 to $5,000 each—a cost your practice cannot afford to incur. If you see coding penalties in your contracts, it’s in your best interest to ask for those to be removed.

Referral Adjustments

A referral adjustment occurs when a payer cuts your reimbursement because you didn’t refer to one of its preferred providers. It’s common for insurers to want providers to only refer within their networks, and sometimes that’s possible, but not always. So if a payer is planning to charge you or adjust your pay for referring to a provider outside of its network, understand what the charges and terms will be before you sign on the dotted line.

Ask for Changes When Needed

If you don’t like something in a managed care contract, copy the clause that you don’t like, and show the payer how you’d like it to be rewritten. If you want to strike part of a contract, let the insurer know. They may negotiate it rather than striking it completely, but it gives your practice the power to say no during the negotiation process.

To better understand how to make managed care contracts work for you, check out the online training, “Get Payers to Cut Unnecessary Burdens From Your Managed Care Contracts.” During this 60-minute session, expert Doral Jacobsen, MBA. FACMPE, will walk you through all the steps necessary to ensure that your contracts are clean, easy to understand, and work in your favor.

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