Payer contracts are the foundation of your practice’s revenue in most cases. As a healthcare leader, managing these contracts effectively prevents financial setbacks—ranging from low reimbursement, underpayments to outright claim denials. In this guide, we’ll outline six key steps to help you manage your payer contracts more effectively, maximize reimbursements, and eliminate the risk of revenue loss.
Step 1: Understand Payer Contract Reimbursement
Before diving into payor contract negotiations, let’s breakdown the key elements of a payer contract that impacts revenue:
- Reimbursement rates: The specific amount your practice is paid for services rendered.
- Covered services: The procedures and treatments that are eligible for reimbursement.
- Exclusions: Services that are not covered or require prior authorization before reimbursement.
Mastering these elements is non-negotiable because even minor discrepancies can lead to significant revenue issues. A thorough review of these terms ensures that your practice maximizes its revenue potential and mitigates any risks related to claim denials or underpayments.
Step 2: Analyze How Payer Contracts Affect Medical Billing
Payer contracts directly influence your revenue cycle processes. The terms set up in these contracts dictate how claims are processed and what reimbursements you receive. When contract terms are unclear or misinterpreted, it can lead to:
- Timely Filing: Duration Claims must be submitted to secure payment
- Claim denials: Duration for which disputes or appeals must be submitted.
- Underpayments: Duration for which to dispute incorrect reimbursement rates.
- The Lesser Of: Dangerous language that undercuts reimbursement.
By thoroughly understanding the terms of your contracts, you can prevent these problems and ensure that your revenue is accurate and prompt.
Step 3: Regularly Review and Update Your Contracts
As your practice grows and evolves, so should your contracts. That’s why regular reviews are so important. During these reviews, focus on:
- Check reimbursement rates: Do they reflect your current costs and the services you provide?
- Look for policy changes: Have payers introduced any new policies that might affect your billing?
- Account for new services: If you’ve expanded your offerings, ensure they’re included in the contract.
- Unclear terms: Vague language leading to billing errors.
This proactive approach will help prevent delayed payments, or underpayments, or cause viability issues if not addressed early. Addressing these issues head-on can mitigate their impact and maintain your practice’s financial health.
Step 4: Negotiate with Data to Strengthen Your Position
Many practices mistakenly view payer contracts as non-negotiable, but the truth is that negotiation is expected and can significantly improve your revenue cycle management or the financial health of your practice. When approaching payers, data is your greatest asset.
- Start by presenting what it cost you to see a patient by services offered
- How current rates are NOT within your market rates or are not covering your cost.
- Then, emphasize inflation and the payor profitability within any given year.
- Also, reinforce your case with data on costly denials, administrative burdens (e.g., pre-auth, medical records requests, verification of who is responsible for payment (Auto, Workers’ Comp, etc.), or excessive audits.
- Finally, emphasize that your practice delivers high-quality care and with high patient satisfaction.
Payers are more likely to respond positively when they see the tangible benefits of partnering with a high-performing practice.
Step 5: Leverage Technology for Effective Contract Management
Tracking multiple payer contracts manually is time-consuming, and errors can easily slip through the cracks. That’s where relevant administrative processes and technology can help.
Take Control of Your Payer Contracts
Payer contract management plays a critical role in your practice’s financial health. The steps highlighted in this article will help make sure your billing process operates at peak efficiency.
At CHCBC, we’ve implemented strategies to improve payer contract management, reimbursement management, cover costs, and reduce denials. Automated tools and analytics help streamline contract updates, reduce billing errors, and ensure your practice financial health.
Don’t leave your contracts on autopilot—take control of them now to quickly enhance revenue, avoid costly mistakes (underpayment), and ensure your practice gets paid what it deserves.
