Your Guide to Payer Contract Essentials

On 15th Nov 2018
healthcare contract modeling

Healthcare Contract Modeling Essentials

Payer contracts are a blueprint of revenue for providers - or at least they should be. When contracts are negotiated, the rates provide a map with which a hospital, SNF, or physician group can forecast revenue. However, the best forecast is only as good as the provider’s ability to get reimbursement in the door, and that requires efficient payer contract management. Inefficient healthcare contract modeling and management can result in the loss of valuable revenue dollars.

The fact is that when a dollar contracted is a dollar tracked, it can become a dollar reimbursed. Anything short of that can result in lost revenue. When providers centralize all contracts in one location and have firm control over contract details they find they also have more control over reimbursements. When it comes to payer contract management, knowledge is power.

The essential tools of managing payer contracts allow providers to monitor, track and manage negotiated contract terms and rates. When implemented, the tools create a knowledge base that can empower staff to monitor contract compliance- and improve revenue. That’s the ultimate goal.

The best tools for payer contract management are simple, yet comprehensive. It all begins with a payer matrix for each payer; a one-stop shop for information. The first role of the payer matrix is to protect the providers with the following information:  

  • The basics of each payer’s contract

  • Details of contract language that can delay reimbursement

  • Fee schedules

  • Reimbursement requirements

  • Conditions payers must meet for timely reimbursement

The second role of the payer matrix is to track the core elements of each payer’s contract:

  • Reimbursement rates

  • Services covered by contract

  • Procedure for healthcare denials management (including window of time)

  • Notice periods for renegotiation and termination

  • Time frame for claims and reimbursements including:

    • Number of days to submit a claim per patient visit

    • Number of days payer has to reimburse

The third role of the payer matrix is to serve as a “go-to” document for all staff that provides essential details for healthcare contract management. Here are the top five:

1: Contact details for the payer. These are the most basic, and most essential, details that can make contacting the payer either very easy or very frustrating. When revenue cycle management (RCM) staff has payer contact information at their fingertips, work becomes streamlined, more efficient and more profitable. Every RCM staff member needs a readily accessible list for each payer with the following information:

  • Payer name

  • Contracting representative; phone, fax, email, physical address

  • Credentialing representative

  • Effective date of contract

  • Agreement structure: group, individual providers, physician/hospital/SNF organization etc.

  • Term of contract and termination date

  • Payer’s percentage of the facility’s volume

  • List of payer products; commercial, Medicare, workers’ compensation etc.

2: Terms of payment. These should be listed by payer product and should include the contract-effective dates of years two and three, with associated rates, and details for multi-year agreements. It should also include a list of services that are included and excluded from the contract.

3: In addition to knowing the window of time for appealing denials, providers need to know the exact deadlines for recovery of denials and underpayments. Not knowing what these windows are, or repeatedly missing them, can cost the facility valuable earned revenue.

4: Preauthorization requirements. It could be said that providers’ revenue is only as strong as their ability to preauthorize patient services, treatments and visits. Knowing each payer’s preauthorization requirements is one of the ABC’s of getting full reimbursement for services rendered.

5: Know the amendment provisions. This can be a particularly sticky part of any payer contract. It is also an essential detail. Amendments can state that the payer can change reimbursement rates and network participation whenever they please. They may give facilities only 30 days to object. There are always consequences assigned to objecting to proposed amendments and it pays to know what they are. Knowing the details of amendment provisions - inside and out - can save providers time and money.

Once you have created a matrix for each payer, you will have a dashboard that can reveal trends, strengths and weaknesses in the contracts. Details on what contracts serve you best will emerge, such as:

  • Trends in payments, denials and rates

  • Which payers pay providers the most and the least

  • Contract terms that best serve providers

  • Clauses that cause problems

With this information, the providers can create contract templates that protect its interests during contract negotiations. Taking the time to create a matrix for each payer can increase contract compliance, reduce frustration and lost time, and bolster the bottom line for providers.

A fast and easy way to automate your payer matrix is with a healthcare contract management system. A payer contract management SaaS like Revenue Masters’ offers features like a single source view. A single source view displays all the information necessary to work your claims, such as the payer name, contract date, terms of contract and even space to add notes as you go! The Reimbursement Maximizer also has the ability to accommodate all government fee schedules and regulations for both inpatient and outpatient (i.e. Medicare IPPS, Medicare OPPS, Medicaid, Work Comp Fee Schedules, etc.). Revenue Masters software organizes all payer complicated rates such as all facility information and payer codes.

Our SaaS also offers a payment variance detailed report that displays all the information of your payer contracts along with underpayment and denial amounts.

If you choose a good healthcare contract management software, it will also include a contract negotiation module, this can help you overcome the challenges that come with determining whether contract terms are fair and the provider is receiving appropriate payment.

Contact Revenue Masters today at  (877) 591-2590 or email us at for more information about a powerful healthcare contract management system & to start recovering 100% collections.