A Guide to Payer Contracting for Providers
A Guide to Payer Contracting for Providers
Managing payer contracts is one of the primary challenges that every healthcare provider faces. From varying reimbursements to issues accessing networks and managing hidden clauses, contracts represent a major hurdle that affects every provider, regardless of size.
Read on for a quick guide to managing and tracking payer contracts, including a step-by-step process for implementing a relevant healthcare contract management system.
PAYER CONTRACTING: THE CHALLENGE
For most healthcare providers, the key problem associated with managing a wide range of payer contracts lies in the complexity of the process. Most providers are working with several different payers at once, with each contracted payer operating under their own terms. That means:
- Variation in reimbursement schedules
- Different rates between payers for the same or similar services
- Wide range of network participation
- Shifting requirements for reimbursement
- Contract language that is confusing and unique to each payer
The disparity between payer contracts is intentional and a major part of payer strategy. In fact, many payers will deliberately change contract terms on a consistent basis to improve reimbursement conditions at the expense of healthcare providers. Generally speaking, this is permissible under the terms of a payer-provider contract.
Without a centralized process for managing these contracts and tracking variations between revenue generation for each individual payer, healthcare providers are limited in their ability to understand whether they are being compensated fairly.
As a healthcare provider navigating the complexities of the contract management revenue cycle, reference the following step-by-step to simplify reimbursement processes across payers.
STEP-BY-STEP GUIDE TO TRACKING YOUR PAYER CONTRACTS
Despite the difficulties associated with payer contracting, it is possible to implement an applicable system for tracking contracts across providers to ensure fair terms. Of course, the process itself can be complex, which is why many providers opt to outsource these strategies to a third-party healthcare consulting firm, like Healthcents.
The end goal when creating a process to track your payer contracts is to successfully enter renegotiations with payers and achieve better terms and working knowledge in the process. To do so, a provider organization should go through the following four steps:
- Get a sense of the fine print within payer contracts
- Perform a deep dive into your payer contracts
- Build a centralized contract management system
- Prep for negotiating managed care contracts
Let’s take a look at each step in-depth.
Step 1: Get a Sense of the Fine Print
When providers understand the terms of their payer contracts in detail, including the fine print, they are better prepared to identify terms that could put them at a disadvantage. That’s where you need to begin—providers must analyze each payer contract in detail. Start by getting a sense of the basics of each contract:
- How many days does the provider have to submit a claim for a provided service?
- How many days does the payer have to reimburse the provider for a given service?
- What is a managed care contract and what are the payer services covered? (Make an entire list of eligible services.)
- What are the rates for each service provided?
- How are disputes handled under the terms of the contract?
- What is the notice period required to negotiate new terms or terminate the contract?
By achieving a full understanding of these requirements, providers can avoid any payment delays or inaccuracies, ensuring they enter renegotiation with each payer at the correct time.
Step 2: Perform a Deep Dive into Payer Contracts
After initially analyzing each payer contract, it should be somewhat clear which payers provide more attractive terms. However, payer contracts contain underlying complexities that must be investigated before evaluating the overall suitability of the contract for a provider.
To ensure accuracy of results, providers should continue the process towards renegotiation by performing a deep dive into the language of each contract.
Why? To protect revenue from potential pitfalls and enhance contract management, it is necessary to achieve a complete understanding of the clauses and requirements embedded.
Read through each contract and identify the following clauses, assuming they are present:
- Unilateral Amendments – This clause enables payers to change contract terms at will, including payment rates, requirements, network participation, and contract language.
- Reimbursement – These policies are not always included in contracts but must be identified. If you cannot find the reimbursement policy within a given contract you will need to contact the payer and ask for a review.
- Network Requirements – These clauses will list eligible provider organizations along with the requirements to be part of a given network. Payers tend to change these requirements often, which could potentially eliminate a provider from a network and effectively decrease the provider’s number of the eligible patients.
Let’s dive a little deeper with each of these…
Unilateral Amendments come with a given notice period ranging from 30 to 90 days:
- Providers are under no obligation to accept a period as short as 30 days, which could put them at risk of being taken advantage of by the payer.
- Providers need ample time to review changes to contract terms, so should not accept a unilateral amendment with a review period shorter than 60 days.
When performing a deep dive into contract terms, make sure to pick out any payers that retain unilateral amendment rights and eliminate this option upon renegotiation.
Many payers also retain the right to change reimbursement policies at will. Both providers and payers must adhere to these stipulations. Providers who fail to operate in line with a given policy face payment reimbursement denials.
One of the most important dynamics associated with proper contract management is identifying whether reimbursement policies differ across payers, including pinpointing which terms are more favorable to the provider.
Patients utilize networks to select a healthcare provider, making it essential that providers monitor their participation in these networks.
In most cases, payer-provider contracts assign providers to networks based on two key criteria:
- Credentialing Criteria – Basic requirements for a given healthcare provider to enter into a network such as an adequate quality of care, proper licenses, and acting in accordance with laws and values.
- Additional Criteria – Added measures that can exclude many providers from networks such as the availability of specialists on-site or specific physicians’ availability.
When reviewing contract network requirements, providers should remain aware of additional criteria. Because these requirements can be changed at the whim of the payer, providers are at risk of losing out on potential revenue by being excluded from networks for arbitrary reasons.
Renegotiations should aim to eliminate any additional criteria from payer-provider contracts.
Step 3: Build a Contract Management System
After completing Step 1 and 2, providers should have a sense of which contracts provide more beneficial terms and which contain underlying clauses that should be re-worked.
Because there are various payer contracts to keep track of, providers should merge the information into an accessible, centralized contract management system that can be monitored on a consistent basis.
- Contact each payer and ask for access to all contract documents, including product line specifics
- Implement a system to store and track each contract
- Create email notifications for all auto-renewals, deadlines, and provisions that go out to every relevant staff member
Over time, every provider’s goal should be to standardize contracts and make them as similar as possible, while of course maintaining attractive terms. By building a system that tracks deadlines, providers can minimize the risk of a payer adding unwanted provisions or renewing contracts without notifying the provider.
Additionally, by monitoring and evaluating contracts across payers, providers can identify better terms and use them as a basis for renegotiation when ready.
Step 4: Prep for Renegotiations
Once your team is monitoring contracts across payers, providers can then begin prepping for renegotiation of less attractive contracts. The enhanced understanding that has been achieved in steps 1-3 act as a basis for better payer negotiation tactics.
How should providers approach renegotiation?
- Analyze fee schedules and payments across payers and assign a rating to each payer in terms of overall benefit.
- Determine your revenue levels from each payer by service offering and check who pays you more and who pays you less.
- Take into account contract values—with bigger contracts it will be more acceptable to have lower margins and vice versa.
- Ask for input from executives, staff, and other key stakeholders on their experiences dealing with each individual payer.
- Decide which contracts require renegotiation and which should be renewed as is.
The end result of this negotiation process should be a coherent plan on accessing better rates from payers that are not contributing enough, and maintaining contracts with payers that are providing beneficial terms.
OUTSOURCE TO ENHANCE YOUR REVENUE
Even when following the above guidance, managing payer contracts for healthcare providers can be an extremely difficult task. Why not consider outsourcing this process to a third-party expert who will ensure you get the best possible contract terms?
Healthcents is the payer contract management specialist. Take all the hassle out of tracking and managing your payer contracts and let Healthcents take the reins.
With us, you will get better contracts and negotiate better rates, letting you spend money on what matters most—expanding your team and providing better services to your patients.
AHLA. AHLA Health Plans Contracting Handbook: A Guide for Payers and Providers. https://store.lexisnexis.com/products/ahla-health-plans-contracting-handbook-a-guide-for-payers-and-providers-ahla-members-skuusSku72860
Recycle Intelligence. Maximizing Provider Revenue with Payer Contract Management. https://revcycleintelligence.com/features/maximizing-provider-revenue-with-payer-contract-management
Twist, Tanja. The Essential Guide to Healthcare Payer Contracting. http://hcmarketplace.com/guide-to-healthcare-payer-contracting