Automate Payer Fee Schedule Management for Higher Margins & Happier Staff

How did the payer fee schedule become so complex and dynamic? 

Technology, legislation, medical advances, the Silver Tsunami  – pick your cause. All of these are upending (and improving) healthcare. 

Leading healthcare organizations are doing their best to contain the chaos, but when it comes to the payer fee schedule, they’re contributing to it, too. From July 2023 to January 2024, CMS changed the physician fee schedule four times. The AMA updates ICD and CPT codes yearly (230 additions, 49 deletions, and 70 revisions in 2024).  

With these triggers, it’s no wonder commercial payers send a steady stream of proposed fee schedule changes. They’re benchmarking from Medicare and Medicaid rates and they need to remain compliant with CMS mandates.  

On the provider side, staff face having to stay on top of each payer’s unique way of sharing proposed changes. Blue Cross has a newsletter, the Blue Review, and its provider portal where it lists updates. UnitedHealthGroup uses email and portals, and Aetna encourages providers to stay on top of fee schedule changes via its Availity provider portal. 

All of these methods leave the burden of knowing fee updates to providers. 

Where payers step back, however, automated payer fee schedule management steps in. Here, you’ll learn how efficient, automated schedule management helps tame contract chaos so you can optimize your revenue and bring high-quality services to your community. 

What is automated payer fee schedule management?

Automated payer fee schedule management is the use of advanced technologies and software systems to streamline and optimize the process of tracking, updating, and implementing changes to fee schedules from multiple commercial insurance payers. 

It typically involves using specialized software that can automatically import fee schedule updates, compare them to existing rates, identify discrepancies, and facilitate the implementation of changes across an organization's billing and reimbursement systems, reducing manual effort and potential errors in managing complex and frequently changing fee schedules.

Automated payer fee schedule management is often part of an overall contract management software solution. Today, too many health systems have no provider contract management platform in place. Others use severely inefficient outdated or manual systems. 

Take a quick, self-guided tour through a powerful contract management and underpayment recovery tool: 

Why providers miss fee schedule updates

As delineated above, the burden is on providers to know when their payers are proposing fee changes. The hard part is getting to the proposed change in time to negotiate better rates. 

The missed chance to negotiate a fee change often means financial detriment for providers. Providers miss alerts for three main reasons. When a payer has instituted a unilateral change clause (stipulating that they can change fee schedules without explicit provider notification or approval) or a time-limited negotiation period, providers often get stuck with a new, lower rate. Providers who haven’t combed their contracts for these one-sided clauses are vulnerable. 

And then there are the payers that notify only via snail mail. Payer contracting expert Doral Jacobsen encourages providers to engage in intensive training with mailroom and front- and back-end staff to put them on notice to watch carefully for any pieces of mail coming from their payers. Writing a list of these payers and posting it in the mailroom is one way to keep these important communications found and delivered to the right staff member. 

Overall, however, the biggest issue is an industry-wide lack of streamlined and automated contract management systems. After surveying 522 contract managers in healthcare organizations, Doug Brown, Managing Partner of Black Book, concludes, "The majority of US health systems are struggling with manual contract tasks and fragmented contract processes." The Black Book survey led researchers to estimate that the intermittent and inefficient manual contract management approach is costing providers 157 billion dollars per year. In other words, manual contract management, of which the fee schedule is an important part, is woefully inadequate.  The thin staff remaining in providers’ administrative offices has neither the time nor the training to keep up with constant fee schedule changes. 

Many forward-thinking providers today recognize that the automated payer fee schedule management features in a contract management software system solve their staffing and expertise problem. 

7 ways automated fee schedule management improves operations and margins

The volume of rate changes, coupled with the intricacy of fee structures across multiple payers, can overwhelm even the most diligent administrative teams. Automated fee schedule management comes with these 10 financial and operational benefits.

1. Increased revenue and reduced revenue leakage via:

• identification and quick communication of underpayments
• actual and contracted reimbursement alignment
• appropriate payment capture

Healthcare consulting firm McKinsey repeatedly urges providers to turn to automation to reduce labor costs. 

8. Cost savings:

• reduces administrative costs associated with manual fee schedule management
• helps avoid costly retroactive adjustments and rework

2. Improved operational efficiency:

• automates manual processes, reducing administrative time and costs

• centralized repository of contracts and fee schedules enhance visibility
• enhanced visibility facilitates real-time tracking of claims and payments

• allows staff to focus on higher-value activities instead of tedious data entry

While data on the efficiencies of automation as it impacts fee schedules hasn’t been published yet, the 2023 CAQH Index reveals the significant time savings and cost recovery providers enjoy after automating patient eligibility, prior authorizations, billing, and more. RCM pioneers looking to cut staff contract time can use these figures to convince the C-Suite. 

3. Enhanced compliance:

• automation stays up-to-date with frequent payer policy and fee schedule updates
• reduces the risk of audit findings or regulatory issues

4. Improved contract negotiations:

• facilitates data-driven insights to support more favorable terms
• enables modeling and forecasting of proposed fee schedule changes
• enables optimization of reimbursement across all payers via competitive insights

5. Improved cash flow:

• facilitates faster claims resolution and payment
• reduces days in accounts receivable

6. Reduced provider abrasion:

• leads to fewer payment disputes and appeals

7. Enhanced decision-making:

• offers analytics to evaluate payer performance and profitability
• Enables identification of trends and optimization of revenue strategies 

By implementing automated fee schedule management, healthcare providers and organizations can optimize their revenue cycle, improve financial performance, and focus more resources on patient care.

Capture those proposed fee schedule changes

As good as all these benefits sound, getting proposed changes from the payer to your fee schedules can be a bit cumbersome. With a few attempts, you’ll have your workflow down.

While some payers do provide fee schedules in formats that can be uploaded, the process is often not fully automated. Providers typically need to take manual steps to obtain the updated fee schedules, and then may have options for semi-automated import into their practice management systems. The level of automation can vary significantly depending on the payer and the provider's software capabilities.

Of course, if you do have an automated fee schedule management solution, you can always lean on your software provider for guidance. They may even help you track down these fee schedules with the payer. 

Still, knowing the mix of manual and semi-automated steps listed here helps. 

1. Establish fee schedule availability:
   • Many payers make updated fee schedules available to providers, but the format and delivery method can vary.
   • Ask payer reps if they provide fee schedules in downloadable formats like CSV files, which can be more easily imported into practice management systems.
2. Manual retrieval:
   • Providers often need to manually retrieve updated fee schedules from payer websites or portals.
   • Some payers may require providers to request fee schedules by phone or email.
3. Semi-automated import:
   • Some practice management systems offer features to import fee schedules from CSV or other structured file formats.
   • This allows for a semi-automated process once the fee schedule file is obtained.
4. Manual data entry:
   • In some cases, providers may need to manually enter fee schedule changes, especially if the payer doesn't provide the information in an easily importable format.
5. Third-party solutions:
   • Some third-party software solutions, like MD Clarity, offer tools to help practices manage and import fee schedule changes more efficiently.

15 key features of automated fee schedule management systems

When evaluating an automated fee schedule solution look for a comprehensive set of features that address the challenges of fee schedule management in the modern healthcare environment. Keep these 15 features in mind: 

1. Centralized contract repository:  A secure, centralized database to store all payer contracts and fee schedules in one easily accessible location.

2. Automated fee schedule updates:  The ability to automatically import and update fee schedules from payers, reducing manual data entry and potential errors.

3. Contract analysis tools:  Features that allow users to compare and analyze different fee schedules across payers and identify discrepancies or opportunities for negotiation.

4. Customizable fee rules:  Flexibility to set up and manage complex fee structures, including multi-tier fee schedules and support for various fee types (e.g., management fees, performance fees, transaction fees).

5. Integration capabilities: Seamless integration with existing EHR, billing, and revenue cycle management systems to ensure data consistency across platforms.

6. Compliance monitoring:  Tools to track contract compliance, including payment timeliness and accuracy, and alert users to potential issues.

7. Forecasting and modeling: The ability to create "what-if" scenarios to model the impact of potential fee schedule changes on revenue.

8. Automated underpayment detection:  Features that automatically compare actual payments received against contracted rates to identify underpayments.

9. Reporting and analytics: Comprehensive reporting tools and dashboards to provide insights into fee schedule performance, payer comparisons, and revenue trends.

10. Contract renewal tracking:  Automated alerts for upcoming contract renewals and deadlines to ensure timely negotiations.

11. User-friendly interface:  An intuitive, easy-to-navigate platform that allows staff to quickly access and understand fee schedule information.

12. Multi-currency support:  For organizations dealing with international payers or multiple currencies.

13. Audit trail and version control: Features to track changes to fee schedules and maintain a history of updates for compliance and auditing purposes.

14. Role-based access control:  The ability to set different levels of access and permissions for various users within the organization.

15. Mobile accessibility:  A mobile app or responsive design that allows users to access fee schedule information on-the-go.

By looking for these features, providers and management services organizations can ensure they select a comprehensive automated fee schedule solution that will streamline their processes and maximize revenue potential.

10 steps to implementing automated fee schedule management

Successful implementation requires careful planning, execution, and ongoing management. The following steps outline a strategic approach to adopting automated fee schedule management, ensuring a smooth transition and maximizing the return on investment.

Implementing automated fee schedule management:

1. Assess current processes and pain points

Begin by thoroughly evaluating existing fee schedule management processes. Identify inefficiencies, bottlenecks, and areas where errors frequently occur. Engage staff from various departments to gather insights on challenges they face with current systems and workflows.

2. Select the right software solution

Research and evaluate different automated fee schedule management solutions. Consider factors such as features, scalability, integration capabilities, and vendor support. Ensure the chosen solution aligns with your organization's specific needs and future growth plans.

3. Fashion a data migration and system integration plan

Develop a comprehensive plan for migrating existing fee schedule data to the new system. Work closely with the software vendor and IT team to ensure seamless integration with other critical systems such as EHR, PMS, and revenue cycle management platforms. Conduct thorough testing to verify data accuracy and system compatibility.

4.  Create a robust training program

Your program will familiarize staff with the new system and processes. Address concerns and resistance to change through clear communication about the benefits of the new system. Consider designating "super users" who can provide ongoing support and guidance to their colleagues.

5. Establish new workflows and best practices

 Redesign workflows to leverage the full capabilities of the automated system. Develop and document new best practices for fee schedule management, including processes for regular updates, compliance checks, and performance monitoring. Establish key performance indicators (KPIs) to measure the success of the new system and identify areas for continuous improvement.

6. Conduct phased implementation and pilot testing

 Consider a phased approach to implementation, starting with a pilot program in a specific department or for a subset of payers. This allows for fine-tuning of the system and processes before full-scale rollout, minimizing disruption to operations.

7. Monitor and optimize

Regularly review system performance and user feedback. Continuously refine processes and update the system to address evolving needs and regulatory changes. Stay engaged with the software vendor for updates, new features, and best practices in the industry.

8. Monitor compliance and security measures

Ensure that the implemented system adheres to all relevant healthcare regulations and data security standards. Regularly audit access controls and data handling procedures to maintain compliance and protect sensitive information.

9. Measure ROI and performance improvements

Track key metrics before and after implementation to quantify the impact of the automated system. Measure improvements in areas such as revenue capture, claims processing time, denial rates, and staff productivity. Use these insights to demonstrate the value of the investment and guide future enhancements.

10. Foster a culture of continuous improvement

 Encourage ongoing feedback from users and stakeholders. Create channels for staff to suggest improvements and report issues. Regularly review industry trends and technological advancements to ensure your fee schedule management practices remain cutting-edge.

Maximize ROI from Automated Fee Schedule Management

Implementing automated fee schedule management is just the first step toward optimizing your healthcare organization's revenue cycle. 

Your next step is to maximize the return on investment (ROI) from this technology.  Strategic use of data, proactive negotiations, and continuous monitoring all figure in. The following tactics ensure your automated fee schedule management system delivers the highest possible value to your organization.

Leverage analytics for strategic decision-making

Automated fee schedule management systems provide a wealth of data that can inform strategic decisions. By analyzing trends in reimbursement rates, claim denials, and payment patterns across different payers and service lines, healthcare organizations can identify areas for improvement and opportunities for revenue growth.

For example, you might discover that certain procedures are consistently underpaid by specific payers, or that particular service lines are more profitable than others. These insights can guide resource allocation, service line expansion decisions, and payer contract negotiations.

Proactive contract negotiations using data insights

Armed with comprehensive data from your automated fee schedule management system, you can approach payer contract negotiations from a position of strength. Instead of relying on anecdotal evidence or outdated information, present concrete data showing payment trends, discrepancies between contracted rates and actual reimbursements, and comparisons with industry benchmarks.

For instance, if your analytics reveal that a particular payer consistently reimburses below the contracted rate for specific procedures, you can use this information to negotiate better terms or address the underpayment issue. Similarly, if you can demonstrate that your organization provides higher quality care or better outcomes for certain services compared to regional averages, you may be able to justify higher reimbursement rates.

Continuous monitoring and optimization of reimbursement rates

Maximizing ROI from automated fee schedule management requires ongoing vigilance and adjustment. Reimbursement rates and payer policies are constantly evolving, and your approach should be equally dynamic. Implement a system for continuous monitoring of reimbursement rates against your fee schedules and contracted terms. This allows you to quickly identify and address any discrepancies or underpayments.

Set up automated alerts for significant deviations from expected reimbursement rates or sudden changes in payer behavior. This proactive approach enables you to address issues promptly, potentially recouping lost revenue before it significantly impacts your bottom line. Additionally, regularly review and update your charge master to ensure it aligns with current market rates and payer contracts.

Regular audits and reconciliations

To truly maximize ROI, it's essential to verify that your automated fee schedule management system is performing as expected and capturing all potential revenue. Conduct regular audits of your fee schedules, comparing them against payer contracts and actual reimbursements. This can help identify any system errors, missed opportunities for higher reimbursement, or areas where manual intervention may still be necessary.

By following these strategies - leveraging analytics, engaging in proactive negotiations, continuously monitoring and optimizing reimbursement rates, and conducting regular audits - healthcare organizations can maximize the ROI from their automated fee schedule management systems. This comprehensive approach not only streamlines operations but also drives financial performance, ensuring that your investment in automation translates into tangible improvements in your bottom line.

Contract and fee schedule management for the big data era

As the healthcare industry continues to evolve, the importance of effective payer fee schedule management cannot be overstated. While automation and artificial intelligence have been making inroads contracts, their adoption has not been universal. As Deloitte observes, "The use of automation and artificial intelligence in legal contract activities are not new things nor are they universally embraced." 

Some organizations remain hesitant about removing human oversight from critical processes where financial and reputational risks are high. Others, as Deloitte explains, are waiting for more comprehensive solutions that can automate the entire contract management lifecycle, rather than implementing partial solutions.

You don't have to navigate this complex landscape alone. MD Clarity's RevFind handles fee schedule and contract management for practices, physician groups, and MSOs. These tools enable organizations to model proposed payer changes, understand their revenue impact, and negotiate more favorable terms. By revealing the best and worst payers, identifying payment trends, and uncovering underpayments, RevFind empowers you to make data-driven decisions.

Moreover, these automated solutions centralize agreements, automate critical alerts for contract milestones, and generate comparative reports on reimbursements across CPT codes and provider locations. This level of insight and automation is invaluable in today's complex healthcare reimbursement environment.

Schedule a demo to see how RevFind provides insights about payer contract performance and the contract improvements that help you boost net revenue. 

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