Contracts Between Providers and Medical Billing Companies

Anyone starting a medical billing business often looks for a sample contract online to use as they market their first clients.  They really don’t know where to start and feel that a sample will help them figure it out.  The problem with this is that there are so many things to consider when writing a contract that they can’t all be covered by looking at sample contracts.

Our first contract was one page that basically said that we would complete the work within a reasonable time frame and how much we would get paid.  We felt that if a relationship with a provider wasn’t working out we didn’t want to be working for them anyway.  As we grew and gained experience, we saw the need for much more to be included in our contract and we understood why it was important to be very clear with the terms of the contract.

Why do you even need a contract?  Can you just start doing the billing for a provider without a contract?  That would be very unwise.  Contracts spell out exactly what is expected of each party and what the consequences are if these expectations are not met.

What are some of the things that need to be included in the contract?   It needs to be very clear as to what services the biller is providing.  Are you offering full services?  What is included in that?  Are you simply submitting the claims or are you tracking them and resubmitting problem claims and filing appeals when necessary?  Do you charge a set up fee?  Will you be helping the provider with their credentialing needs, coding, patient billing, working aging reports and negotiating contracts?  These are just examples of a few of the services that need to be considered.

What are you charging the provider for your services?  How is the provider going to pay you?  Are they paying you a flat fee, a per claim fee, or a percentage.  If you are charging a percentage, what is the percentage based on and is it legal to charge a percentage in your state.  When is the payment due and what are the consequences if not paid on time?

What is the length of time a contract is in effect?  What happens when that time frame expires?  Can the contract be broken prior to the the length of time designated in the contract?  What reasons would constitute the breaking of the contract?

Confidentiality must be covered.  Patient information must be kept confidential as required by HIPAA and this should be covered in the contract.

This list does not cover all the things that must be covered in a contract but I hope it gives you an idea of how important it is to really spend some time developing a good contract that will hold up in court if necessary.  Unfortunately this sometimes happens even in the most well intended relationships and it is best to have it all fully explained.  If you need more help with your contract, we recommend our ebook “How to Write a Kick Butt Contract for Your Medical Billing Business”


Sample Contracts Don’t Work

I know we have written on this many times, but it can’t be said often enough…….  If you are a billing service, make sure you have a good contract!  Even having the best contract in the world does not mean you will never have an unpleasant situation but having a good contract will help you avoid many unpleasant situations and help you navigate through the ones that cannot be avoided.  We see posts on our forum all the time about difficult situations that billing services find themselves in.  Having a well written contract that covers all of the issues helps to prevent, or handle many of these situations.  Recently we had a post by someone in an unexpected predicament with one of his providers.  It is very recent so we still don’t know the outcome but here is what he wrote:

“I had a client for 2 years that never complained and as far as I knew things went along splendidly. I would go to his office at least 1x a week at his request because he was close and it made him happy. I’m a outsourced billing service. In June he decided he wanted me to work in the office. I declined because I have other clients & that would change our contract. I worked hard in June to change his mind. Until he kept insisting that I work in his office so I had to tell him NO. On June 19 he cut my access to his billing software. At this point he already owed me for May. I met with him a few times to try and resolve the issues he had. I told him he had to give me a 30 day notice in writing as per our contract. He said he would give me 30 days but I had to serve them in his office. Which I could not do. I said I would come 2 or 3 days and send my employee’s in but that was not good enough. It was me or nothing. So after 3 letters from my attorney he paid me for May. But refuses to pay me anything for my billing in June. Remind you he cut my access and gave me notice June 19th. Which would mean he owed me a % until July 19 if I had gotten my 30 days notice. He says he is not paying me b/c I did not come into the office to work. My contract is simple and I am sure I could win this in court. He owes me at least $4500. Now that I have my May check the advice I need is do I risk him bad mouthing my all over town for $4500. Maybe he won’t but maybe he will. Maybe it would make no difference. I have other clients. But I was just getting my foot in the door locally. Maybe he will bad mouth me anyway. He has it in is head I billed wrong. But I didn’t. I have it in my head he was just having a really good month in june and didn’t want to pay me my %. ADVICE? ”

We don’t know what his contract specifies, but in a case like he is describing a good contract is crucial.  There is really no good outcome that can be expected but with a good contract at least he has a better chance to be reimbursed some of what he is do.

Tips for a good contract:

•    DON’T copy someone else’s!  You need to write your contract for your needs
•    Consider everything that can come up or go wrong and write what you would want done to handle it
•    Make sure there is a specific way to terminate the contract from either end and spell out what situations that can occur

For more information on contracts see our book “Write a Kick Butt Contract for Your Medical Billing Service”

Michele Redmond
Vice President

Solutions Medical Billing Inc
1-800-490-4299  ext. 101
1-315-207-4222  ext. 101
Fax:  315-865-6359