Outsource Medical Billing

Placing RCM Contracts

In the business of revenue cycle management, contracts often feel like an obstacle. Many clients prefer not to sign them, and it is also easier for you to forego sticky legal complications when conversing with them. The dilemma of contracts is by no means new. But the new acquisitions happening in RCM are, in fact, money businesses have openly acknowledged that they wish to buy out RCM companies.

RCM firms may view themselves as players in the billing business, but are strongly involved in the contract business. Still wondering how it pans out that way? Consider that the rights to payment and protection of such companies are based on the provisions in client contracts, and things get significantly clearer.

One of the ways to cite the value of your company is through the terms, enforceability, and value of the contracts you hold. Given below are the key provisions these contain, the negotiation strategies used, as well as where you probably should be getting the contracts.

Key Provisions

Mostly, client-billing contracts would contain much the same basic provisions everywhere, with the obvious provisions for limited variation or deviation. Some regular provisions are explained here, along with a look at necessary concepts accepted industry-wide, and which would be required for an inclusion.

Services

The first contract provision is the “Services” section, where it specifically states the services you will provide to the client. Specificity is the key here, because companies often ignore many details while contracting services, and end up paying heavily for this mistake. Not only is clarifying vital from a payment expectation point-of-view, it is also important from a liability standpoint. No client will be able to derive infinite functionality, so stick to what you are able and willing to offer them. Refrain from using expansive language that alludes to the provision of services that are not on your roster.

Term And Termination

The right jargon is needed to specify the duration of the engagement, as well as any safeties you need that your client will honor the agreement. A month-to-month contract cannot reasonably ensure influx of monthly revenue for valuation. That way, the only thing your firm will have to fall back on is a past record of performance. With a term explicitly defined, your organization will be able to perform with greater comfort that clients will keep doing business with you, at least for the minimum time allocated.

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Contract Provisions

There are jurisdictions which do not permit perpetually lasting agreements, which may mean you have to include a stated terms with periods for renewal. With a set term, each side will be able to count on the other side holding up their end of the bargain. Obviously, both sides would want to have an out-clause that allowed them to terminate prematurely.

The provisions for termination vary widely, but there are certain commonalities, such as each party being able to break off without cause as long as they give advance notice. The right to terminate also covers a breach or ‘cause’ consequent from the other party’s action or inaction.

There is also the matter of revising the contract for compliance. Language that allows termination or revision, if a provision is not strictly ‘legal’, allows either side to rest easy that a reasonable agreement can be reached in the event of a regulatory shift, and the consequent need for a change in terms. Also related to termination are wind down provisions, which is a wise planning strategy that fixes payment upon termination.

The services can be finished up within the time provided, and the provider can collect payment when that is done. Issuing contracts without a planned exit clause is not a safe move. The opposite approach lets you finish up on the claims in progress, while clearly mapping out the right to continually collect any fees outstanding.

Indemnification

As long as the contract is drafted properly, it legally lets you hold the client financially liable of conditions resulting from their conduct. You wouldn’t believe how many places this comes in handy. For instance, consider an insurance company that wants to make up for money losses from the billing/coding issues of a client.

If it were your company submitting the claims, you would be the one taking the blame. It may be far-fetched, but the possibility remains within the legal domain. Indemnification can be used as a safety, because as long as you are not responsible for the misinformation, neither are you liable for the money owed because of it. Similarly, limited indemnification extended to the client can be used to insure against fraudulent or grossly negligent acts on your part.

Limitation Of Liability

Most of your colleagues try to get a type of limitation of liability provision, which restricts the exposure to a so many months’ worth of monthly fees received by the client. Clients may root this out and ask for the removal of this clause, evoking a contention before the agreement is finalized. But limitation of liability is an industry standard, and required for any company that does not provide insurance. Unlimited exposure for errors in billing is not something you want to take on. As long as the company’s conduct has remained within reasonable limits, the industry standard dictates that your liability should be limited.

HIPAA Protection

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Privacy Law

The amended Privacy Law and HITECH Act entails that any covered business entity should have an associate agreement in place, for the fact that your company will be accessing and using protected health information. It is common to attach an addendum business associate agreement to the contract, because of the expansive range of requirement in the former.

If the event arises that you have to show where you sourced the business associate agreement, or if you have to refer that contract for any reason, it will be separate from the service contract. A standalone document of this sort would detail the obligations of each involved party. HIPAA breaches can cause a lot of complications, and overlooking a business associate agreement is not one of the thing you want to have done.

Negotiating

The ultimate goal is to get the right to continued revenue, while staving off exposure. For this, you need a favorable contract signed by the client; at a price you are comfortable with, and for the long term. Getting them to sign is often the hardest part. Every person has their own tactics that they will undoubtedly use, and every negotiation is different. The best tack is starting off with a reasonable offer that they are willing to agree with, based on earlier discussions.

Do not tout an eight-page long agreement as a ‘simple document’, because that is bound to put many a client off the whole deal. If they value having an upper hand, they will make a strong stand on some matter or the other to assert domination. If this conduct ignores the fairness of your agreement, you may want to reconsider taking them on as a client in the first place.

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