How To Accomplish Bottom-Line Growth Through Better Managed Care Contracting

Medical practice’s interested in billing commercial or private payers may need a managed care contract. The first step to securing a managed care contract is for an administrator to identify those payers in its market that it's interested in contracting with to secure coverage for services provided.

The second step is to negotiate and agree to a managed care contract. Sounds pretty straightforward, right? But like essentially everything in healthcare, managed care contracting is easier said than done.

It's one thing to agree to a managed care contract, payers are increasingly interested in contracting with medical practices and their providers. It's another thing to agree to a contract that's beneficial for the practice.

Payers are generally not eager to give providers favorable reimbursement rates and terms. If a practice comes to the negotiating table unprepared, it can leave with a managed care contract that actually limits or may even stifle growth and profitability.

Managed Care Contracting Problems

How is it possible for a managed care contract to work against a practice and/or provider? These are three (3) of the most common and significant problems associated with suboptimal managed care contracting.

Prior Authorizations (PA’s)

Providers cannot assume payers will agree to cover all the services the provider wants covered and do so at a fair reimbursement rate. Practices must be prepared to explain and sometimes demonstrate with clinical and financial data why its procedures are worthy of coverage and should be covered at an appropriate rate.

Payers are increasingly putting in contract verbiage that gives providers a tight window from the date of service to update the required authorization (when necessary). If a practice fails to update the authorization with the correct CPT®, a practice can experience a 50% reimbursement penalty or even non-payment, with no way to pursue the overturning of a denial.

Missed Opportunities To Maximize Negotiations

Before going into a managed care contract negotiation, practices should perform a cost analysis and determine what they need to be paid per case based on their costs (e.g., building, supplies, administrative). From there, the goal is typically to end with a contract that ensures at least a slight profit for procedures and always getting paid above Medicare rates.

Unfortunately, negotiating rates that ensure a profit on all procedures is often difficult. Negotiations tend to require a little give and take, with the practice "winning" on some rates and the payer "winning" on others.

That's why it's imperative for physicians and administrators to approach the negotiating table having looked at their revenue in aggregate and understanding the balance that will be deemed acceptable for a negotiated contract.

Poor Key Performance Indicator (KPI) Metrics And Financial Data

Physicians must take contract renegotiations just as seriously as they do initial contract negotiations. First and foremost, that means actually renegotiating contracts. Contract renegotiations must be a routine process for a practice or else the value of the contract (i.e., profitability) will inevitably decline with the rise in costs.

Accurate KPIs for metrics like days to pay and denial rate will allow a practice to better hold a payer accountable to terms agreed upon in the contract and a payer's responsibility to be a good-faith partner. Financial data can support disagreements for reimbursement increases, carve-outs, and expanded coverage.

Crafting Provider-First Payer Contracts

We partner with our clients to bring transparency and actionable insights to the contracting process.

Fair Market Data

The CodeToolz Contract Analyzer shows you where you stand compared to your peers, shining light on unfavorable contract terms and CPT® codes that offer potential for increase.

Contract Visualization

We convert payer agreement terms into clear visual models so you can quickly track the performance of your payer contracts.

Regular Contract Analysis

Our experts examine your contracts to ensure they are as competitive as possible, and our contract renewal notifications help you stay on top of contract management.

Strategic Recommendations

Based on our thorough review, CodeToolz experts will offer strategic guidance tailored to your practice’s priorities and daily pain points.

Summary

#Physicians and #medicalpractice administrators can negotiate their #managedcarecontracts on their own. In fact, some do and do so fairly well. But for an increasing number of practices looking to ensure their managed care contracts play the pivotal role they can and should in helping grow the bottom line, outsourcing to a company that provides managed care contracting services is becoming a practical and highly effective option.

The Physician's Advocate in Payer Contracting

Achieving more favorable contracts requires resources, time, and industry knowledge your team may not have. If this is the case, schedule a free consultation with us and we’ll take care of it for you.

Starting with your top 5 payers, our team partners with you to analyze and communicate directly with payers to obtain better rates and competitive terms, while you focus on patient care.

Contact Us Today (512) 787-1852 or Schedule Your Free Consultation / Demo here.