As I work with groups, I often find that contracts are often overlooked. They have not been viewed since originally negotiated or the last renegotiation was five plus years ago.
Payer contracts are the major component of getting paid fair market rates and collecting all fees for services provided. In addition, there are many operational components tied to the contract that support a practice maintaining optimal operations that are often overlooked.
I like to think of contracting like the hub and spoke system. Taking the simple analogy of a bicycle wheel. A bicycle can only move efficiently if both hub and spokes are working. Contract ~ the hub can only work for the practice if the practice operations ~ the spokes are well managed and compliant with contractual agreement.
Payer Contracts
Ideally a contract should be renegotiated every 2 years. With so many changes in healthcare and contract amendments affecting fee-for-service, it is essential to evaluate your current payment against your existing contracts. What happens if you don’t?
Losing Money on Drug Reimbursement (Example 1):
An Ambulatory Surgery Center (ASC) uncovered that they were writing off a significant amount of dollars due to a drug they used that was recently approved by Medicare for payment. While renegotiating their agreements, they uncovered they were not being paid at all or at a lower rate than they were being invoiced by the drug company. By renegotiating their agreements they confirmed payment by payer and negotiated a rate for payment that eliminated 85% of their write off costs for this drug.
Outdated Fee Schedule Loss of Revenue E&M Codes (Example 2):
A four provider primary care group had not negotiated their contract in 12 years. They were getting paid significantly lower than fair market value for most evaluation and management codes. By renegotiating their contract to a more current fee schedule they could see a significant increase in payment resulting in approximately a $30K increase to their bottom line.
I also recommend that contracts be reviewed annually, preferably Q3 or first month of Q4 at the latest. A simple review to make sure new staff members are familiar with contracts and that your contracts support the upcoming years changes. It can result in saving loss of revenue to the practice.
Obsolete Codes Impacting Bottom Line
A specialty care group brought forward their concerns to the payer regarding receipt of a lower payment than the Centers for Medicare and Medicaid services (CMS) fee schedule was allowing. The group claimed they were being charged $20 less per code and at a quick look at the CMS fee schedule, they were correct. Based on their billing patterns, they estimated a $3K loss monthly or $36K yearly. Upon further view of their contract of which they had not viewed or renegotiated in 6 years, it was uncovered there was a flat rate or carve out code in their contract. They lost the argument with the payer for payment at current CMS rate because the contract they had on file was the executed agreement with the flat rate they negotiated 6 years ago. Had the group reviewed their contract annually, they would have uncovered this carve out code and could have reached out to the payer to amend their contract and negotiate to get the fair market value rate.
Finally payers are moving toward value-based payment options and it is good to evaluate to what extent and how this could impact your practice. For more. Value-Based Contracting Payment Models
Patient Verification, Credentialing and Authorizations
Many of the payers have online portals that allow for back end staff to verify patient verification, authorizations and providers credentialed and loaded to contract. By setting up operational protocols that require use of these portals can support getting paid to contract and a reduction in write-offs.
Patient Verification
A primary care practice had a significant write off percentage mainly due to two factors: 1. Seeing patients for health insurance payers they were not contracted with and 2. Seeing patients for payers they were contracted with BUT not for a specific product. Your existing contract may not include all products a payer offers and this can be evaluated to add in a contract negotiation. For this practice by implementing a process of enrolling in all payer portals and checking prior to patient visit they reduced their write offs by 25%.
Provider Data and Credentialing
Payers are becoming more stringent with provider data protocols because of CMS requirements on up to date online provider directories. In one specialty care group their write offs were significant, approximately $50K a year due to a provider not being added to their contract. There are strict requirements mandated in the contract and the provider portals regarding requirements to add a provider. Also keep in mind the actual credentialing process can take 30-90 days and this should be factored into your overall practice operations of adding a provider to contract to insure proper payment and reduce the practice write off percentage.
Authorizations
Getting authorizations in most cases may be obtained through the payer portal. It is essential to confirm authorization for services per the contract terms to insure payment and eliminate write offs or dissatisfied patients who may be required to self-pay.
Time of Service Collections
By verifying eligibility and benefits especially with a significant number of members with a high deductible, it is important to confirm a deductible amount, co-insurance and collect the correct copays per patients eligibility and benefits. Establishing a process for this with accountability measures will support compliance with contract terms and optimum reimbursement. By leveraging the payer online portals can reduce time of staff to get this information quickly.
Revenue Cycle Optimization (Timely Filing, Charge Entry and Coding)
Contract terms define timely filing, coding requirements, appeals and reconsiderations and any specifics around use of modifiers and code edits per the payer systems. It is essential to be aware of the contractual terms, to effectively challenge a denied payment for reimbursement. Most payers are moving many claim options available vis the payer portals. A lack of processes and guidelines around these results in a higher percentage of write offs and loss of revenue.
Regulatory Compliance and Policies and Procedures (P&Ps)
Compliance is often that one item on the “To Do” list and is often seen as a nice to have and not a need to have. To see a list of groups currently under investigation: OCR Cases Currently Under Investigation
Cases can be from email, social media, stolen laptop, Stark Law violations, coding violations to name a few. If an audit is conducted and the practice is found in violation, this might impact contract termination and significant fines to the practice. Establishing P&Ps create clear and concise direction for employees, accountability and quarterly checks and balances to confirm adherence and insure the practice is run efficiently.
The contract hub and spoke system visually ties together how important it is to consider the contract as a key revenue document – the hub, and the spokes – are the back end operations of the practice that are often overlooked but valuable to running a healthy and financially generating practice that allows for patients to be served with quality care.