Financial Contract Decision

Daniel Spencer
Medical Imaging Corp

OBJECTIVES
An imaging facility expanded imaging modalities offered
which posed a problem for one of the insurance contracts
previously negotiated. The contract did not offer
reimbursement rates for the new services, and thus any
service billed to that contract was denied as non-contracted
and non-covered.
The company issuing the contract was acquired by a larger
entity and all contracts in effect prior to the merger were to
remain unchanged. All new contracts and modifications
require a new agreement to be initiated under the new
company name as a single agreement.

Review current contract

$2,500.

Services covered under the flat-fee

structure provided a potential financial
loss

$20,000.

$750 flat-fee
Commercial
$625 flat-fee
Medicare
Market fees for
all others

Review proposed contract

Map out financial differences

A decision was required as to whether the independent

contracts would remain unchanged, thus continuing not to
reimburse the new services, or to implement a new, all
inclusive contract under a restructured reimbursement
methodology.

The figures provided insight into the

actual value of the services currently
non-covered

Contract A

Make financially sound decision

Contract B

$635 flat-fee
Commercial
100% current
Medicare rates
All others non-
covered

New Contract

$635 flat-fee
Commercial
$100% current
Medicare rates
Market fees for
all others

1. In order to consider the best option, a listing of all non-covered services over
a 9-month look-back period was populated.
2. New contract market fees were populated for each service to arrive at an
actual, monetary value (gain).
3. A listing of all services paid under contract A, under the flat-fee structures,
was populated over the same look-back period.
4. The resulting list was then parsed between Commercial and Medicare lines of
business.
5. A new column was populated based on the difference in Commercial rates
($115) and the average Medicare rate ($257) to arrive at a summed, potential
monetary value (loss).
6. The actual gain was compared against the potential loss.

Keeping contract A and B intact as is provides a net

loss of $2,500.

Accepting a new, consolidated offer provides a gain of

$2,500, but would downgrade flat-rate business at an
estimated $20,000 with a net loss of $17,500.
The decision to remain with separate contracts
was made based on the figures provided.
While additional services will continue to be
non-covered under part of one contract, the
loss of flat-rate business revenue far
outweighs the gain of these services being
covered.

Medical Imaging Corp on behalf of an

owned, independent diagnostic testing
facility.
Insurance company A who serves as the
contracting entity for contract A and the
surviving entity of the merge.
Insurance company B who serves as the
original contracting entity for contract B
and the acquired entity of the merge.
The CEO and Controller of Medical
Imaging Corp who reviewed and approved
the findings and financial figures
produced.

CONCLUSIONS