We are reviewing our contracts for revenue potential and lesser-than provisions are being discussed. What specific pitfalls should we look for in terms of lesser-than provisions?
Answer: In many managed care organization (MCO) contracts, the term “lesser of” is used to minimize payments to providers using the charges in the organization. For example, if a procedure contains a C-arm and then requires magnetic resonance imaging (MRI), the MCO may disallow the charges for the C-arm and pay the “lesser of.” Pricing may look similar to this: $7,000 hospital charge with MRI and C-arm; $4,500 hospital charge with MRI only and the contracted payment is $4,800. The MCO would pay the $4,500 hospital charge amount and keep the $300.
This question was answered by: David A. Williams, FHFMA, CPA, partner, Horne LLP, and a member of HFMA’s Mississippi Chapter.
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