Managing payor 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 payor contracts, including a step-by-step process for implementing a relevant healthcare contract management system.
For most healthcare providers, the key problem associated with managing a wide range of payor contracts lies in the complexity of the process. Most providers are working with several different payors at once, with each contracted payor operating under their own terms. That means:
The disparity between payor contracts is intentional and a major part of payor contract negotiations. In fact, many payors 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 payor-provider contract.
Without a centralized process for managing these contracts and tracking variations between revenue generation for each individual payor, 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 payors.
Despite the difficulties associated with healthcare 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 PayrHealth.
The end goal when creating a process to track your payor contracts is to successfully enter renegotiations with payors and achieve better terms and working knowledge in the process. To do so, a provider organization should go through the following four steps:
Let’s take a look at each step in-depth.
When providers understand the terms of their payor 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 payor contract in detail. Start by getting a sense of the basics of each contract:
By achieving a full understanding of these requirements, providers can avoid any payment delays or inaccuracies, ensuring they enter renegotiation with each payor at the correct time.
After analyzing each payor contract, it should be somewhat clear which payors provide more attractive terms. However, payor contracts contain underlying complexities that must be investigated before evaluating the overall suitability of the contract for a provider.
To ensure the accuracy of results, providers should continue the process of 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:
Let’s dive a little deeper with each of these…
Unilateral Amendments come with a given notice period ranging from 30 to 90 days:
When performing a deep dive into contract terms, make sure to pick out any payors that retain unilateral amendment rights and eliminate this option upon renegotiation.
Many payors also retain the right to change reimbursement rates at will. Both providers and payors 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 payors, 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, payor-provider contracts assign providers to networks based on two key criteria:
When reviewing contract network requirements, providers should remain aware of additional criteria. Because these requirements can be changed at the whim of the payor, 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 payor-provider contracts.
After completing Steps 1 and 2, providers should have a sense of which contracts provide more beneficial terms and which contain underlying clauses that should be reworked.
Because there are various payor 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.
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 payor adding unwanted provisions or renewing contracts without notifying the provider.
Additionally, by monitoring and evaluating contracts across payors, providers can identify better terms and use them as a basis for renegotiation when ready.
Once your team is monitoring contracts across payors, providers can then begin prepping for the renegotiation of less attractive contracts. The enhanced understanding that has been achieved in steps 1-3 act as a basis for better payor negotiation tactics.
How should providers approach renegotiation?
The end result of this negotiation process should be a coherent plan on accessing better rates from payors that are not contributing enough, and maintaining contracts with payors that are providing beneficial terms.
Even when following the above guidance, negotiating payor 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?
PayrHealth is the payor contract management specialist. Take all the hassle out of tracking and managing your payor contracts and let PayrHealth take the reins with extensive payer contract knowledge. 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 healthcare services to your patients.