Medical Billing Contract Example: My Biggest Mistake


When starting a medical billing business, there are many things to think about and writing a contract is just one of them. There are a lot of expenses involved in getting started and most of us who are just starting out don’t want to spend our limited investment money on an attorney. So what do many of us do? We “googled” a sample medical billing contract and used what we think sounds good and created 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’ back then. But basically we search until we find an example, a very simple contract, and modify it for our use. For several years we told ourselves that it was okay and if it didn’t work for the provider, it didn’t work for us either and that we should move on and find new customers. It took us a long time to realize that, in several situations, our simple contract was actually the reason things weren’t working out.

When you first start your medical billing business, you have no idea what things can go wrong in a relationship with your clients, so you don’t know what needs to go into a contract. Our first contract did not even specify the responsibilities of either the provider or ourselves. It is surprising that we have been able to find suppliers willing to sign our contract. If you don’t include each party’s responsibilities in the contract, how do you protect them both when the relationship begins to fall apart? And if neither party knows their responsibilities, how can you expect the relationship to work?

Here is an example. You specify in the contract that it is the obligation of the provider’s office representative to provide you with all remittance advice, but you do not receive it, which causes you a lot of extra work when contacting insurance companies to check the status of claims. that were already paid for. It’s annoying to spend three or four hours calling the insurance companies to find out that the claims were paid but the doctor’s office didn’t send you the eobs. When the doctor has signed a contract that says he will designate a responsible person for that purpose, you can kindly inform the person responsible for getting you the eobs that this is such an important issue to you that it is written in the contract the doctor signed that eobs will be provided to you. You can also include a provision in the contract to specify what you can do if the provider does not provide you with EOBs.

Another important example is a problem that you will undoubtedly run into: your payment. Many people who start this business are used to receiving a regular paycheck. When you become an entrepreneur and own your own business, you can only write yourself a paycheck if your vendors pay you. You need an agreement with your providers about when you will be paid for their services. Doctors are often not the best businessmen and sometimes they are not very good at paying bills on time. Especially when you’re just starting out in business, it’s vital that your supplier understands when he expects payment and has something well written in place to protect you if you end up with someone interpreting your contract language in court.

Every year you’re in business, you find additional things that need to be added to your contract. New situations arise that you realize should be contemplated in your contract. So how do you cover everything that needs to be covered? You need a list, actually multiple lists. You need a list of what you think the provider’s responsibilities are. You need a list of what you think your responsibilities are. You want to imagine a symbiotic relationship with your suppliers and then list the reasons why this relationship works and put those actions in your contract as your or the supplier’s responsibilities.

You need a list of everything you’ve ever heard that went wrong in a medical billing deal between the provider and the biller. You need to decide how you would avoid those situations if possible and cover how you would best handle them in your contract if they were unavoidable.

What you are charging your provider and how they will pay you is a pretty big part of your contract. Are you charging a percentage, a flat fee, or a per claim fee? Is it clearly defined how you are charging? Is the percentage on what is invoiced or what is received? Are patient payments included? If you charge per claim, what constitutes a claim? Is it one line on a claim form or is it per page?

You also need to consider what will happen when the relationship ends. It can be expected, like when someone retires, or it can be unexpected, but you need to have a plan for when the relationship ends. It will be much better to stay out of the way if you have a plan of action for how things will be handled.

The main reason for a good contract is to protect you, but your contract can do much more than protect. You can eliminate possible problem providers that will drive you crazy. If you don’t agree with your suppliers about what each of you will contribute to the relationship, then the chance that the account will work out 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 in the future. Be sure to take advantage of the time and expertise of others to get everything you need covered in your contract.

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