6 ways to protect your medical billing business during contract negotiations

Medical billing contracts with private practices can be tricky. As a medical billing business owner — especially if you’re a new one — you don’t want to overwhelm potential clients with complicated legalese. However, it’s crucial to protect your business and its interests.

Why is this important? A contract is a legally binding agreement. Without careful attention, the medical billing contract you negotiate could:

The good news is that medical billing business owners can avoid these negative outcomes by taking proactive steps to ensure clarity and prevent surprises.

Consider the following 6 strategies as you create your medical billing contract template.

Providing "revenue cycle management" to a medical practice can be misleading because there are so many potential services included under this umbrella. Instead, spell out each individual service your medical billing company will handle, such as:

Be as specific as possible in the medical billing contract. For example, your services might only cover certain payers, or you might only work aging A/R past a specific number of days. If the scope changes over time to include additional (or fewer) services, be sure to update the medical billing contract accordingly.

Ensure the medical billing contract outlines when clients will pay, how much they’ll pay, and how. Here are some questions to consider: 

Setting a high bar is good, but you also want to make sure you can deliver what you promise. Work with the medical practice to identify reasonable KPIs for which it can hold you accountable. 

For example, will you ensure you submit claims within a certain period? Keep denial rates below a certain percentage? Ensure a specific clean claim rate? Each client may prioritize different KPIs, and it’s important to explore what matters most so you can promote a positive return on investment. 

Similarly, your medical billing contract template should outline the frequency, format, and content of any financial and operational reports you’ll provide to clients. Review your medical billing agreement template each time you onboard a new medical practice.

Ensure the medical billing contract determines who is liable for errors, rejected claims, and compliance breaches. Include indemnity clauses that limit your liability and/or protect you against liability for lost profits, damages, and client misconduct. 

Listing the steps you’ll take to ensure compliance with the medical billing contract (e.g., adhere to KPIs, sign a Business Associate Agreement and comply with HIPAA, and adhere to all relevant healthcare laws) may seem obvious. However, what may be less intuitive is spelling out the medical practice’s responsibilities in the medical billing agreement template. 

Examples of these responsibilities include: 

You and your medical billing business staff can’t do your jobs unless the medical practice does its job as well. That’s why capturing the responsibilities of both parties in your medical billing agreement template is critical.

Here are details to keep in mind: 

Before presenting a client with your medical billing contract, it’s always a good idea to consult with an attorney. This article is not meant to provide legal advice or serve as an all-inclusive resource as you develop a medical billing contract template. 

Once you feel confident in the terms of the medical billing contract you’ve created, be sure that both parties sign and date the contract and any updates you make thereafter. Keep a copy of the medical billing contract on file and ensure your medical practice client has one as well. 

Taking the time to think through important contractual elements helps medical billing company owners avoid potential headaches down the line, attract new clients, and boost revenue in the long run.

Learn more about how Tebra's complete platform can support your medical billing company and practice clients by booking a free demo today.