COMPENSATION PROVISIONS – Class 7
Compensation provisions – usually include rate, billing, payment provisions:
Rate – Payment rate or formula for covered and possibly non-covered services.

Traditional payment formulas include: discounted fee for service, percentage of cost or charge, fees based on the relative value scales or diagnosis related groups.

Increasingly more arrangements place providers “at risk” for extraordinary patient care costs. Example: per diem, per service and capitated rates.

In capitated contracts, there is typically the potential for additional compensation out of “risk pools” maintained on behalf of hospital providers. Risk pools reward physicians and hospitals for utilization and costs under projected levels and penalize over- utilization.

Billing and payment:
MCO’s usually want these provisions to specify the billing form to be used (example: UB82) and also specify the period in which billings are to be submitted (example: 30 days). Payment is typically conditioned on providers submitted “complete” claims which may or may not be defined in the agreement. Contract may also contain provisions specifying a penalty for late submission of billings which providers typically seek to eliminate.

Payment provisions typically identify the time period for payment of undisputed “complete” claims. Also, usually certain Coordination Of Benefits (“COB”) procedures (example: the payment priorities if the payer is primary or secondary, or if the subscriber may have a claim against a third party tortfeasor for medical or hospital care).

Often COB provisions provide that if the payer is determined to be secondary to another payment source, its obligation to pay is delayed until the primary payer makes final payment.

Timing of payments.

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