I recently found myself hitting my head against the wall over a contract I had signed. As a small business owner, I don’t know what I was thinking when I agreed to a contract that locked me in for three years! I guess I had stars in my eyes, thinking nothing in my life or business would change and everything would be smooth sailing.

Oh, how wrong I was.

From being a solo practitioner to managing a full-time practice with five employees—and then back to solo again—my business has gone through many changes, I couldn’t have predicted any of it.

It wasn’t until I was sitting in one of the WSMTA LMT Support Group meetings, listening to other therapists vent about the contracts they had signed with insurance companies, that it finally clicked for me: I didn’t understand the contract I had signed either. I thought I had no negotiating power, so I just signed and (confession time) didn’t even read the fine print. Yet another forehead slap moment. And to make matters worse, this contract wasn’t even insurance-related!

I kept berating myself, thinking I should have known better. But as I listened to other LMTs, I realized—this is just part of being in business. Ideally, we’re working with companies that have their customers (us!) in mind, but the reality is, many contracts are filled with confusing language that can lead us astray (been there, done that, got the invoice).

Whether you’re credentialed with insurance or not, understanding the contracts you sign is essential. Some of the common contracts LMTs are entering into include:

• Business insurance agreements
  

• Laundry service contracts
  

• Commercial leases
  

• Independent contractor agreements
  

• Partnership agreements
  

• Retail or vendor agreements

• Reseller or Wholesale Agreement

WSMTA has written several articles on understanding contracts, like this one on terminating an insurance contract or this one on Supporting House Bill 1589 Insurance Contract Fairness—but the same principles apply across the board. We’ve seen firsthand how contracts can make or break your confidence, income, and even your schedule.

Here are some tips to know before signing any contract. 

Read the Fine Print (Yes, All of It!). 

Before signing any contract, it’s crucial to read the fine print. We understand how tedious and time-consuming this can be, but take it from the thousands of LMTs who are currently stuck in unfavorable contracts—sometimes paying to work instead of getting paid for their labor. Don’t rush through the process. Take your time, highlight areas of concern, and ask questions if something doesn’t make sense. 

Avoid Costly Audits. 

Imagine being in a situation where an insurance carrier audits your practice, or you want to cancel a contract and they make you do a buy out, and you find yourself responsible for paying out hundreds to thousands of dollars—all because of a small clause buried in your contract. Unfortunately, this scenario is all too real for many therapists. That's why we offer our regular support group for clinic owners and managers, where you can ask questions, review contracts, and get the guidance needed to avoid these costly mistakes.

Understand Your Reimbursement Rates

One of the most critical aspects of any insurance contract is the reimbursement rate. Ensure that the rates outlined in the contract are clear, consistent, and align with the standard rates for your services. Look out for language that allows the insurer to change rates without prior notice or agreements that lock you into low reimbursement rates for extended periods.

Watch for Hidden Fees and Costs

Contracts can sometimes include administrative fees or costs related to billing and processing claims. These hidden fees can add up, reducing your profit margins. Read the fine print and calculate how these costs could impact your bottom line.

Know the Billing and Coding Requirements

Insurance companies often have specific billing and coding requirements. Missteps in this area can lead to rejected claims, delayed payments, or reduced reimbursements. Make sure you fully understand the required billing procedures and maintain accurate records to support your claims.

Be Aware of Termination Clauses

Termination clauses outline how either party can end the contract. Look for clauses that allow the company to terminate the contract without cause or with minimal notice. Ideally, you want a contract that provides a fair process for termination, giving you time to adjust and secure other resources. 

Avoid Exclusive Contracts

Some companies may require you to sign an exclusive contract, preventing you from working with other companies of the like. This can limit your practice’s growth or financial stability. Aim for contracts that allow flexibility and autonomy in your business decisions.

Look for Authorization and Pre-Approval Requirements

Many insurance contracts include provisions for prior authorization or pre-approval for certain services. Failing to meet these requirements can result in denied claims and lost revenue. Familiarize yourself with these stipulations and create a process to manage them efficiently.

Clarify Your Liability and Risk

Understand what liabilities you are taking on by signing the contract. Some agreements may shift the burden of risk onto you, making you responsible for unpaid patient bills or discrepancies in claims. Avoid contracts with broad indemnity clauses that can expose your practice to undue financial risk.

Check for Dispute Resolution Processes

A good contract should include clear procedures for resolving disputes. This might involve mediation, arbitration, or legal proceedings. Make sure the process is fair and that you are not waiving important rights by agreeing to specific terms.

Evaluate the Length and Renewal Terms

Long-term contracts may seem like a sign of stability, but they can also trap you in unfavorable conditions. Understand the renewal terms and whether the contract automatically renews or if there is an opportunity to renegotiate.

You Have Options: Accept, Negotiate, or Decline

When it comes to contracts, it’s easy to feel like you have to accept whatever is offered, but that’s not the case. You always have the option to accept the terms, negotiate for better conditions, or walk away if the contract doesn’t serve your best interests. The power to decide is yours, and it’s worth taking the time to make an informed choice.

In Conclusion: 

Curious what my contract was for? Laundry services. Yep, a three-year contract I signed without batting an eye. I paid $2,400 annually for a service I barely used because my workload had changed significantly.

It was an expensive lesson, but one I’m now grateful for. It woke me up to the importance of reading every line, even in contracts that seem routine. Next time, you better believe I’ll have a pen, a highlighter, and maybe even a buddy with me to help review the details—so I know exactly what I’m committing to.

Learn from my mistake. Whether it's a vendor, lease, or insurance agreement—read it, ask questions, and don’t be afraid to say no. You have more power than you think.

Have you signed a contract you shouldn’t have? Join the conversation on Facebook! 

How Our Support Group Can Help

At our Members Support group for clinic owners and managers, we dive deep into contract-related questions, offering a safe space to explore the fine print, share experiences, and learn from others. Whether you're considering a new contract or re-evaluating an existing one, our community is here to provide support, insights, and resources to ensure you make the best decisions for your practice.

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