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Work Comp Discount Contracts, Pt 1: What You Don’t Know Can Cost You

February 2, 2016 by Catherine Montgomery

 

If you’re a provider, chances are you’ve signed a discount contract for worker’s comp services or you’ve been approached about signing one. These contracts are tempting, because they allow a provider to participate in a network in exchange for accepting lower fees.

We have one word of advice: beware.

Bad News: Most Discount Contracts Are NOT Good for Providers

For unwary or unprepared providers, discount contracts are usually confusing, nearly impossible for billing staff to manage, and, ultimately, of questionable value.

Here are just a few of the reasons discounts contracts are such a minefield:

  • Contracts can be sold or “rented” to other networks, often without provider permission. You may think you’re entering into an agreement with one particular network, only to find yourself stuck in agreements with many others. A provider may not even know that a particular injured worker is covered by a discount contract until the reduced check arrives.
  • Even if a provider never signs a work comp discount contract, the provider may unwittingly participate via group health contracts that include “workers’ compensation products.”
  • Explanations of review (EORs) reference discounted contracts with a variety of terms, including “Network Discounts”, “PPO Discounts”, “Bill adjusted in accordance with XYZ Contract,” etc. The vague references to contracts makes it difficult for billing staff to assess if bills are appropriately discounted.
  • Most practices don’t have the staffing capacity to correctly track discount contracts, so incorrectly applied discounts frequently slip through the cracks.
  • For practices that have the ability and intestinal fortitude to challenge incorrectly discounted bill payments, staff end up spending huge amounts of time and effort making phone calls, submitting requests for second review, and otherwise managing the incorrect payment.

For practices without a clear understanding of their signed discount contracts, it is very difficult to:

  1. Properly and efficiently review bill payments for accuracy
  2. Calculate the overall cost of the various discount contracts, and
  3. Negotiate better discounted rates

Good News: We’ll Show You How to Manage and Negotiate Better Discount Contracts 

DaisyBill’s vast amount of payment data, drawn from almost 1 million California workers’ comp bills, clearly shows that a provider can negotiate for better discount contracts. Discount rates for contracts vary by huge amounts: some providers receive 100% of the fee schedule reimbursement while others receive as little as 65% for essentially the same contract. These reduced payments add up to a substantial loss of revenue for providers who haven’t negotiated for favorable rates.

Over the next four weeks, Daisy News shows providers how to manage these discount contracts and negotiate for better, more profitable discount rates. Starting next week and in subsequent weeks we will review:

  1. How to systematically identify discount contracts.
  2. How to manage discount contracts for greatest efficiency and fewest headaches.
  3. Methods for analyzing exactly how much each contract is costing or benefitting the practice, so as to target the contracts that should be canceled or re-negotiated.
  4. 5 things to watch out for before signing a contract (hint: read the fine print).

Next Tuesday we’ll talk about how to identify your contracts and the reasons this is the most important step in managing these contracts.


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About Us

DaisyBill is a trusted authority on workers’ comp billing. Thousands of work comp professionals attend our webinars and state agencies and professional organizations turn to us for our expertise. We created this blog to help everyone involved in workers’ compensation; sharing news, tips, and data of interest to the community.

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