Strategies for Securing Optimal Contracts from Payers (PDF Fillable Checklist Provided)
Managed care revenue fuels medical practice operations, which is why physicians’ managed care contracts require careful maintenance. Still, we see physician clients with stale five (5) or ten (10) year-old contracts.
As a general rule, physicians should review their major payer contracts at least annually, evaluating them semiannually, and review contracts with small-volume payers at least every three years.
Why Physicians Should Review Their Payer Contracts Annually
By conducting annual reviews, physicians can ensure that their payer contracts remain favorable, compliant, and aligned with their practice goals, ultimately supporting financial stability and high-quality patient care. Physicians are advised to review their payer contracts annually for various reasons:
Reimbursement Rates: Payer contracts often dictate the rates at which physicians are reimbursed for services. These rates can change, and reviewing contracts annually ensures that physicians are aware of any adjustments and can negotiate better terms if necessary.
Network Status: Physicians need to confirm their participation status in payer networks. Changes in network status can affect patient access and reimbursement rates.
Contract Terms and Conditions: Physicians should review the terms and conditions of their contracts to ensure they are fair and favorable. This includes understanding termination clauses, renewal terms, and any potential penalties.
Financial Impact: Understanding the financial implications of payer contracts is crucial. Regular reviews help physicians identify any unfavorable terms that could negatively impact their practice's revenue.
Negotiation Opportunities: Annual reviews provide an opportunity to renegotiate terms that may no longer be beneficial. Physicians can leverage their performance data and market conditions to negotiate better rates or terms.
Improved Relationships With Payers
One of the key benefits of payer contract management through regular payer contract review is the impact it has on the payer-provider relationship. Since payers are often able to amend contract terms at will, providers who aren’t regularly performing contract review can be subject to higher denial rates, a more complex and resource-intensive appeal process, and a steadily degrading revenue cycle.
Signs You Should Refresh Your Payer Contract Review
You Don’t Have a Plan: The biggest tell that your payer contract review process could improve is that you’re haphazard in your execution. This includes not reviewing payer and contract performance on a routine cadence, not having annual meetings scheduled with your payer representatives, and not having organizational reimbursement goals.
You Aren’t Tracking Administrative Burden: Each payer has its own issues around denials, appeals and authorizations. If you aren’t tracking the intensity and expense at the payer level, it’s a sign that you’re missing potential revenue opportunities and opportunity in your contracting.
You Aren’t Tracking and Comparing: At a base level, you should be tracking the payments that are coming in and comparing them to the expected reimbursement for each payer. These variances are valuable clues to the effectiveness of your payer contract performance.
You Aren’t Doing Cost Analysis: Your team should be performing cost analysis at the level of your health plans. Not only will this insight be valuable for your organization’s financial health, but it can help you set priorities for payer contract negotiation based on your margins.
Final Considerations
The provider should obtain copies of, and analyze, all relevant documents, especially any documents which the contract incorporates by reference. These documents, whether actuarial data, policies or procedures, can be integral parts of the MCO-provider relationship
And most importantly, the provider should feel free to ask questions of the MCO's representatives, and negotiate the terms and conditions of the contract. Few contracts, even standard printed-form contracts, are nonnegotiable. Start-up MCOs with little market share will more readily negotiate, but even larger organizations will discuss particular provisions with multispecialty groups, tertiary care specialists, key providers, or specialists willing to accept capitation arrangements.
Also, the provider should confirm all representations, additions, and clarifications in writing. No change will be binding unless it is set forth in a signed, written instrument which amends the contract.
Finally, the provider should sign the contract, and accept its terms, only after considerable evaluation and review.
Summary
Comparing payer contracts requires a comprehensive analysis of financial, operational, and strategic factors. By carefully evaluating reimbursement rates, administrative burden, patient access, and other key elements, healthcare providers can make informed decisions that maximize revenue, minimize risk, and support high-quality patient care. Regular contract reviews and renegotiations are also essential to ensure ongoing value.
CodeToolz created this detailed checklist to assist contract management staff in verifying the presence of essential contract elements. This checklist helps medical practices understand the journey to achieving optimal contracts from payers. Use it at your leisure. Enjoy.
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The Physician's Advocate In Payer Contracting
One must recognize that payer contract management and negotiation is an ongoing process, not a one-time event.
CodeToolz eliminates the need to add permanent overhead costs of hiring and maintaining a full-time staff of contract negotiators, managed care analysts, and contract managers to your practice. Our team will perform all of these functions.
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