The struggle is real. Obtaining payer contracts that improve reimbursement and enable hospitals to remain financially stable in the changing reimbursement landscape requires expertise. On an average, hospitals work with close to 50+ payers. To maintain and update the payer matrix calls for a deep understanding of reimbursement regulations.
Reimbursement patterns are constantly evolving. Under-preforming payer contracts have a profound impact on the profitability of hospitals. To unlock the complete potential of payer contracts it is critical to analyze and make course corrections periodically.
- High variance between contracted fees and actual collections
- Inconsistent reimbursement structure
- Frequent instances of underpayments
- Revenue leaks
- Difficulty in managing contract processes
- Outdated fee structure
- Poor payer performance across-the-board
What you don’t know can hurt you. Obtain copies of payer contracts and fee schedules to identify payment variances. There are several instances of hospitals being reimbursed below contractually agreed-upon rates. Forecast a 3-5% increase every few years and calculate the impact it can have on your collections. Negotiate contracts after establishing clear baseline figures.
The current healthcare climate isn’t conducive for independent medical practices. Joining hands with bigger networks, hospital groups or ACOs will offer independent physician the leverage they need to obtain better performing payer contracts.
To ensure continued profitability evaluate various payment models such as bundled payments to take advantage of bigger revenue opportunities.
Collect patient outcomes data and other vital quality metrics to improvise reimbursement and demand a better fee schedule from payers. This data can also help in participating in incentive programs.
A Strength, Weakness, Opportunity and Threat analysis of your hospital can bubble up strong differentiators like your hospital’s location or the community it serves to improve reimbursement rates. Factors such as the unique specialty you offer or being the only community hospital within a 5-mile radius can significantly improve rates.
Take an inventory of the number of hospitals who offer similar services within your locality and average patient volume. Run and monitor patient satisfaction reports to understand your market share and build stronger contracts.
Escalator clauses are clauses within a payer contract that offer a guaranteed increase in reimbursement within a stipulated period of time. A 1% increase every year is an industry standard. Pay attention to escalator clauses to improve reimbursement annually.
Contract negotiations can be an opportunity to improve the financial outcomes of your hospital. The key to unlock optimal payer contracts lies in data. Use a contract negotiation software to perform contract modelling or partner with a revenue cycle provider to improvise the performance of your contracts.
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