Avoiding Medicare Advantage Contract Pitfalls: A Guide for Physician Practices

Medicare Advantage contract

It’s a story many physician practice owners know all too well. A hardworking doctor secures a promising Medicare Advantage contracts with a major payer, expecting substantial revenue—100% of Medicare fee-for-service rates. The new contract seems like a win: more resources for staff, improved facilities, and better patient care.

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But reality soon sets in. Denials pile up, claims are downcoded due to administrative rules that don’t reflect clinical realities, and by the end of the first year, the practice owner realizes the revenue is far below the promised rates. Time and resources are lost, leaving the practice financially strained.

Most healthcare professionals choose medicine to serve patients, not to navigate financial complexities. However, running a practice in today’s healthcare system often hinges on the outcomes of intricate contract negotiations with payers. Once a contract is signed, physicians are often left to grapple with its real-world implications: How does this agreement function in practice? How will it impact patient care and the financial health of my practice?

Common Contractual Pitfalls

Physicians, particularly those with Medicare Advantage contracts, frequently encounter hidden “trapdoors” in contracts with payers—provisions that can undermine revenue and destabilize operations. The good news is that these issues often follow predictable patterns, and with careful attention and strategic negotiation, they can be avoided. Below are six common pitfalls to watch for:

  1. Overpayment Recoupment Clauses
    Many payer contracts include provisions allowing them to recoup overpayments without a time limit. This could mean a payer demands repayment for a service provided years ago, creating financial instability. Physicians should negotiate a reasonable time limit for recoupment, ideally one year.
  2. Inadequate Prior Authorization Protections
    Prior authorization is a notorious administrative burden. Some contracts even allow payers to rescind prior authorizations after services have been provided. Physicians should push for language that:

    • Requires decisions based on medical necessity standards.
    • Permits peer-to-peer reviews for denied authorizations.
    • Prohibits rescinding prior authorizations after approval.
  3. Financial Penalties and Fines
    Contracts often include clauses that impose financial burdens on physicians, such as covering payer fines, providing free medical records for audits, or incurring penalties for failing to notify payers before delivering care. Physicians should scrutinize contracts for these provisions and negotiate their removal or modification.
  4. Unilateral Amendment Clauses
    Some contracts allow payers to amend terms unilaterally, sometimes with only a notice or an online update. Physicians should insist on provisions that prevent such amendments or require mutual agreement.
  5. Restrictive Time Limits on Claims
    Most payers set a 90-day window for claim submission. While many practices can meet this deadline, unforeseen delays can occur. Physicians should negotiate for extended timeframes to protect against denied payments for legitimate services.
  6. Overly Long Contract Durations
    Lengthy contracts can trap physicians, limiting their ability to seek better terms or partners. Physicians should advocate for shorter initial contract periods, particularly when working with a new payer.

Best Practices for Medicare Advantage Contracts Negotiation

The most significant mistake a physician, especially one with Medicare Advantage contracts, can make is assuming that contract terms are non-negotiable. Many payers use standard templates that can be adjusted. By pushing back on unfavorable language, physicians can often secure more equitable terms. Key strategies include:

  • Prioritizing Clear Language: Beyond financial terms, the language of a contract can profoundly affect a practice’s financial health.
  • Knowing What You Need: Understand the reimbursement rates required to sustain your practice and serve your community effectively.
  • Testing Limits: While payers may initially resist changes, persistence can lead to favorable adjustments, particularly if higher-level approval is needed.

Building a Stronger Future

Physicians shouldn’t have to become expert negotiators to run successful practices. Their focus should remain on patient care. However, by staying vigilant and applying proven strategies, healthcare professionals can navigate contract negotiations more effectively.

With well-negotiated contracts, practices can achieve financial stability, enabling them to keep their doors open, lights on, and mission at the heart of their work: delivering exceptional care to patients and communities.

RCM Companies: Navigating the Complexities of Medicare Advantage

Medicare Advantage (MA) plans have become a major focus for Revenue Cycle Management (RCM) companies. Their complex billing, coding, and reimbursement processes pose significant challenges for healthcare providers. As more providers partner with MA insurers, RCM companies become crucial in effectively managing these contracts.

The transition from traditional Medicare to MA introduces unique hurdles. These include navigating diverse payment models, understanding specific payer policies, and addressing claim denials stemming from coding and documentation inconsistencies. RCM companies help mitigate these risks by ensuring accurate coding, timely claim submissions, and proactive denial management. This is essential to maintaining revenue flow and operational efficiency.

MA plans often employ a capitated payment model, where providers receive a fixed amount per member. This can lead to payment discrepancies if not managed carefully. RCM companies also assist in managing risk adjustment factors (RAF), which influence reimbursement rates based on patient health.

By leveraging expertise in coding, compliance, and payer policies, RCM companies enable practices to maximize reimbursement, minimize denials, and adhere to MA regulations. This allows providers to prioritize patient care while ensuring financial stability in the dynamic Medicare Advantage landscape.

Partner with us for accurate billing, faster reimbursements, and fewer denials.

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