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It's common for healthcare providers to believe that there is little they can do to improve their payor contracting income. This isn't true! Contract negotiation and contract management are valuable skills your healthcare organization can use to improve your current contracts and increase revenue. However, many physicians struggle to find time to look into better reimbursement rates and learn more about this time-consuming, ongoing process - which is why partnering with a healthcare industry expert like PayrHealth has helped many providers focus on better patient care while achieving more competitive terms in their payer contracts. Here's what to know about reimbursement rates, contract negotiations, and how to maximize revenue for your practice.
Optimizing Payor Contracts to Increase Revenue
COVID vastly changed the landscape of healthcare, and many healthcare providers are still trying to find their footing. For many practices, post-COVID patient visits no longer support their profit margin, meaning it's more important than ever to reassess your managed care contracts. Renegotiating contracts allows you to achieve a better reimbursement rate than a generic fee schedule that payors would prefer you to use. If you're struggling to meet your bottom line, new contracts with more favorable reimbursement would likely boost your practice's success.
Infrastructures Impairing Contract Optimization
Contract management can be an impossible task for practice managers, especially those overseeing large and complex healthcare organizations with multiple payers. Keeping track of a contract portfolio with unique fee schedules, terms, and requirements can be overwhelming, especially when also tasked with other administrative tasks like provider credentialing, data analysis, and even in some cases, focusing on patient care. Regulations such as the No Surprises Act only put additional revenue pressures on practices. In most cases, successful contract management requires healthcare providers to seek outside help.
3 Steps to Optimizing Payor Contracts
Payer contract optimization is one of the best tools available for boosting payer revenue. Success requires proactive thinking, in-depth data-driven research, and knowledge. To optimize income and get timely reimbursement, a strong payor contracting process should follow best practices in the three primary stages of contract optimization: evaluating existing contracts, spotting possible opportunities, and renegotiating with payors. Let's look at these more in-depth.
Recognize Your Assets (Acquiring Critical Information)
Compiling all payor contract-related paperwork and setting up a centralized system for your contract portfolio is a crucial first step. This helps you stay organized and provides you with access to important data about payors. After that, your payor contract analysis should start with each payor's income stream. Important information includes:
- The price structure for each payor
- The terms for prompt payment
- The notification period and effective date for contract renegotiation and termination
Having this information available will help you more successfully negotiate better contracts. The more you understand your contract language, the more you can begin to understand what you want out of it.
Understand Your Desires (Revenue Analysis)
Knowing your contract portfolio will assist in identifying the contracts that account for the largest portion of your practice's income and areas that will benefit most from negotiation. Thanks to analytics and contract management software, healthcare providers can easily find the actual worth of their payer contracts in this landscape of post-COVID financial recovery. You can use this revenue analysis to calculate the impact of different reimbursement rates, both overall and for each CPT code for certain services, will have on your overall net profit for all your payors.
Develop Your Negotiation Strategy and Know How To Achieve What You Want
A strong case must be made to increase income from contract negotiation; data and contract performance are your foundational elements. Using this data and analyzing payor performance, you can prioritize the services your practice bills for the most often and the various reimbursement rates. Information about your practice is crucial when negotiating with payors. Start using a SWOT analysis and determine your negotiating leverage and prospects for mutual gain. Are you well-skilled? Do you provide any unique processes or services? Is there a deficit in your industry, etc.? What are the advantages for the patients you see, and how satisfied are they, according to your data? What clinical actions do you take to lower healthcare expenses for the payor. All of these facets can help you negotiate more favorably, resulting in more revenue and, ultimately, a better patient experience. Figure out how contract negotiations can work in everyone's best interests and take steps accordingly.
Payor Contracting with PayrHealth
As a healthcare provider, partnering with a professional payor contracting resource is one of the best steps you can take for your practice. To meet with our team and learn more about how we can improve your payer negotiations and boost revenue, contact us today for a free consultation.
