Timely and correct reimbursement is always top of mind for a healthcare provider. However, many providers are leaving money on the table due to infrequent payer contract renegotiations.
Due to the nature of payer contracts, which includes fee schedules, reimbursement requirements, as well as conditions payers must meet for timely reimbursement. Therefore, payer contract negotiations are a vital component of a healthy revenue cycle.
Basics of a Payer Contract
Payer contracts are legal documents, and it is essential to have a firm understanding of the fine print. This will help your organization capture all charges and prevent claim denials. It is usual for providers to know the reimbursement rates for their most commonly billed services. However, there are other core elements that they need to be familiar with that can create challenges for revenue cycle management.
Here are eight other critical areas of a payer contract that need to be reviewed and understood:
- Timely filing: Payers set time limits for filing claims, and your practice must know what those limits are to ensure timely filing. While most practitioners send claims quickly, it is good to understand the time limits for anything that may fall through the cracks.
- Unilateral Amendments: Every contract has a section pertaining to the process by which a contract can be amended or the ability for the parties to revise the agreement. Some of these contracts allow for changes to be made by the payer without consent from the provider. It would be best if you tried to ensure that the contract can only be amended by mutual agreement, in writing, in advance, and by both parties signing off on the change. Or at least state in the contract that you are to be notified of any revisions before they go into effect and given time to craft a response.
- Prompt Pay: The contract’s language should be specific regarding the reimbursement practice for all plan products for correctly submitted claims. This should be within 30-45 days of receiving the claim or follow your state’s regulations if there are any.
- Over/Underpayment: This language refers to the timeframe both parties have for limiting how far back either can go to collect or refund an over or underpayment.
- Termination: This language is specific to either party’s ability to exit the agreement without cause within a fair amount of time.
- Assignment/mergers: Any language about assignment or mergers should be reciprocal to the payer and provider. Payers frequently enter into mergers and don’t ask permission from practices. Practices should have the same freedom to conduct business transactions, whether it is a merger or assigning a contract.
- All Services: This contract language should allow practitioners to provide and be reimbursed for all services that fall within the scope and expertise of their specialty and license so as not to limit them to a specific set of services.
- Arbitration: The contract should contain appropriate and reasonable arbitration language, ensuring that both parties can access all legal protections. Proper jurisdiction, as well as clear time frames and cost responsibilities, are critical. Also, the contract should be governed by the laws of the state where the practice is located and not the payer’s headquarters.
Preparing to Negotiate
You need to make sure you have copies of all contracts to see where you currently are with them and determine where you want or need to go. Have all your contracts in one easy-to-access place; if you can’t find them, request a copy from the payer.
When getting ready to negotiate, you must clearly understand your payer mix. Looking at your entire book of business will help to determine where you are paid the least, the most, and what representation of your patients are under which payers. This will allow you to decide which payers and services to focus on. Other information you need to have to help in your negotiations are details that can help you articulate the story and value of your practice, such as your technology, affiliations, patient population, range of services you offer, what sets your practice apart from your competitors, and the overall goal/purpose of the practice.
Here are five points of negotiation that can help:
- State laws apply: You should be aware of your state laws and how they affect insurers’ way of conducting business. There may be rules governing timely payment or even takebacks.
- Be aware of the contract term: Many insurance payers try to get providers to sign long-term contracts, three years or more. If this is the case, does the contract cover built-in increases to keep pace with inflation or other considerations? Usually, they don’t.
- Make sure rates are transparent: Understand what the rates are based on, whether it be Medicare or a proprietary fee schedule. If Medicare, is it the current or another year? Is there more than one plan under the payer? If so, do you have a fee schedule for all of them?
- Know the payer: In addition to bringing data from your practice, conduct research to better understand the payor’s specific concerns and areas of focus. For example, if the payor is concerned with minimizing hospitalization rates, bring data to the table showing how your practice has addressed ongoing healthcare, lowering patient hospitalizations.
- Know your value: Payors respond the best to facts and data. Knowing your worth and quantifying all aspects of your practice can help get you higher reimbursement rates.
You should also develop clear objectives of what your organization expects to gain from the negotiations, whether to increase net yields, boost a specific service line, or enhance payment accountability. But, be prepared for anything by having data-driven, evidence-based responses to potential questions. You can be ready for these by brainstorming with organization stakeholders such as other practitioners, financial leaders, or practice administrators to develop ideas on what the payer may expect from the negotiations and how they may react to your requests, thus putting yourself in a better place to negotiate.
Also, getting input and agreement from key stakeholders can ensure you are flexible where you can be and stand fast on the terms that provide a better outcome for your healthcare organization. You can even determine if there is a point where you are willing to walk away.
Benefits of Negotiating Payer Contracts
It is agreed that contract negotiations can be intimidating, but there are many benefits to be gained by taking the time. Not only does this build relationships with payers, it also can keep the practice top of mind of the payer’s network providers. In addition, it allows practices the opportunity to demonstrate their value to payers while offering clarity on issues within their specialty. In the end, successful negotiations can result in higher reimbursement for services and contract language that protects the business interest of the practice.
Building relationships with payers helps create a strong foundation for negotiations. It is suggested that practices sit down annually with their payer representative to:
- Introduce practitioners
- Provide education about the practice’s specialty and value proposition
- Learn payer’s needs and find opportunities to collaborate
By doing this, you maintain close contact with the payer representative, which can support a mutually positive outcome regarding negotiations.
Getting Help with Your Payer Contract Renegotiations
With all the other things that need to be managed daily, who has the time to establish a comprehensive payer contract management process to handle the complexity of managing multiple contracts. It is hard for a practice to keep up without getting discouraged by the process as it can be lengthy and complicated.
At Billed Right we understand how stressful and time-consuming contract renegotiations can be. Taking the time to review your payer contracts to understand where you currently are can be overwhelming. You also need to analyze your data to determine which payers, plans, and services drive the most value, or the least, consuming even more time and resources. But there is a way to save yourself the time and cost of doing all of this yourself – outsourcing.
Billed Right has a dedicated team of experts who can help prepare and negotiate your payer contracts. In addition, we work closely with you and your team to ensure a solid understanding of your analytical data and what makes your practice unique and work hard to increase reimbursement amounts.
Contact us today to learn more about how we can help you negotiate your payer contracts.