Why A Medical Billing Contract?
There’s an old saying – “Everybody looks good at the starting line.” That is to say when you first start working with someone, everybody’s agreeable and cooperative. That’s the time to document your agreement to minimize any “he said, she said” issues later. There’s also another saying – “If it’s not in writing, it didn’t happen.”
A contract is very important for a medical billing business to define the rolls and responsibilities of both parties as well as defining the services provided, pricing, terms, etc. It should also clearly describe the responsibilities of client and Medical Billing Service.
The contract we use is fairly simple and doesn’t obligate the client if they wish to discontinue our services. If a client doesn’t want to use our service, I don’t want to force them to.
However it is important that we are fairly compensated for our efforts and expenses. And the contract is the place to document the fees for your services. It’s also especially important to define deliverables and responsibilities when/if services are terminated. If you have an obligation to pay clearinghouse fees for a fixed period, you want to make sure you are covered for those and any other expenses.
I’ve seen too many situations where a client thinks they can just immediately quite using a billing service and have no obligation to compensate they for all the time, labor, and expense they have obligated to getting the doctor paid. That’s when having a good clear medical billing contract is important.
We pride ourselves in providing a level of service that they wouldn’t want to change services. This also makes it easier to sign a provider when they know they are not getting locked into using our services.
Some people also refer to a contract as a service agreement. Here’s an example medical billing contract in PDF form.
Below is the same sample medical billing contract text if you want to cut-and-paste in your own word processor document. I know it’s a little difficult to copy from a PDF document.
Feel free to use as a starting point and remove what you don’t need. Remember it’s just an example that can be customized. I’ve used ACME as the generic billing service name. As with all business contracts it’s a good idea to have it reviewed by an attorney before signing with a client.
The Medical Billing Business Books page has a comprehensive guide to writing a contract called “Write a Kick Butt Contract For Your Medical Billing Service“. It’s an 82 page guide on crafting a contract that’s customized to your situation.
Some other resources you may find helpful on this site:
Sample medical billing contract:
SERVICE AGREEMENT FOR FULL REIMBURSEMENT MANAGEMENT
This Service Agreement is entered into between Acme Medical Billing LLC, a (hereinafter ”ACME”), a ”healthcare electronic claims processing and services company and _________________, (hereinafter “Client”), a healthcare provider.
WHEREAS, ACME is a healthcare billing and service company which provides computerized claims, billing and collection services to healthcare providers and which files medical insurance claims on behalf of healthcare providers with government and commercial companies by electronic and paper means, and which also provides for billing services directly to patients or for patient’s portion of healthcare provider fees not covered by insurance; and
WHEREAS, the Client desires to retain ACME to provide it with claims and billing services whereby ACME will file insurance claims with government and commercial companies by electronic and paper means on behalf of Client;
NOW, THEREFORE, in consideration of the promises and covenants contained herein and for other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:
- Commencing on __________________, ACME will process all the Client’s medical insurance claims for payment by government and commercial companies by either electronic or paper means. The Client agrees to make available to ACME all information necessary to properly process the Client’s claims and to submit all such billing and insurance information to ACME (Daily, MWF, Weekly). In return, Billing Center will process and submit all Client’s claims within seventy-two (72) hours by electronic means wherever possible, and by paper means otherwise. The scope of services provided by ACME will be as follows (List additional services or terms here):
___________________________________________________ - ACME will provide to Client a direct fax number, through which the Client will provide to Billing Center claims and billing information necessary for ACME to properly process the Client’s claims.
- All patient information and data provided by the Client to ACME shall be kept confidential and shall not be disclosed to anyone outside of ACME other than to the extent necessary for ACME to process and submit claims for the Client. In addition, the Client will not divulge the contents, terms or conditions of this Service Agreement to any third party without the express written consent of ACME.
- The Client will pay ACME a one-time setup fee of $______ to cover the cost of gathering information from the Client and setting up the Client’s files for entry into computer system. The information and initial setup covered by this initial fee includes, but is not limited to: Doctor Profile; Listing of Current Insurance Companies Used; Referring Physicians; Facilities at Which Doctor is Accepted or Transfers Work; Diagnostic Codes; Procedure Codes and Fees; Signed Patient Registration Forms (to be kept in Client’s office); Registration with Clearinghouse which will distribute claims to the carriers
- The Client will pay to ACME ____% of the total (gross) amount collected from ALL insurance companies and ALL patients as a result of the billing services performed by ACME for Client, with a $500 monthly minimum billed amount. The Client agrees to provide copies of all Explanation of Benefits (EOB) forms received from insurance payors to ACME as well as records of payments received directly from patients (Weekly). ACME shall post the payments received from the insurance payors to the patient’s file, shall file any secondary or tertiary claims, and shall bill the patient directly when necessary in order to secure full payment for the Client.
- ACME shall provide to Client management reports regarding the practice on a timely basis. The types of Monthly Management Reports shall be as follows:Insurance Aging Report – monthly Patient Aging Report – quarterly Practice Analysis – monthly Other(s) __________________________
- ACME will close its books for billing purposes on the last day of each month and will bill the client for its services on the 5th business day of each succeeding month for the previous month’s processing. The Client will pay ACME for its services upon receipt of receiving ACME’s invoice. If the Client fails to submit payment within the time set forth in this paragraph, the Client will be responsible for paying, in addition to the principal amount billed, a 1% per month late charge for each month or any portion thereof payment of the billing is late.
- During the term of this Service Agreement, the Client will not use the services of any other claims processing companies and will allow ACME to process all of the Client’s medical insurance claims with the government and commercial companies.
- Either party may terminate this Service Agreement at any time by providing a thirty (30) day written notice with explanation or reason why termination is desired to the otherparty.
- ACME will be serving as a conduit of information and claims data between Client and many insurance payers, both government and commercial. Client will be providing all such claims information and data to ACME, including but not limited to procedure codes, identifying the exact procedures Client has performed on patients. Client verifies that all such procedures were in fact performed on the patients as specified. ACME has no authority to and will not change any of these procedure codes without the express permission and direction of Client.
- Client understands that ACME is relying entirely on the claims and billing information supplied to ACME by Client in preparing and submitting insurance claims for payment on behalf of Client. Client warrants and represents that all such claims and billing information is entirely accurate and truthful. If any investigation is initiated or if any action is brought by any individual, company or entity whatsoever regarding any of the claims filed by ACME on behalf of Client, then Client agrees to cooperate fully in any such investigation or action and shall provide all relevant supporting documentation to support the claim(s) filed.
- Client understands that ACME will NOT provide insurance pre-authorizations.
- Client agrees to indemnify and hold ACME harmless for any and all damages or penalties imposed and any attorney’s fees incurred by ACME in defending any such action resulting from Client’s failure to provide truthful and accurate billing and claims information to ACME.
- This Service Agreement shall be interpreted under the laws of the State of Georgia and any disputes between the parties concerning the validity, interpretation or performance of any of the terms or provisions of this Service Agreement or of any rights or obligations of the parties hereto shall be resolved in Georgia. Should it become necessary for ACME to retain an attorney to collect any amounts owed to ACME under the terms of this Service Agreement, ACME will be entitled to recover in addition to its damages, reasonable attorney’s fees.
- Any notices or communications anticipated by this Service Agreement shall be directed to the parties, as follows:BILLING CENTER: (Enter company rep and contact info in Medical Billing Contract here)CLIENT:(Enter Client name and title in Medical Billing Contract here)
- This Service Agreement represents the entire agreement between the parties and shall not be modified unless done so in writing signed by or on behalf of both parties.
- This Service Agreement shall be binding upon and inure to the benefit on the heirs, legatees, successors, and assigns of each of the parties.
Executed this _______day of _______________, _________.
By: ___________________________________( Client name and title)
By: ___________________________________( Billing service representative name and title)
End of Sample Medical Billing Contract
If you agree to modifications to the medical billing contract, these can be handled with an amendment. Here’s a sample medical billing contract Addendum in PDF.
Here’s the sample medical billing contract addendum in text if you prefer to cut-and-past into a Word document:
ADDENDUM TO SERVICE AGREEMENT FULL REIMBURSEMENT MANAGEMENT
This Addendum Service Agreement hereby modifies the terms of the service agreement dated entered into between Acme Medical Billing LLC, (hereinafter ”Acme”), and Dr. John Doe (hereinafter “Client”).
The Agreement is hereby modified as follows:
The Client will pay to Acme ____% of the total (gross) amount collected from ALL insurance companies and ALL patients as a result of the billing services performed by Acme for Client, with a $500 monthly minimum billed amount. The Client agrees to provide copies of all Explanation of Benefits (EOB) forms received from insurance payors to Acme as well as records of payments received directly from patients (Weekly). ACME shall post the payments received from the insurance payors to the patient’s file, shall file any secondary or tertiary claims, and shall bill the patient directly when necessary in order to secure full payment for the Client. Effective date of this change is _______________.
This Service Agreement represents an addendum to the original agreement between the parties and shall not be modified unless done so in writing signed by or on behalf of both parties.
Executed this _______day of ___________________, _________.By: ___________________________________( Client name and title)
By: ___________________________________( Billing service representative name and title)
End of Sample Medical Billing Contract Addendum
If you’re looking for a more comprehensive guide to writing a contract, “Write a Kick Butt Contract For Your Medical Billing Service” on the Medical Billing Business Books page. It’s an 82 page guide on crafting a contract that’s customized to your situation and includes information on contracts, Errors & Omission insurance, compliance plans, as well as a section on pricing for your medical billing business.
Even if you are an experienced medical billing business owner, you should have a good contract that will protect your business interests if you have a dispute.
Minimum To Include
As a minimum you medical billing contract should specify:
- What services will be provided
- What services will NOT be provided – such as coding. Believe it or not I have had providers expect us to include coding
- Cost of services and how they will be calculated – percentage, per claim, or per hour
- When services will start
- How and when patient encounter and EOB information will be communicated
- Where insurance and patient payments should go
- That patient confidentiality will be maintained in accordance with HIPAA practices
Reporting Requirements
Some billing services include reporting requirements and frequency. I don’t include this as I feel the provider should be entitled to reports on request to see how their practice is performing. Most providers also have access to the practice management system and generate their own reports.
The client is responsible for providing true and accurate data. Unless you offer as an additional service, the provider should also be responsible for verifying insurance and credentialing. You may want to spell these out separately in the medical billing contract if you think this could be a point of contention later.
Price Aging Separately
You also may want to clarify in your medical billing contract that you are not responsible for claims or billing issues that occurred prior to your contract date. This is especially important if the current billing is a mess. If this is brought up afterwords you can document agreement with a medical billing contract addendum similar to the one shown above.
Many providers desire that past insurance and patient aging be worked due to issues with past office billing practices. That’s fine and it’s a great service for a medical biller to offer, but should be priced right. Remember if you are going to charge different rates for aging, you have to track and the aging claims separately from the current ones.
Working on insurance aging (unpaid or rejected insurance claims) is usually very labor intensive and time consuming. These services need to be spelled out in the contract separately and priced accordingly. Your time and expertise are valuable and your services should be priced fairly.
It’s important to remember that the practice information (including patient data) is the property of the client.
Business Associate Contract
Providers may also request that you sign a Business Associate contract with regard to the HIPAA Privacy Rule. This documents that a covered entity (the Provider) has an agreement with the business associate (Medical Billing Service in this case) to comply with the requirements of the HIPAA Privacy Rule.
The U. S. Department of Human Services has a Sample Business Associate Contract here and also further explains it’s use.
Protect Yourself
In the litigation crazy society we live in today, it’s a good idea to have your contract reviewed by a business lawyer. If a client decides to sue or is party to a suit, you want to make sure you are protected.
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