Revisiting Payer Contract Review for Success in 2024

Healthcare providers should constantly be reviewing and assessing the performance of their payer contracts. But as the payer contract management environment continues to shift, now is an ideal time to reset your approach to contract review - evaluating how it’s impacting your relationship with payers and establishing checklists for addressing issues in payer contract management. This article will help you get that process started.

Payer contract management is a form of relationship management. The contracts between healthcare organizations and payer entities can be incredibly complex, requiring regular review and updates to ensure they are beneficial for both parties and support the financial health of the healthcare organization and meet the needs of your payers’ members. 

A key tactic in successful contract management is payer contract review. This involves going through contracts looking for specific issues and opportunities for renegotiation. Ideally, contracts should be reviewed annually. MGMA reports that most payers (58%) review their contract each year, while 10% report checking as frequently as quarterly or semi-annually. If your organization is not actively assessing your contracts at a minimum on an annual basis, you must consider reviewing your agreements more often. If contract review isn’t high on your priority list, you might be missing out on key opportunities and benefits [1].  

Additionally, many payers have the legal right to change reimbursement rates as they see fit, not having to wait until negotiation. This can make it difficult for providers to attain their goals of competitive reimbursement. When properly executed, payer contract review can help identify opportunities in cost savings, increased revenue, improved revenue cycle management, and stronger relationships with their payers.

One of the key benefits of payer contract management through regular payer contract review is the impact it has on the payer-provider relationship. Since payers are often able to amend contract terms at will, providers who aren’t regularly performing contract review can be subject to higher denial rates, a more complex and resource-intensive appeal process, and a steadily degrading revenue cycle.

There’s no need to guess whether or not your payer contract management processes need to incorporate more routine contract review. There are a few major signs that your contract management is lagging. 

• You don’t have a plan: The biggest tell that your payer contract review process could improve is that you’re haphazard in your execution. This includes not reviewing payor and contract performance on a routine cadence, not having annual meetings scheduled with your payer representatives, and not having organizational reimbursement goals.
• You aren’t tracking administrative burden: Each payer has its own issues around denials, appeals and authorizations. If you aren’t tracking the intensity and expense at the payer level, it’s a sign that you’re missing potential revenue opportunities and opportunity in your contracting. 
• You aren’t tracking and comparing: At a base level, you should be tracking the payments that are coming in and comparing them to the expected reimbursement for each payer. These variances are valuable clues to the effectiveness of your payer contract performance. 
• You aren’t considering value-based care (VBC): VBC contracts are more complex than fee-for-service, and your team should be aware of potential value-based reimbursement models that are available from your payers. 
• You aren’t doing cost analysis: Your team should be performing cost analysis at the level of your health plans. Not only will this insight be valuable for your organization's financial health, but it can help you set priorities for payer contract negotiation based on your margins. 

Your Payer Contract Review Checklist

If you’ve looked at the list above and realized that you need to make some changes in your payer contract management, a checklist will be useful. The American Medical Association provides a checklist that can be useful for developing a perspective on where your payer contract review program stands today [2].  

The checklist is extensive, and here are some of the highlights. 

• Make sure you’re including all parties involved in the contract, plans and reimbursement methodologies covered, and products involved. 
• Check that contracts clearly describe all services covered, including any exclusions and limitations. 
• Verify that all key terms are clearly defined, this includes terms like “billed charges”, “clean claim”, “covered services”, “adverse change”, “emergency care”, “member”, and more. 
• Ensure that the contract indicates clearly what party is responsible for credentialing, including descriptions for credentialing and corrective action procedures. 
• Check that your contracts include explanations for payment provisions. This includes late or non-payment and payment methodologies, including medical billing forms, what defines a clean claim, requirements around electronic payments or paper checks, and requirements to accept virtual credit card payments. 
• Other items including dispute resolution, termination, amendments, and change of control

Ultimately, payer contract review is a key element of robust relationships with payers. At 3Gen, we’re specialized in building connections with payers, which in turn, fosters healthy payer contract negotiation. To learn more about how we can support you in improving your payer relationships through payer contract review, contact us today.