4 ways to make software warranties work for you

So, you finally decided to purchase that new dental software that you’ve been thinking about for a couple years now.

You believe you got a good deal and are excited at the prospect of finally implementing a new system that will support both your administrative and clinical operations The last step is to structure a solid software contract with your vendor that protects you moving forward. 

Unfortunately, too many times this is where you wind up on the wrong end of the deal. When it comes to software contracts, many practice attorneys just don’t have the specialized experience needed to structure solid software contracts and vendors typically have an upper hand in their never-ending goal to protect themselves. 

Having negotiated many software contracts over the years, I can tell you that there are numerous things to think about when structuring and negotiating a winning contract. One area that isn’t talked about enough is the concept of software guarantees and warranties. 

Software functionality warranties 

Software functionality means that the software works as advertised. This is usually guaranteed for a reasonable period of time after go-live (120-180 days). If bugs, errors or problems occur, the contract needs to include specific timeframes and steps for communication and fixes as well as specific remedies for non-compliance. The software functionality section should include but not be limited to:

• The standard for acceptable functionality, which may be in user manuals, reference materials or other documentation

• Timeframes for fixing broken or inadequate functionality

• Remedies such as financial penalties and/or software refund if timeframes are not met

• Warranties about performance. 

Bottom line: If a vendor cannot repair broken functionality after the timeframe has elapsed, then remedies should be spelled out. Don’t leave it open.

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Regulatory compliance  

Regulatory conditions change over time as rules and circumstances alter. Regulatory compliance is a commitment by the vendor to address and meet future regulations, such as changes to HIPAA. A key question to ask is whether compliance upgrades are free to the practice or if there will be additional costs or fees. The timeline for vendors to reach compliance should also be specified. 

Bottom line: Ensure that your vendor commits to keeping up with regulatory compliance, preferably at no extra cost.

Standards compliance warranties 

Standards compliance refers to specific kinds of functionality. For instance, interoperability with other systems or the ability to interface with certain standard devices. Contracts usually spell out compliance for existing standards and specify which standards are met by the software. 

Practices may also want the vendor to commit to meeting new or revised standards. That may be difficult, particularly if the standards have not yet been completed. However, understanding how the vendor will work to remain in compliance with industry standards over time, as well as government and certification standards, is key to ongoing software functionality. Practices should ask if standards compliance is included in regular upgrades or if there are additional fees. If a practice has unusual interfaces, the contract should specify any charges for a specific interface that does not meet an industry standard. 

Bottom line: Make sure your vendor is committed to keeping up with evolving industry standards.

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Meaningful Use warranties (If eligible for EHR Incentive Subsidies)  

Eligible groups and practices that wish to attest for Meaningful Use need guarantees  that the vendor will continue to provide necessary functionality as program rules change. Certification is crucial to receiving the incentive and reimbursement, which is a vendor responsibility. 

Often, vendors try to stick customers with the cost of keeping up with certifications. They are selling you software that supposedly allows you to get your subsidies, so shouldn’t they be responsible for any costs incurred for changes that will continue to allow their customers to be eligible for complying with Meaningful Use? 

Another question is whether the main software is Meaningful Use compliant itself or if additional modules are needed to attest. Some vendors offer separate meaningful use reporting tools or package their software with a third-party vendor’s certified software. Reporting of Meaningful Use measures (typically by “Meaningful Use” dashboards) is a critical component to address. The Meaningful Use section should include, but not be limited to:

• Functionality commitment

• Timing and information around upgrades

• Certification commitment, and which stages are included

• Remedies and steps for non-compliance

• Customer responsibilities and vendor responsibilities.

Bottom line: The contract should include steps and remedies for non-compliance both for present and future stages of meaningful use. Remedies can include such provisions as service credits, financial penalties or ultimately refund of the cost of software.