How to Avoid the Five Most Common Payor Contracting Mistakes

In today's competitive healthcare industry, reaching your organization’s revenue goals requires a strategic approach. A key component of this strategy involves securing maximum reimbursement by efficiently enrolling practitioners with payors. However, errors in this process can lead to costly delays and denials, undermining your financial stability. Thankfully, many of these mistakes are preventable.

To minimize the impact of these errors, it’s crucial to assess your organization’s interactions with payors. This includes identifying potential areas where revenue might be leaking, gaining a thorough understanding of your market and contracts, and maintaining consistent communication with payors. Here are five of the top ways healthcare providers miss out on important improvement opportunities with payer contracts.

Mistake #1: Skipping a Thorough Market Analysis of Payors

The Centers for Medicare & Medicaid Services (CMS)projects that the number of Medicare beneficiaries will rise from 50 million today to 80 million by 2030. With such a significant increase, government and state payors become essential for most group practices. While some practices may opt for a cash-only model, particularly in specialized or upscale markets, the majority rely heavily on a mix of government and commercial payors.

For private commercial payors, whether national or regional, practices have more options and control. The American Dental Association (ADA) emphasizes that deciding whether to contract with third-party, non-governmental payors is one of the most important decisions a practice can make.

Forward-thinking practices conduct comprehensive market analyses to understand their current target market and anticipate future trends. This involves evaluating the largest employers in their community, understanding the insurance plans they offer, and determining which payors will provide the best return on investment given the effort required for enrollment and re-enrollment.

Key questions to consider during a market analysis include:

·       Which insurers represent the major employers in your area?

·       What insurance types or health plans are accepted by your referral sources and local hospitals?

·       What is the competitive landscape and socio-economic environment of your practice’s location(s)?

·       What are the current and future needs of your target market?

·       Are patients in your target market willing to pay out of pocket for services not covered by insurance?

·       Which insurers offer benefits that align with your practice’s service goals now and in the future?

Since enrollment and credentialing rules vary by state and plan, a commercial payer contract is not one-size-fits-all. Major national or regional insurance companies, such as UnitedHealth, Anthem, Aetna, Cigna, and Humana, often offer better-paying panels, but they are private entities and not obligated to accept all practitioners. It's essential to thoroughly evaluate your options with each insurance company to identify the best fit for your current and future patient base.

Mistake #2: Not Utilizing Technology to Streamline Provider Enrollment

Managing payor contracts and provider applications is a complex and time-consuming process that requires persistent effort to ensure all providers are enrolled and active with the necessary payors.

Leveraging technology throughout the entire lifecycle of a practitioner or payor contract can greatly enhance efficiency. By using technology to share data more effectively, ensure data integrity, and handle large volumes of traceable information, organizations can better manage growth in provider numbers. Payor enrollment software with batch processing and form automation capabilities can streamline these processes.

Key workflows that benefit from automation include:

·       Recruiting

·       Onboarding

·       Primary source verification

·       Credentialing

·       Contract management

·       Internal and external communication regarding application or enrollment status

Technology solutions with features like contract template creation, e-signature capabilities, and web views can significantly expedite and manage the contracting process for healthcare organizations, whether single or multi-entity.

Mistake #3: Failing to Keep Provider Data and Contracts Updated

Frequent changes in practitioner locations, group affiliations, and licenses can disrupt the flow of payor reimbursements if not properly managed. Maintaining accurate and up-to-date information is crucial to avoid negative financial impact from claims and prevent costly errors.

Incorrect or outdated information in provider directories can result in denied or incorrect claims, potentially leading to fraud and abuse investigations or fines. Managing claims data is much easier when all relevant information is stored in a single database with robust notification, letter-writing, and reporting capabilities.

Financial risks also increase when contract management is disorganized and not aligned with individual practitioner enrollment and re-enrollment. By rigorously maintaining data, healthcare organizations can effectively oversee their growing number of payor contracts, from initial negotiation to renewal.

Mistake #4: Overlooking the Value of Delegating Enrollment Responsibilities

Delegation is a formal process where a healthcare organization or health plan’s credentialing or enrollment department transfers specific functions to a qualified organization. When done properly, delegation can save both time and resources by allowing staff to focus on other priorities.

Delegated relationships are typically with NCQA-certified organizations enrolling more than 150 providers. However, each payor or health plan has its own standards for delegation, and efficiency is usually realized only when a certain volume is reached.

To ensure a successful delegated relationship:

·       Understand your contractual responsibilities, which may vary by payor.

·       Determine whether delegation involves obligations to participate in certain payor products or services.

·       Investigate the conditions under which patient products or services can be upgraded.

·       Request a sample explanation of benefits form that patients will receive.

·       Clarify the claims submission process and how denials will be handled.

·       Understand the notification process when a provider becomes participating with a payor.

·       Expect at least annual audits, either by the healthcare organization, health plan, or payor.

·       Establish a mutually agreed-upon processing timeline and discuss expectations for renegotiation if necessary.

·       Gain a clear understanding of the unenrollment process and notification timeline.

Mistake #5: Not Inquiring Further When a Provider is Denied Enrollment

Enrollment is the first step toward generating revenue, so a denial from a payor can represent a significant loss. Payors have the authority to limit the number of providers in their networks and establish their qualifications. This balance between cost control and the ability to deliver promised healthcare benefits can result in provider application denials for various reasons.

Common reasons for denials include:

·       Failure to meet specific criteria or standards set by the payor.

·       Non-compliance with a payor’s Conditions of Participation.

·       Over-saturation of a provider type in a specific area.

·       Restrictions or additional requirements for out-of-state enrollments.

When facing a denial, it’s important to request additional information, clarify the unique or special patient community your provider serves, and, if necessary, request a meeting with a decision-maker. Persistence can often turn a denial into an acceptance.

Additionally, if your provider serves any of the following populations, be sure to communicate that to the payor:

·       Rural

·       Indian Health Services

·       Pediatric

·       Geriatric

·       Disabled

·       Chronic condition

·       Non-English-speaking

By addressing these common mistakes and implementing best practices, healthcare organizations can greatly enhance their payor contracting processes, leading to improved financial stability and overall success.

PayrHealth: Your Partner in Payor Contracting

Navigating the complexities of payor contracting can be challenging, but you don’t have to do it alone. PayrHealth is a leading expert in payor contracting, offering comprehensive solutions to optimize your contracting processes and maximize your revenue potential. With our expertise, you can ensure that your organization avoids common pitfalls and secures the best possible outcomes in your payor relationships.

For more information, visit PayrHealth and discover how we can support your organization’s financial success.

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