6 Elements of Your Healthcare Payer Contracts Worth Noting

You probably have a love-hate relationship with your #healthcarepayercontracts . While they are essential to your practice or medical group’s financial security, they also cause countless headaches and payment delays. If the legalese and convoluted terms of your payer contracts are creating inefficiencies and uncertainty, you’re not alone.

Payer contracts define and explain a provider’s reimbursement arrangement for delivering healthcare services to patients covered by a specific health plan. The contracts cover everything from reimbursement rates and #providernetworks to medical necessity and provider credentialing.

In this article, we discuss common issues that #healthcareprofessionals encounter in their payer contracts and suggest ways you can improve your reimbursement systems.

Understand Your Contractual Rights to Simplify Your Revenue Stream

According to 2019 census data, roughly 91% of Americans have some form of health insurance. So, managing insurance contracts is likely part of your everyday operations. Your practice probably has to navigate an array of pay-for-service, performance-based, and population-based contracts with both public and private insurance providers. Each one has its own terms, credentialing requirements and fee structure.

While your practice strives for clean claims, it can be hard to navigate the dense terms and conditions of your payer contracts. To make matters worse, insurers typically give themselves the freedom to amend their agreements and fee structures unilaterally. If you don’t take a comprehensive approach to contract management, it’s easy to lose money.

Make Sure You Understand These 6 Elements of Your Healthcare Payer Contracts

We understand why some healthcare providers skim their payer contracts, rather than getting into the fine print. However, you do so at your own peril. These terms can dramatically impact your reimbursements, so we suggest that practices create a contract management system that identifies the following issues:

(1) Unilateral Amendments

Many healthcare payer contracts let the insurance company change their terms at will. This can lead to unexpected changes in your payment rates and other requirements—sometimes with minimal notice. You typically have a limited time to object to the changes and renegotiate them.

Some states mandate that payers notify providers of any changes to a payer contract, but many do not. Providers should be aware of unilateral amendment language in their contracts and negotiate with payers to exclude such language in future contracts.

(2) Dispute Resolution Requirements

In a payer contract, dispute resolution language defines the processes for mediation or arbitration. In the event of a claim denial or a disputed claim, dispute resolution policies in the payer contract will direct a provider on how to resolve the claim in question and recoup the revenue if it is owed to him or her. Dispute resolution language can include anything from informal resolution processes to formal litigation.

As an increasing number of payers are shifting to value-based or pay-for-performance systems, leading to an increasing number of denied claims and disputes. Many healthcare payer contracts include detailed dispute resolution requirements, which you must follow when payment or other disputes arise. Look for mediation or arbitration clauses, which can limit your legal options.

(3) Reimbursement and Fee Schedule Issues

A fee schedule is a list of fees or payments for specific provider services or supplies. Each payer contract should have a fee schedule attached, and providers should push payers to provide a complete fee schedule. The list will define all covered services and the negotiated rates for each service.

For example, Medicare manages the Physician Fee Schedule (PFS). Using the PFS, CMS reimburses for physician services under Medicare Part B.

Each Current Procedural Terminology (CPT?) code receives a relative value unit (RVU), which are then adjusted for the Geographical Practice Cost Index and the national conversion factor. The result is the Medicare allowed amount for a specific covered service.

Other payers use similar processes to determine the allowed amount for each covered service listed on the fee schedule.

Payers should always give you a detailed fee schedule and outline their reimbursement procedures. In addition to understanding each of your payer’s precise reimbursement requirements, look out for unilateral amendments to these terms.

(4) Medical Necessity

Most healthcare payers will only reimburse providers for medically necessary care. However, their definition (and interpretation) of “medical necessity” can vary. Providers should be aware that they understand each payer’s definition of medical necessity because definitions may vary slightly by contract and their own definition may be different.

Billing payers for services that are known to be medically unnecessary can result in healthcare fraud investigations and punishment.

(5) Network Requirements

Networks requirements are a key component of payer contracts. The provisions detail the networks in which provider organizations can participate, as well as the credentialing requirements providers must meet in order to join a network.

Providers should ensure they join the appropriate network for their practice to generate revenue and increase patient volume. Network requirements in payer contracts will become more important as the number of value-based contracts increases.

Make sure you understand the exact parameters of each payer’s network and carefully monitor any changes to these networks and their credentialling requirements.

(6) Renewal and Termination

Payers’ contracts should clearly define the contract’s period and under what circumstances the provider and payer can terminate the agreement. Make sure you identify payer contracts that automatically renew and those that do not. These clauses will impact your ability to renegotiate the contract’s terms or terminate contracts that are no longer beneficial for your practice.

Summary

Understanding complex payer contracts is key to ensuring timely, correct reimbursement and keeping a practice’s doors open. Knowing the ins-and-outs of each contract is also crucial to avoiding claim denials, drawing patients to the practice, and offering comprehensive (and reimbursable) services to patients. #healthcarepayercontracts #providernetworks #healthcareprofessionals

Let the experts at CodeToolz take your contracting efforts from burden to competitive advantage. The bottom line is that in negotiations, knowledge is power and planning is essential. Contact Us Today! (512) 787-1852

This article is provided for general informational and educational purposes only and does not constitute legal advice or opinions.