---
title: Multi-year Contracts
description: Multi-year Contracts
---

[Confessions of a Pediatric Management Consultant... Where fame and fortune await those who help keep pediatric practices alive and independent! ](https://chipsblog.pcc.com)

# [Multi-year Contracts](https://chipsblog.pcc.com/multi-year-contracts)

 Written by [Chip Hart](https://chipsblog.pcc.com/author/chip-hart) | Jan 9, 2008 1:59:35 PM

Over the last month, I have had three practices ask me about multi-year contracts.  What do I think of them?

Multi-year contracts *can* be great.  Why not?  It's one less contract to worry about for 2-3 years.  Presuming you do it properly, of course.  Sometimes, the payors are willing to give price increases over time that you could never get going year-to-year.  In addition to all of the normal contracting issues to consider, here is my general advice when a multi-year contract is on the table:

- Whatever rate you are paid for your multi-year contract should increase each year.  100% -> 110% -> 120% of Medicare, etc.  Obviously, it's more money.  And, obviously, it reflects an expected cost-of-living increase.  But it also means that the starting point in your negotiations 3y from now is higher.  And it's a matter of principle.
- *Lock in your RVU year.*  In the past quarter I have seen more contracts that talk about the "prevailing CMS rates" than in the previous two years.  Why?  Because all the payors know that *Medicare rates are going to get cut.  *In fact, as I've pointed out [here](https://chipsblog.pcc.com/pediatric-utilization-and-rvu-2008/), depending on your "gypsy," you may already be getting a sizable cut.  So, the smart payors tie you the most recent year because they expect that it will cut their reimbursement 10-20% in the years to come.  So, lock your contract to, say, 2006 or 2007.
- Finally, take this chance to make sure the payor refers to RVUs, etc., and not the "Medicare rates" - the latter language gives them freedom to use the Budget Neutrality adjusters, which are an additional ~5% cut.

[View full post](https://chipsblog.pcc.com/multi-year-contracts)

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