Operational efficiency in healthcare contract management

On 31st Oct 2018
payer contract management

Healthcare operational efficiency - payer contract management

Healthcare contract management isn’t just important to healthcare organizations - it’s essential to viability. It isn’t an option, it’s a core function to financial well-being. When operational efficiency in payer contract management is achieved, it can yield robust financial benefits, improve reimbursement and capture revenue before it is lost. Comprehensive management of payer contracts is the foundation on which strong financial performance is built.

Whether it’s patient registration or provider workflow, efficiency is the name of the game for healthcare organizations. The same is true with payer contract management; the more efficient the process, the more reimbursement is captured. When a hospital, or physician practice is financially healthy, it can attract and retain physicians, purchase necessary equipment, increase patient volume, thrive and grow. Making sure payer contracts are fulfilled is the first step in financial viability.  

The ABCs of operational efficiency

Ensuring that payer contract management is integrated into the healthcare organization practice can be achieved rather easily, if the right processes are in place. Three important steps will set up the practice and/or hospital to track payer compliance with contract terms.

A: Make sure that newly negotiated contract rates are actually loaded into the payer’s system. It may seem like a no-brainer, but you can’t assume that the payer has updated their payment system. If they have not, you are not going to receive the newly contracted rate. Careful monitoring of payments is crucial when new reimbursement rates are in effect to ensure the provider is being reimbursed to contract. It’s one concrete step that can greatly improve contract management efficiency and ensure the payer updates the new rates in their system.

B: Ensure that healthcare contract modeling handles all types of reimbursement calculators, especially ensure the contract management system is able to create/build sophisticated customized calculators. Workflow can be streamlined and operational efficiency achieved if the contract modeling software handles all payers and reimbursement calculators accepted by the practice, hospital and/or health system.

C: The right healthcare contract modeling and management software will calculate the expected reimbursement at the time of billing and compare it to the posted payments and adjustments. It will automatically identify payer variances by exception. This is time saved and money earned. Payer variances can be appealed immediately and staff has the facts and figures in hand when doing so.

These three steps can improve payer contract management exponentially.

Integrating contract management into daily workflow

Of course there are other functions that should be integrated into the workflow to improve operational efficiency in payer contract management. There is a direct, and profitable, correlation between the amount of knowledge and experience the revenue cycle management staff has about contracts and robust reimbursements. In fact, the more that revenue cycle management staff; accounts receivable, coding, billing, posting, claims management and underpayments / denials management, understand payer contracts, the more they can work in support of them.

For example:

  • When staff is aware of contract terms and deadlines, they are more apt to address notices from payers in a timely manner. Many negotiating deadlines are missed when an email or letter remains in the unopened pile.

  • Denial management in healthcare can pile up as well. When appeal windows are missed it can cost the practice valuable revenue dollars.

  • When staff recognizes trends it can lead to better contract management. Staff responsible for managing denials can call attention to the fact that one payer seems to have a much higher percentage of denials than another. Billing and posting staff may recognize trends with certain payers who seem to routinely underpay.

When the team is aware of contract terms, they can better manage payer compliance.

If contract management is woven into the everyday function of the provider, managing payer compliance becomes easier. For example, tracking performance measures on a regular basis creates a stockpile of data that can be used during contract negotiations. Value based contracting will increasingly require results based on quality of care and efficiency. You are probably already collecting the data for MACRA, why not organize it for contracting purposes as well?

Finally, integrating payment recovery and accurate provider contract modeling calculators into the organization are essential tools for payer contract management as well.

  • Payment recovery that is integrated into practice/hospital operations can enable 100 percent collections. That factor alone can make a significant difference to the bottom line.

  • Accurate healthcare contract modeling calculators provide a powerhouse of contract policing.

    • They can calculate reimbursement based on one or more combinations of: Place of Service code, ICD-10 code, CPT code, Modifier, number of units, and more.

    • They have the ability to calculate reimbursement based on place of service, patient age, bill type, bill charges, diagnosis codes, discharge status, value codes, condition codes, CPT, HCPCS, revenue code, modifier, length of stay, physical status codes, physician NPI, etc...

    • These factors can be entered in multiple combinations, single entry and in a hierarchy or order of operation per contract.

That is powerful calculating to ensure every contracted penny is reimbursed.

Gaining operational efficiency in payer contract management isn’t something that healthcare organizations should wait to pay attention to at the end of the day - it’s a core function that needs immediate attention. After all, spending valuable time negotiating a beneficial contract means nothing if reimbursement doesn’t reflect the new rates. Integrating contract management into the daily operations of the healthcare practice will ensure that hard earned dollars come through the door accurately and efficiently.

Revenue Masters helps you gain operational efficiency in payer contract management by simplifying underpayments and denials. We offer 3 Underpayment & Denial recovery services options:

  1. FULL SERVICE: We recover for you on a contingency. No cost unless we recover.

  2. DIY: Use our healthcare contract modeling and management software to manage denials and underpayments and increase operational efficiency (we teach you to run the complete underpayments and denials management system).

  3. HYBRID: We do it for you on a contingency. No cost unless we recover, then when you are ready switch to DIY and we teach you to run a complete underpayments and denials management system with our SaaS.

Contact Revenue Masters today to start improving your operational efficiency in payer contract management. Contact us at (877) 591-2590 or email us at