Review, Negotiate, & Monitor: Managing Your Payor Contracts

ContractWith increasingly complex contract terms and the proliferation of plan products with the creation of the healthcare exchanges, it is more critical (and difficult!) than ever for physician groups to manage payer contracting through physician contract negotiation. Review Your Contracts The devil is in the details. You should have access to all of your contracts and have read them carefully to understand all the terms and conditions – it is often in the fine print where problems can start. Many practices make the mistake of only looking at the fee schedule when deciding whether to contract with a payor. It’s equally important to review their payment rules, medical policies, etc. Important information to obtain and make note of include:

  • Effective date, term and termination
  • Nature and scope of services provided
  • Rate/fee schedule
  • Rules and guidelines for payment
  • Pre-certification, prior authorizations
  • Claim submission requirements
  • Claims contact

As you review the contract you may wish to summarize key information on a cover sheet that includes all major terms. Successful Negotiations Do your homework before negotiating a contract for the first time or entering a renegotiation. Prepare a formal request to the health plan detailing what you would like to change in the contract and make sure you have supporting documentation to support any claim that you are making in the request. Never be afraid to ask for what you want and be prepared to say NO if the contract does not make financial sense for your practice. Monitoring Compliance So now you have done the hard work of obtaining, evaluating and negotiating the contracts with your payors, it is now an important part of your day-to-day revenue cycle processes to ensure that they are honoring the terms of these contracts. Studies have shown that on average commercial payors underpay claims by 7%. This is an average – some claims may be accurately paid while others are underpaid by potentially significant amounts. The hard part for practices is to identify which claims are underpaid and then to put together the proof to successfully appeal the claim. Most practices will need to partner with a Revenue Cycle specialist to gain access to sophisticated tools that enable verification of line-item contractual allowed amounts and rigorously monitor payors compliance with contract terms at the claim level. Armed with these type of tools, practices can:

  • Identify opportunities to appeal underpayments and recover lost revenue.
  • Efficiently file mass appeals when necessary.
  • Approach your next contract negotiations armed with actual data about payor performance on current contracts and understand potential leverage points to avoid costly reimbursement rule changes.

Remember, reviewing, renewing and renegotiating contracts is something you need to do every year as a part of effective revenue cycle management, while monitoring compliance should become an everyday task.

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