The Finer Points of Contracting

BreusKeeping in mind the information that appeared in the last issue of Sleep Review, it is now important to approach the individual who is responsible for agreeing to the contract you are going to outline and discuss. Often the medical director or practice manager will need to speak to several different people and it becomes a huge waste of time since none of these people are the ones who will approve the contract. First and foremost, find out who is the person with authority to make concessions and language changes, and finalize the agreement, and try not to waste time getting to them.

Usually negotiating occurs as soon as talks begin. Remember, the insurance company wants to get the most service for the least price and they will try to do everything they can to get it. It is usually best not to “need” to have a particular contract. Although sometimes this is the case, one can end up making concessions just to get business and that can be costly. Another error can be making assumptions about the company you are contracting with. They may have several ulterior motives behind meeting with you; for example, they may have already contracted for sleep services with someone else and are trying to get another bid for services, or their previous sleep service provider may have left them due to delinquency of payment. Try not to give away too much information (cost structure) and try listening more than speaking. It is important to expect to be given a very low price initially for your services. If you give your bottom line price at the start of negotiations, there is little flexibility. Remember this is much like buying a car, there is plenty of give in the final price. It is also useful to review which payors have given you the most trouble in the past for your other services, to get an idea of what they may be like in the future.

It is essential to thoroughly review the terms of the contract. Cost aside, there are other issues involved in the economics of the contract including time frame of services and when (or if) the group can renegotiate rates of service later on. More specifically, there should be some clarification of the specific CPT codes that will be approved for fees and some limit on the authorization processes required to perform services. There should be some mention of which physicians can perform services (based on specialty education) and the process for adding or deleting these physicians when staffing changes occur. A published schedule of rates is better than “usual and customary” as well as receiving payment on a fee-for-services schedule until volume in the center increases.

A detailed timeline for payment will be needed. Try to place insurance verification in the company’s hands; this will also help create a paper trail in the case of refusal of payment. There needs to be a mutually agreed termination period and payment schedule in case there is cause for either side to leave the table. It is also important to recognize that there may be some exclusive dealings and noncompete clauses imbedded in the contracting language, which at first may not be important but later can be crucial.

Michael J. Breus, PhD, ABSM, is a senior partner of the Sleep Center Management Institute, Atlanta; (888) 556-2203;;