At a Becker’s Hospital Review CEO and CFO event last year, one healthcare organization CEO characterized his contract discussions with payers this way:
“I don’t negotiate with terrorists.”
Payers are notoriously aggressive in establishing and updating their contracts with providers. They set their sites on the fees and terms that primarily benefit their own bottom line.
And they’ve done a good job.
Year after year, payer net profits run into the several billion to tens of billions of dollars. That level of profit is far out of reach of all providers, no matter their size.
Many healthcare leaders share the anger the CEO above displays. They feel payers count on providers being too overwhelmed to read and review their contracts and the yearly updates closely.
They’re not wrong.
Some providers let their contracts languish for years, stuffing annual updates in the same file folder where the first hard copy was forgotten. Others depend on a matrix of spreadsheets that are tough to cross-reference and gain critical insights from.
Payer contract management software helps hold payers accountable
But there’s a new revenue sheriff in town, one that puts providers and payers on a more equal footing in contract negotiations. Payer contract management software steps in when providers lack the time, expertise, organizational, and analytical skills to advocate for themselves.
Here, you’ll learn how you can use payer contract management software to regain your power and recoup the revenue you’ve earned.
Contracts currently favor payers
Payers have the contract advantage because they create the contract in the first place.
One contested term frosts revenue cycle managers in particular: the payer’s right to modify the contract at their discretion, without requiring any provider approval at any time.
In some of these cases, providers are given a 30-day notice to object to amendments in writing, but most healthcare organizations find this period far too short to respond in time. If the provider doesn’t meet this deadline, payers set their amendments to roll out automatically.
Worse, in some cases, payers add stipulations that, should they decide to amend the contract, they are not obligated to get any approval from the provider at all.
Knowing these stipulations requires a deep dive into contract language, staff too often deprioritizes contract reviews and updates. Given a dire staffing shortage, it’s no wonder.
When amendments do cross their desk, too many provider groups simply accept the contract the payer hands them, assuming their efforts to negotiate will be cost-ineffective if not outright futile. This capitulation must stop. With thorough payer contract knowledge, healthcare organizations can avoid denials, submit stronger prior authorizations, and win claim reimbursements without having to resubmit.
Providers must go on contract writing offense
Payers should not be the only ones creating contracts. You, too, must have input in determining:
- reimbursement rates and fees
- days the provider has to submit a claim after a service or visit
- days the payer has to reimburse the provider for covered services
- scope of services covered by the payer
- claim denial dispute procedures
- notice periods for renegotiation and termination
All of these should be negotiated fairly by both parties involved in the contract.
But how does a provider know what’s fair?
The power of payer contract management software
Payer contract management software reads, ingests, and learns contracts. Once it’s done its work, it tells you automatically:
- where you’re being underpaid (the amount you received vs. the amount the contract stipulates you’re entitled to receive).
- which payers offer you the highest fees and terms.
- how you can improve future contracts.
- which contracts are returning the most revenue.
- how contract changes will impact cash flow.
Payer contract management software also:
- reduces staff time spent on administration and data entry tasks.
- provides full visibility into payer contracts, ensuring that every contract is tracked, and renewals occur on time.
- offers real-time updates on managed care and contract rate changes, which helps you maximize your revenue and ensures that you're working with the most profitable insurance providers.
- minimizes errors and discrepancies in your contract documents, reducing the risk of claim rejections and revenue loss.
- manages plan details, reimbursement rates, and contract expiration dates.
All of these critical tasks combine to reinforce provider revenue AND put payers on notice that you’re paying attention.
Spreadsheets vs. payer contract management software
Even if you have a spreadsheet whiz in your office, this person is most likely prioritizing figures involved with payments and fees.
Payer contracts contain a lot more revenue-impacting information than just the rates for services. Revenue leakage lurks in the fine print. The terms surrounding provider credentialing and the medical necessity there can also limit revenue. It takes sophisticated payer contract management software to review these details and deliver the insights you can take action on. Trying to get insights from spreadsheets takes hard work, and the product can be biased because it’s coming through just one person.
The other drawbacks to using spreadsheets for contract management all threaten revenue. When you’re using Excel and Google Sheets, a staff member performs all updates. Should an error occur, spreadsheets can’t self-identify errors the way payer contract management software can. Spreadsheets also lack automatic notifications that alert your staff to expiration dates. Finally, payer contract management software involves more security features to keep your patient information safe.
Evaluate the best payer contract management software vendors
When selecting a payer contract management software, there are several factors to consider.
- The software should be user-friendly, with an intuitive interface that makes contract management easy for your staff.
- It must integrate with your existing healthcare practice management system and EMR.
- Make sure the vendor can customize the software to meet your specific practice needs and requirements.
- The vendor should offer excellent customer support and training during and after the implementation process.
Contract management software vs. contract modeling software
In the healthcare industry, the terms payer contract management software and contract modeling get used interchangeably, but they are not the same.
Although both terms refer to computer software that manages payer contracts, internal agreements between healthcare providers, and payers, there are differences.
Payer contract management software features an integrated system that can regulate contracts and reduce the time spent on administration and data entry tasks. The automation in the software is also useful in monitoring payer perceptions and adjusting to changing policies, guidelines, and reimbursement rules.
Contract modeling, in contrast, has advanced data analytics capabilities. It can analyze historical claims, identify trends, and incorporate contract terms analysis to predict possible outcomes (models) that are necessary for optimizing future contract negotiations in real-time.
The basic goals of payer contract management software are to:
- process claims promptly
- effectively manage fee schedules
- track every contract's performance
- generate reports that advisors can use to improve future contracts.
Contract modeling, meanwhile, aims to:
- increase the accuracy and predictability of payer contracts
- reduce the volume of manual labor required for contract creation, management, modeling, and analysis
- identify gaps that require rectification
Steps to Implementing a Payer Contract Management System
Once you determine a robust payer contract management system is in your future, envision having a central repository of your many contracts.
Use these steps to give your payer contract management system a firm foundation:
- Reach out to your payers and ask for your most recent contracts. With all contracts available, implement an automated system to store and track them.
- Review fee schedules and payments to determine each payer’s performance. Start with your most commonly billed services.
- Review contracts for recent increases in reimbursements. When was the last time you got a raise or an increase in fees of 3 to 5% on any of them?
- Compare your reimbursements across payers for each code. How much do they vary? Which is the worst payer for each code? Which is the best?
- Pinpoint which payers contribute the most to your total revenue based on the covered patient population.
- Consider seeking renegotiations with payers who offer lower reimbursements,
- Develop your goals for renegotiations. Do you aim to increase net yields? Raise reimbursement for a popular service? Stipulate penalties for late payments or underpayments?
Common Features of Payer Contract Management Software
As you evaluate payer contract management software vendors, press each one on how their products optimize reimbursement rates, track deadlines, and improve terms. Ask for examples of how their software succeeded in these goals for clients. Request referrals, of course.
Most payer contract management software offer similar features. These include:
Contract Negotiation and Monitoring
Make sure that the software can monitor contract compliance, such as checking that payments are made on time. It should also keep track of and alert you to crucial negotiations, including deadlines for contract reviews and revisions.
Many payer contract management software options let providers model and forecast potential changes in payers' reimbursement rates. The software can create "what-if" models that simulate the impact of various factors on the provider's revenue, making it easier for decision-makers to adjust or renegotiate contracts.
Contract management software also provides analytical tools that can help providers evaluate each payer’s profitability for their organization. Use it to identify trends, evaluate payer performance, and develop strategies to increase profitability.
Contract Workflow Automation
One of the best advantages of payer contract management software is its ability to remove the workload from already overburdened staff. It shoulders the manual and time-consuming data entry, exception monitoring, and payer follow-up that staff struggles through. This automation frees staff to focus on higher-value activities like patient interaction.
Integration with other Systems
Advanced payer contract management software integrates with the EHR and other revenue cycle management systems.
Get your contracts capturing more revenue with MD Clarity
MD Clarity can bring transparency to your entire revenue cycle, boosting your bottom line and improving the patient experience. RevFind’s payer contract management capabilities digitize and consolidate your contracts into one place. It helps you easily benchmark your reimbursements against national standards like Medicare.
RevFind compares every payment to contract terms. It automatically flags any discrepancies, notifying your staff immediately. Not only does it provide the contract insights you need to negotiate proactively, but it also supports you through the recovery process and helps identify the root cause to prevent future underpayments. Get a demo to see it in action.