Managing Your Payer Contracts Like a Pro

Ensuring maximum reimbursement is always at the top of a healthcare provider’s mind. But we find too often that many providers are leaving money on the table with inefficient and infrequent payer contract management.

Before We Get Started

CPT? codes and descriptions are copyright 2019 American Medical Association. All rights reserved. CPT? is a registered trademark of the American Medical Association (AMA).

Objectives

• Manage current payer and network agreements.
• Analyze #contractallowables and #feeschedules.
• Create a #renegotiationstrategy and timeline.
• Incorporate strategies to improve contract terms.

Goals For This Article

• Walk-through of the payer contracting process.
• Manage the process going forward and improve the bottom-line.
• Showing you that this can be done and done right.

What We’ll Cover

• Gathering your current contracts and rates.
• Determining which contracts need attention and when.
• Negotiating or renegotiating properly.
• Knowing your worth and analyzing offers.
• Ensuring new agreement / amendment reflects terms.
• Managing a termination process if need be.

Gather, Inventory & Analyze Your Contracts

• Find all your current fully executed agreements.
• Find all the amendments between original effective date and present.
• If you cannot find them, you can request them from the payer or network, each has its own process.
• This is a must for proper management.

Finding Your Current Rates & How Rates Change

Rates change over the years due to amendments and proprietary market fee schedules or CY Medicare-based fee schedules.

Identify all procedures you perform and compare the fee schedule amounts to your procedures.

Consider the ramifications of a fee schedule that pays 90% of your charge for CPT? code 99203 but 45% for a surgical procedure that accounts for 50% of your revenue.

Amendment provisions often allow the payer or network to modify the rates without the written consent of the provider. Sometimes notice is required but silence = acceptance.

For example; “Following (30) days written notice. Failure to object constitutes agreement”.

Gather Utilization Data From EHR

• Select a recent but mature one-year period.
• All billed codes and new codes should be addressed.
• Include CPT?, modifier, payments, charges ad place of service.
• Run a 12-month utilization report with all CPT? codes.
• Create a side-by-side line up of all your payers’ rates.

Evaluate Charges. Why?

All too often practices have certain codes that fall below contract rates and almost all contracts have a “lesser of billed charges (BC) or contract rate” provision.

A recent AMA study showed that physicians billed $5.15 below their contracted fee schedule per code.

How To Evaluate Charges

Use your contract inventory notice dates, reimbursement rates and utilization to determine which ones to focus on and when.

Set Timeline for Negotiations.

Send notices to initial payers - don’t negotiate too many at one time.

Contract Analysis

• Compare payer allowables for all CPT? sections and subsections.
• Identify?undercharges.
• View your charges as a percentage of the contract rate.
• Perform what if analysis for all CPT? sections and subsections.
• Perform utilization reviews.

Notice &?Negotiation

Determine notice terms and termination provisions in your contract inventory - these indicate when and how notice is to be sent.

Decide upon the payer or network with which to negotiate based on (1) notice dates and (2) financial impact on your practice.

Generally, don’t tackle more than two major negotiations at one time.?If all have priority, none have priority.

Tips Regarding Renegotiation Notice

• Know the number of days’ notice required and if tied to anniversary date.
• If group agreement - all provider's sign.
• Send with signature receipt required and save proof.
• Plan to follow up - you drive the timeline.

Writing Notice To Renegotiate

• On letterhead with practice name, TIN and locations.
• List all physicians and signatures within the practice.
• Prepare a value proposition / proposal letter and get it to the payer contracting manager (not the provider relations representative).
• Date by which you request a response.

Strategies To Improve Contract Terms

Do you perform unique procedures or services, are you highly trained, is there a shortage in your market, etc.?

What are benefits to the patients you treat; in your opinion, what is the level of patient satisfaction?

What do you do clinically that reduces healthcare costs for the payer?

The success of renegotiation rests on the ability to provide cost-effective, evidenced-based services and convince payers of their value!

Summary On Initial Steps

• Identify which contracts need attention.
• Know if notice is tied to anniversary.
• Send timely notice out according to contract terms.
• Don’t tackle too many at one time.
• Create realistic expectations and timelines.

Modeling and Testing Offer Impact

• All payers.
• All CPT? codes, sections and subsections.
• What-if analysis, for example: “110% of CY 2019 Medicare” vs “105% of CY 2020 Medicare”.
• Even one percentage point can mean thousands of dollars annually.

Reimbursement Exhibit

• Verify reimbursement amounts for all CPT? codes.
• Be sure contract is clear as to which fee schedules apply to each product / plan.
• Make sure contracts do not allow new products and rates without your written consent.

Amendments

• Oftentimes an agreement will state that the payer has the right to amend the contract with the provider without prior written notice.
• Reject any language which gives the payer unilateral amendment rights.
• If the agreement requires the payer to provide notice of the amendment, remember, usually; “Following (30) days written notice. Failure to object constitutes agreement.”

Term &?Termination

• What are the termination provisions?
• Does the contract afford the provider with due process rights?
• Are you required to continue delivering care to the payer’s enrollees after the contract has been terminated? Will you be paid for services rendered after the effective date of termination?

Summary

While working with healthcare groups across the country, we have seen payers reduce their fee schedules by 5% to 12% due to lack of attention, this is devastating to your practice.

Fortunately, longstanding patterns of poor attention to contracts can be broken by managing, analyzing, renegotiating and monitoring your payer contracts. We believe in a proactive approach, not a reactive one.

Many of our physician clients see average payer reimbursement increases of 10% – 15%?(results will vary). #contractallowables #feeschedules #renegotiationstrategy

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