Payer-provider contracts serve as the basis for how a healthcare provider gets paid. But understanding them and managing them are not easy undertakings, especially when each payer has different terms. Here’s an overview of provider contracts and some key points to keep in mind to mitigate risk.
What is a provider contract?
A provider contract, also called a payer-provider contract, is an agreement representing the business relationship between a payer or self-pay client and the provider, which can be an individual physician or a healthcare facility. It ensures a provider will get paid for services rendered.
A provider contract outlines the guidelines and requirements providers and payers must follow and everything each party must provide during the billing and reimbursement process. There are several different types of contracts, categorized by how long the contracts remain in effect, including:
- Fixed term. The contract is for a limited time, preventing long-term obligations.
- Fixed price. The payer pays an agreed-upon amount, covering the services provided during the contract term.
- Evergreen. These contracts automatically renew until one party makes changes or requests termination.
- Fee-for-service. The payer pays according to the services provided.
Each provider-payer relationship has a different contract with different terms, which can make them difficult to manage.
Common challenges of provider contracts
Providers have different contracts with different terms for each payer, so they must familiarize themselves with the details of each one. That can be confusing and difficult to manage: There are deadlines to meet, different coverages and rates of reimbursement, and different claim dispute procedures.
Contracts can have confusing, unclear, and easily misunderstood language, and there is often poor communication between provider and payer. In addition, circumstances can change during the term of the contract.
Addressing contract challenges
Many providers enter into contracts with payers without deeply considering the terms or even understanding what they are signing. They need to have a standard process for negotiating contracts.
Contracts can be confusing, so it’s important for providers to learn the meanings of common contract terms, ask questions for clarification, and to read the fine print.
Providers also should make sure the contract addresses key points:
- Reimbursement rates
- Time frames
- Dispute procedures
They also need to understand how to terminate the contract if necessary. When issues arise, the payer should be promptly contacted to resolve them.
One way to ensure a fair and equitable provider contract is to partner with a third-party company experienced in contract negotiations, like TruBridge. If you need assistance with your provider contracts, contact us at 877-543-3635.