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Medical Billing: How to Decipher Standard Contracts

In the world of medical billing, many payers or networks have standardized contracts that they offer to healthcare providers. It is important that you understand and can decipher these contracts. A well-defined contract does the following:

  • Defines the number of days after the encounter that the provider has to submit the claim. This is called timely filing.

  • Specifies how many days after receipt of the claim the payer has to make payment. Some states have prompt claim pay laws, and it’s important to know what each state requires. If the payer is not compliant with either the contract or state laws, penalties are usually applied in the form of interest that compounds daily.

  • Specifies which of the payer plans are included, the frequency of services that it will cover (for certain procedures), and the type of claim that is to be submitted by the provider.

  • Identifies special circumstances that may affect either the provider or the payer, such as

    • How unlisted procedures are to be reimbursed (these procedures end in “99” and are usually worded in a way that states “other unspecified procedure”)

      Medicare and some other government payers will not pay unlisted procedures. Other commercial payers simply deny payment unless the provider’s contract specifically obligates it.

    • The appeals process

    • Procedures that are carved out of the fee schedule to be paid a set amount

    • The number of procedures that the payer will pay per encounter

    • The multiple procedure discount (the discount applied to procedures that are paid in addition to the initial procedure)

  • Identifies cost intensive supplies or procedures that may need to be paid. This may include such items as implants, screws, anchors, plates, rods, and so on.

  • Carves out payment for intensive services or procedures at 65 percent of billed charges.

Even though they’re standardized, every payer contract is different in one way or another. Make sure you read each contract carefully and familiarize yourself with each set of payer circumstances.

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