Improving payer contract management by analyzing terms and assessing payer performance can maximize revenue for healthcare providers.
Payer contracts contain fee schedules and reimbursement requirements, as well as the conditions payers must meet for timely reimbursement.
Ensuring correct reimbursement in a timely manner is always at the top of a healthcare provider’s mind. But many provider organizations could be leaving money on the table with inefficient and infrequent payer contract management.
Therefore, payer contract management is key to ensuring payers reimburse practices and hospitals the correct amount each time a claim is submitted.
Many provider organizations have failed to implement comprehensive payer contract management practices because of the complexity associated with negotiating and managing multiple contracts.
Payer contracting, whether it is commercial payers or government payers, and the credentialing process is complicated, cumbersome, lengthy and time-consuming,
It’s very hard for a medical practice to keep up without getting discouraged by the process because it is lengthy and complicated.
Provider organizations can overcome these challenges and maximize their revenue by understanding the basics of payer contracts, diving deeper into contract language, creating a central space for contracts, and preparing for negotiations.
1. UNDERSTANDING THE BASICS OF PAYER CONTRACTS
While payer contracts are legal documents, providers and practice or hospital administrators do not need a legal degree to understand the terms of each contract. Payer contracts may seem complicated, but ensuring providers and administrators understand the fine print can help organizations capture all charges and prevent claim denials.
It’s incredibly important for practice administrators and physicians to understand their contracts and know what they are getting paid.
Providers usually know the payment rates for commonly billed services at their organizations. However, payer contracts contain a lot more information than just the rates for these services. The fine print can easily create revenue cycle challenges for provider organizations.
On top of the rates for commonly billed services, providers and administrators should also be aware of the following core elements of any payer contract:
- The number of days a provider has to submit a claim after a service or visit
- The number of days a payer has to reimburse the provider for covered services
- Scope and list of services covered by the payer
- Reimbursement rates for all covered services
- Claim denial dispute procedures
- Term of contract
- Notice periods for renegotiation and termination
Understanding all of these terms is key to not just receiving payments, but maximizing reimbursement. For example, knowing the codes for all covered services ensures that claims are complete and providers get paid for every covered service they perform, even if it is not a commonly billed one.
Digging into all the provisions of a payer contract also helps provider organizations prevent and fight claim denials because they understand all the requirements for reimbursement on both their side and the payer’s side.
2. CONSIDERING LANGUAGE WHILE CONTRACTING
Once practice or hospital administrators understand the basics of payer contracts, they can start to dive deeper into contract language. Understanding common clauses and requirements included in the majority of contracts will improve payer contract management and help provider organizations protect their revenue.
3. UNILATERAL AMENDMENTS
Contract language pertaining to unilateral amendments can be particularly important. These clauses state that payers can change reimbursement rates, requirements, network participation, and even contract language whenever they please.
Most payer contracts say that the payer can amend the contract at any time. In the worst case, they say that no approval is required from the provider at all. In the best case, they’ll say, ‘We are amending this contract and you have 30 days to object to the amendment in writing or it automatically goes into effect.
With revenue at risk under unilateral amendment language, provider organizations should not accept contracts from payers that include this clause.
Thirty days is such an unattainable period of time for a practice that is trying to keep up with all of this. At the very least, ask for 60 to 90 days. But ideally, organizations should not allow unilateral amendment language in the contract at all.
4. REIMBURSEMENT POLICIES
Payers typically have reimbursement requirements that are not explicitly detailed in individual contracts. But provider organizations must still abide by these policies or face claim denials.
While payer contracts contain language pointing to these reimbursement policies, the clauses also typically state that the payer can change these policies whenever they choose.
That’s a big catch-all that can trap providers because it ties reimbursement to policies not specified in the contract.
However, provider organizations may not be able to avoid the clause.
In most cases, they can’t really take out language that says they will abide by reimbursement policies because these clauses often include mechanisms such as medical necessity guidelines or pre-authorization protocols.
They just need to be aware of the language pertaining to reimbursement policies and how broad it is.
5. NETWORK REQUIREMENTS
Payer contracts also detail the networks in which provider organizations can participate, as well as the credentialing requirements providers must meet to join a network. Ensuring a provider organization is in the appropriate network is key to revenue generation because plan networks guide members to the organization.
However, contract language regarding network changes can lower revenue for provider organizations. Payers can redesign networks to include different physician positions, such as specific specialists. Practices or hospitals lacking those positions can be eliminated from the network.
Value-based care is producing different networks for different products. There’s always language in contracts that pertains to credentialing criteria that you have to meet in order to be added to the network. But oftentimes a contract will also have language that states that the payer can pick and choose which positions can participate in which networks.
Ideally, a payer contract should never include language that allows payers to select a provider organization’s network.
6. IMPLEMENTING A PAYER CONTRACT MANAGEMENT SYSTEM
Adding to the complexity of payer contract management is the fact that provider organizations work with multiple payers at once.
Once providers have all their contracts available, they should implement an automated system that stores and tracks the documents. Merely maintaining a spreadsheet of contracts will not result in comprehensive, streamlined contract management.
The ability to view all contracts can also help provider organizations standardize contracts and pull out common clauses that their staff should be aware of. Based on all contracts at the organization, administrators can create a standard version of a payer contract and use that contract when negotiating with payers.
PREPARING FOR PAYER CONTRACT NEGOTIATIONS
With the ability to understand payer contracts comes the ability to renegotiate terms that favor the provider organization. Payers do not hold all cards when it comes to determining reimbursement rates. Provider organizations can use contract and performance data to convince payers to give the hospital or practice a more favorable rate.
To start this process, provider organizations should start to analyze fee schedules and payment processes to determine the performance of each payer. Providers should focus on the rates for the organization’s most commonly billed services.
Developing data-driven, evidence-based responses to these potential questions or push backs will put providers in an ideal place to negotiate.
Providers and practice or hospital administrators may feel overwhelmed when it comes to managing the nuances of payer contracts, but breaking down the issue can help to clarify these important relationships.
