Top 10 Revenue Cycle Payor Issues

May 2, 2014
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Each month Wipfli’s Revenue Cycle Team contributes insights to the Health Care Perspective newsletter highlighting Top 10 Revenue Cycle Opportunities we observe from our work with clients.  This month’s insight pertains to revenue cycle payor issues that we often find can be improved.  You can perform a quick checkup of your organization by ensuring the answer to each item is “yes.”
  1. Do you have a Payor Contracting Team in place?  This team is crucial for coordinating contracting discussions and managing payor relationships effectively.  The team should include an executive and a reimbursement analyst at minimum, with ad hoc representation from key revenue cycle team members.
  1. Do you have a standard template for noneconomic payor contract terms?  A standard template outlining the key criteria for contract language is a helpful tool to ensure all significant elements are addressed and the organization is protected against any unintended consequences before a new contract is signed.  The template should include criteria for patient eligibility, claim submission, claim payment, credentialing process and timing, prior authorization requirements, new products, etc.
  2. Do you have a contract modeling system in place?  The ability to model a claim data set effectively is essential for negotiating with payors.  The claim sample should represent at least one year of claims from all components of your business.  If you are using a contract management system for claim modeling, are you testing the accuracy of the process?  Remember, if it is not set up properly, you will not be obtaining accurate reimbursement information upon which to make good contracting decisions.
  3. Do your payor contracts include language that allows for reimbursement adjustments if the payors’ payment policies change?  We often see providers sign contracts that are linked to a payment policy document of some kind, unique to the payor.  This payment policy document is often allowed to be changed unilaterally by the payor with no provider input, yet these new policies may reduce reimbursement, add administrative cost (e.g., related to prior authorizations), or both.  We suggest providers protect themselves by including protective language that provides for reimbursement adjustments to offset any reimbursement or cost impact of these policy changes.
  4. Are you including inflation factors in your payor contracts?  We often see providers sign “evergreen” contracts with no inflation increases each year.  It is very unlikely the payors will ask you every year if you want to modify the contract to reflect an increase in rates.  We have seen many contracts with the same lagging market reimbursement rates in place for five years or longer simply because no one managed the renewal process, and no inflation factors were included in the contracts.
  1. Are you asking the business office for the top denials and underpayments associated with each payor?  Specific payor edits often create rework and lost reimbursement for providers.  Often these issues can be addressed and resolved in the contract negotiation process by agreeing to simple billing changes that enable claims to be processed accurately.
  2. Are you comparing contracted reimbursement rates with actual reimbursement rates on a per claim basis in real time?  Many health care providers cannot even locate their payor contract reimbursement schedules much less have a system to compare expected reimbursement with actual reimbursement on a per-claim basis, in real time.  All key payor reimbursement rates should be included in a contract management software package to address underpayment issues in real time.  In addition, revenue cycle team members should have access to payor contracts to most effectively do their work and challenge any claim-based issues with specific payors.
  3. Do you have a contract management system, including a contract summary template to document key elements of all payor contracts?  An electronic contract management system should house all your payor contracts and reimbursement schedules.  In addition, a contract summary template should be developed to document contract execution and termination dates, notice dates, scope of services, reimbursement methodologies and rates, and other pertinent items.  The contract summary template should link directly to the contract documents for quick reference.
  4. Do you have a payor contracting scorecard?  All key contracts should be monitored for quality and timeliness in the same manner in which health care service delivery processes are monitored.  The scorecard should track key performance attributes such as overall reimbursement amounts, timeliness of payment, claim denial rates, actual reimbursement compared to expected reimbursement percentages, effectiveness of issue resolution, to name a few.  The payor contracting scorecard is an effective tool to use when negotiating new contracts.
  5. Is your organization ready to take a risk in payor contracts?  If you believe your organization manages patient care effectively (likely if you have a strong primary care provider system in place), you may be in a position to ask for a certain amount of upside risk- and reward-based payments in contracts.  The risk-based system should have positive potential for both your organization and the payor and should start small, while everyone is learning.  It may be the time to get started on this opportunity, but make sure the system is understandable, measurable, and controllable by your organization.

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