When starting a medical billing business there are many things to think about and writing a contract is just one of them. There are many expenses in getting started and most of us just starting out don’t want to spend our limited investment money on an attorney. So what do many of us do? We “google” sample medical billing contract and use what we think sounds good and make up a contract for our business. That can be a big mistake.
That’s what we did sixteen years ago when we started our business except there was no ‘”Google” then. But we basically searched until we found a sample, very simple contract and modified it for our use. For several years we told ourselves that it was fine and if it wasn’t working out for the provider then it wasn’t working for us either and we should move on and find new clients. It took us a long time to realize that in several situations our simple contract was actually the reason things were not working out.
When you first start your medical billing business you have no idea of the things that can go wrong in a relationship with your clients so you do not know what needs to be included in a contract. Our first contract did not even specify the responsibilities of either the provider or ourselves. It is amazing we were able to find providers willing to sign our contract. If you don’t include the responsibilities of each party in the contract how does it protect either of you when the relationship starts to fall apart? And if neither party knows their responsibilities, how can you expect that the relationship will work?
Here is an example. You specify in the contract that it is the obligation of the provider’s office representative to supply you with all the payment remittances but you are not getting them which is causing you to do a lot of extra work in contacting the insurance carriers to check status on claims that were already paid. It is upsetting to spend three or four hours calling insurance companies to find that the claims were paid but the doctor’s office missed sending you the eobs. When the doctor has signed a contract that says that he will designate a person responsible for that purpose you can nicely inform the person responsible for getting you the eobs that this is such an important issue to you that it is written into the contract that the doctor signed that you are to be provided with the eobs. You can also include a provision in the contract to specify what you can do if the provider is not providing you with the eobs.
Another important example is an issue you will undoubtedly run into – your payment. Many people who start this business are used to receiving a regular paycheck. When you make the move to being an entrepreneur and owning your own business you can only write yourself a paycheck if your providers pay you. You need an understanding with your providers as to when you are going to be paid for your services. Doctors are often not the best businessmen and are sometimes not very good about paying bills on time. Especially when you are first starting your business it is vital that your provider understands when you expect payment and that you have something well written to protect you if you end up with someone interpreting the language of your contract in court.
Each year you are in business you find additional things that need to be added to your contract. New situations arise that you realize should be covered in your contract. So how do you cover everything that needs to be covered? You need a list – actually several lists. You need a list of what you feel the provider’s responsibilities are. You need a list of what you feel your responsibilities are. You want to imagine a symbiotic relationship with your providers and then list the reasons this relationship works and put those actions in your contract as responsibilities of yourself or the provider.
You need a list of everything that you have ever heard of going wrong in a medical billing business between the provider and the biller. You need to decide how you would avoid those situations if possible and cover how it would best be handled in your contract if unavoidable.
What you are charging your provider and how you will get paid is a fairly important part of your contract. Are you charging a percentage, a flat rate, or a per claim fee? Is it clearly defined how you are charging? Is the percentage on what is billed out or what is received? Are patient payments included? If charging per claim, what constitutes a claim? Is it a line on a claim form or is it per page?
You also need to take into account what will happen when the relationship ends. It may be expected, as when someone retires, or it may be unexpected but you need to have a plan in place for when the relationship ends. It will be a much better parting of ways if you have a plan of action for how things will be handled.
The whole reason for a good contract is to protect you but your contract can do much more than protect. You can weed out potential problem providers that will drive you crazy. If you are not in agreement with your providers on what each of you will be contributing to the relationship then the likelihood of the account going smoothly is very small. Don’t make the mistake of skimping on an important part of your business that may save you from defending yourself in court down the road. Make sure you take the time and experience of others to get everything you need covered in your contract.