From the Field: Tips for Contract Negotiations

Rick Collins

Tips for Contract Negotiations

The emergence of Parsabiv™ (etelcalcetide) has spotlighted holes in provider contracts that resulted in lost reimbursement for renal providers. The loss of reimbursement could have been prevented in many cases had payer contracts been negotiated more wisely. In this month’s article we will look at contract terms that providers should avoid. While the examples that follow focus on outpatient dialysis contracts, the same principles apply to contracts for professional services.

All-Inclusive, Global, Bundled, and Per Diem

A side effect of the implementation of the Centers for Medicare & Medicaid End-Stage Renal Disease Prospective Payment System (CMS ESRD PPS), the Bundle, in 2011 is that commercial payers decided they should also bundle dialysis services into one all-inclusive rate. Prior to 2011, most commercial contracts reimbursed dialysis treatments and drugs separately. Once the CMS Bundle was implemented, commercial payers began bundling dialysis services in a manner similar to Medicare, but with important differences.

For example, the CMS Bundle anticipates that providers will receive the base rate plus additional reimbursement for comorbid conditions, home training, outliers, drugs given during dialysis that are unrelated to a patient’s ESRD, and vaccines, among others.

Commercial payers either missed or ignored these critical payments made in addition to the CMS Bundle base rate. Instead, many payers pushed providers to accept a single payment for all services, labor, medications, labs, and supplies provided to ESRD patients regardless of whether the services were related to the patient’s ESRD. Further, some providers even agreed to contracts that failed to offer additional reimbursement for home training.

When Parsabiv was introduced, many providers found that commercial payers would not pay separately for this new drug because the provider had agreed that ALL services, medications, etc., related to a patient’s ESRD were included in the contracted rate. There were no clauses that allowed for the creation of new drugs that could add significant costs to providers without adding any additional reimbursement. Without additional reimbursement, providers were effectively discouraged from providing this new drug that could have benefitted some of their patients.

In addition to Parsabiv, providers have found that antibiotics given for non-ESRD reasons are not reimbursed nor are vaccines given to patients. The non-ESRD drugs and vaccines can be reimbursed in other provider settings, including the physician’s office, if the contracts for those providers cover them.

Contracts that Include Specific Codes

Another type of contract causing problems for providers are those that specify only certain procedure codes as covered. For example, if an outpatient dialysis program agrees to a contract only for revenue code 0821 (in-facility hemodialysis) with procedure code 90999, any other revenue or procedure code billed on the claim will not be paid. Similar to all-inclusive contracts, no allowance is made for vaccines, drugs given for non-ESRD reasons, or new ESRD drugs,

A big mistake made by programs offering home dialysis is not including the codes for home training in their commercial contracts. In this case, no additional amounts will be paid for training services because the corresponding codes are not listed in the contract.

Managed Care Coverage Not Always the Same as Medicare Coverage

A common misunderstanding regarding contracts with Medicare Advantage payers is that Medicare Advantage Plans pay exactly the same as Medicare. In reality, procedures and services covered by traditional Medicare are only the minimum standards for Medicare Advantage payers as they can cover more services and pay more than traditional Medicare.

However, the introduction of Parsabiv and the move of Sensipar® (cinacalcet) from Part D to Part B coverage has befuddled some payers. Several had not updated their systems to reimburse for Parsabiv when it was first introduced into the market and thus denied this medication in error.  Others failed to update their systems to reimburse Sensipar when included on an outpatient dialysis claim. As of this writing, some payers are still struggling to modify their claims processing systems so they will pay correctly for these drugs.

Interestingly enough, if Parsabiv and Sensipar were denied in error, the payer normally does not go back and locate these claims and pay what they should have. Instead, the payers leave it up to the provider to go back and refile, adjust, or appeal the denials. Unfortunately, if the payer has not updated their system when the provider refiles or adjusts their claims, the payer denies the services incorrectly again. However, if providers fail to refile, adjust or appeal claims that were incorrectly denied, they may miss the payer’s timely filing deadlines for appeals and adjustments. It is a game in which the odds are stacked against the provider even though the provider is correct in expecting reimbursement. While difficult, it is usually not impossible to have payers go back and reprocess claims correctly, but it may require a lot of time and persistence on the part of the provider.

Review Your Current Contracts and Update/Renegotiate Now

So, what can you do to protect yourself going forward? First, find out if you are being paid for all of the services you are billing. Second, if you are being paid, are you being paid at the correct rate?

If you are not being paid correctly, review your payer contracts to see what is covered and the rate at which it is covered. If you find the item is being paid, but at the wrong rate, providers should contact the payer immediately to notify them of the error and ask them to reprocess claims paid incorrectly. If you find that certain procedures are not being paid, review your payer contracts to see if they are included. If not, contact the department of the payer that handles provider contracting and insist on the addition of drugs and procedures not currently covered.


Rick Collins is the director of business development for Sceptre Management Solutions, LLC., a company that specializes in billing for dialysis, nephrology, and interventional nephrology programs. Please direct your comments or questions to him at or 801.775.8010.