Payer Contract Management Software: How It Wins Providers More Revenue

Have you started to hate these terms?

• “Lesser of” clauses that interfere in reduced length of stay (LOS), issues, reducing reimbursements. 
• “Stop-loss” clauses that limit payments for weighted diagnosis-related groups (DRGs) where providers are trying to manage utilization. 
• “Annual increase limitations” that restrict annual rate increases and can lead to reimbursements falling behind rising costs over time. 

All of these – particularly in aggregate –  amount to millions of dollars in uncaptured revenue for healthcare organizations every year. 

All of these must be carefully reviewed and addressed. 

But when? And with what staff? 

Too often, providers determine to review a payer change or jump on a contract 60 days ahead of the renewal date, but then crises intervene and contract tasks get relegated to the next year. When amendments cross their desk, too many healthcare organizations accept what the payer hands them, assuming their efforts to negotiate will be cost-ineffective if not outright futile. 

Payers have been counting on providers’ persistent overwhelm, but healthcare organizations are getting tougher. As Amanda Norris writes in a recent HealthLeaders article, “There’s a Surge in Provider / Payer Disputes.” She points out that not only is there “a notable uptick in payer/provider disputes,” but “disagreements over reimbursement rates and contract terms have also garnered more media attention in the last year.” Providers win many of these disputes. With the balance of power tipping toward providers, you can advocate more aggressively for your demands. 

Discover how to use payer contract management software to evaluate payer performance, improve rates and terms, negotiate more forcefully, model revenue impact from proposed payer changes, and identify underpayments. 

What is payer contract management software?

Payer contract management software is a tool that enables healthcare providers to efficiently manage, analyze, and optimize their contracts with insurance companies and government payers. This specialized software streamlines the complex process of tracking, interpreting, and enforcing the terms of all payer agreements. It helps healthcare organizations receive accurate and timely reimbursements for services rendered. By automating many aspects of contract management, these tools help providers reduce common revenue cycle errors and lift the workload of overburdened staff. 

Payer contract management software serves as a centralized repository for all contract-related information. All approved users can get real-time access to critical data such as fee schedules, payment terms, and performance metrics within minutes. This technology helps healthcare organizations proactively monitor contract compliance, identify potential underpayments, and streamline the claims adjudication process. Advanced features often include automated claim checking, reimbursement validation, and data analytics capabilities. 

Its contract modeling features empower revenue cycle leaders to enter proposed payer changes into an engine that renders how the change impacts organization revenue. Leaders can even enter all rate and term changes coming in at renewal time to determine a new contract’s impact to revenue. Finally, the ability to enter their own “what if” rate changes into the system frees them to fashion their own rate and term targets. 

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

Contracts currently favor payers

Because historically payers have created and managed contracts, they’ve always had an advantage. 

As insurance and healthcare have evolved together, insurance legal teams specialized in contracts. Healthcare specialized in medicine. Payers also spend the money to study market trends, reimbursement rates, and other factors that influence contract terms. 

In addition to the payer-favoring contract terms listed above, some payers retain the audacity to modify the contract anytime at their discretion, without requiring any provider input or approval. Payers may extend providers a 30-day notice to object to amendments in writing, but most healthcare organizations find this period far too short to respond in time. If the provider doesn’t meet this deadline, the amendment rolls right on out. 

Worse, in some cases, payers add stipulations that, should they decide to amend the contract, they are not obligated to notify the provider at all. 

These unbalanced terms must end. With payer contract management software identifying them, you marshal your best points to push back on.  

This capitulation must stop. With thorough payer contract knowledge, healthcare organizations can avoid denials, submit stronger prior authorizations, and win claim reimbursements without having to resubmit.  

The impact of payer contract management software on the overall revenue cycle

Healthcare organizations that implement this technology typically enjoy: 

1. Increased revenue via:

•  higher reimbursement rates and more favorable contract terms
•  underpayment identification and recovery
•  enables providers to maximize reimbursements by ensuring compliance with contract  terms

2. Improved efficiency via:

• centralization and automation of contract management saves time and reduces manual work
• streamlined claims processing and reduced denials when claims align with contract terms
• automated appeals processes for underpayments and denials

3. Enhanced visibility and analytics which:

•  provides comprehensive visibility into all payer contracts in one centralized system
•  enables data-driven contract negotiations using analytics on historical performance
•  allows modeling of different contract scenarios to assess financial impact

4. Reduced revenue leakage which:

•  flags payment variances and underpayments automatically 
•  ensures proper charge capture and coding to prevent underbilling
•  monitors compliance with contract terms to avoid missed revenue opportunities

5. Faster cash flow which:

•  accelerates the revenue cycle by reducing denials and payment delays
•  enables quicker identification and resolution of payment issues

6. Improved payer-provider relationships due to:

•  clearer communication about contract terms and expectations
•  better data to support collaborative negotiations

7. Strategic insights which:

•  identifies trends and opportunities to optimize reimbursement strategies
•  informs decisions on which payers and contracts are most financially beneficial

8. Regulatory compliance:

•  helps ensure adherence to complex regulatory requirements in contracts
•  keeps providers up-to-date on contract changes and renewals

By addressing contract vulnerabilities, payer contract management software can potentially boost a healthcare organization's revenue by millions of dollars annually while also improving operational efficiency and strategic decision-making throughout the revenue cycle. 

How payer contract management software limits denials

In addition to the above benefits, contract management software also curbs your denials by accurately capturing contract terms, including reimbursement rates, submission timeframes, and coverage details – the data points that trigger billing errors. Some contract management solutions incorporate automated claim checking features that validate claims against contract terms before submission, catching potential issues early. Real-time eligibility verification tools integrated into these systems help prevent denials due to lack of coverage or incorrect patient information, addressing one of the most common reasons for claim rejections. Additionally, the software's ability to automatically spot mismatches between ICD and CPT codes before claim submission further reduces denials caused by coding errors.

These systems also provide valuable payer-specific insights, allowing providers to tailor their claims submission process to each payer's preferences, thereby minimizing denial risks. By analyzing contract terms and historical denial data, contract management software enables providers to develop proactive strategies for denial prevention. It also ensures compliance with the latest regulations and payer requirements, reducing denials due to non-compliance issues. 

The performance tracking capabilities of these systems allow providers to identify areas where denials occur frequently, enabling targeted improvements. When denials do occur, the software streamlines the appeals process by providing quick access to relevant contract terms and historical data. Through these comprehensive features, contract management software significantly reduces denial rates, enhances revenue cycle performance, and ultimately helps healthcare providers receive payments more quickly and accurately.

Providers must initiate contracts

Payers should not be the only ones creating contracts. You, too, must have input in determining: 

• reimbursement rates and fees
• days the provider has to submit a claim after a service or visit
• days the payer has to reimburse the provider for covered services
• scope of services covered by the payer
• claim denial dispute procedures
• notice periods for renegotiation and termination

All of these should be negotiated fairly by both parties involved in the contract. 

But how does a provider know what’s fair?

Spreadsheets vs. payer contract management software

Even if you have a spreadsheet whiz in your office, this person is most likely prioritizing figures involved with payments and fees. 

Payer contracts contain a lot more revenue-impacting information than just the rates for services. Revenue leakage lurks in the fine print. The terms surrounding provider credentialing and the medical necessity there can also limit revenue. It takes sophisticated payer contract management software to review these details and deliver the insights you can take action on. Trying to get insights from spreadsheets takes hard work, and the product can be biased because it’s coming through just one person. 

The other drawbacks to using spreadsheets for contract management all threaten revenue. When you’re using Excel and Google Sheets, a staff member performs all updates. Should an error occur, spreadsheets can’t self-identify errors the way payer contract management software can. Spreadsheets also lack automatic notifications that alert your staff to expiration dates. Finally, payer contract management software involves more security features to keep your patient information safe. 

With payer restrictions tightening, prior authorizations piling up, and denial rates rising past 14%, providers must hold payers to the terms they have committed to.  

Contract management software and contract modeling software 

Contract modeling is an important feature within some contract management software solutions. 

Payer contract management software features an integrated system that can regulate contracts and reduce the time spent on administration and data entry tasks. 

Contract modeling, in contrast, has advanced data analytics capabilities. It can analyze historical claims, identify trends, and incorporate contract terms analysis to predict possible outcomes (models) that are necessary for optimizing future contract negotiations in real time.

The basic goals of payer contract management software are to:

• process claims promptly
• effectively manage fee schedules
•  track every contract's performance
• generate reports that advisors can use to improve future contracts

Contract modeling, meanwhile, aims to: 

• increase the accuracy and predictability of payer contracts  
• reduce the volume of manual labor required for contract creation, management, modeling, and analysis
• identify gaps that require rectification

What is healthcare contract modeling?

Healthcare contract modeling is a critical process that allows revenue cycle teams to assess the financial impact of proposed rate changes on their organization's revenue. It enables teams to evaluate whether a payer's suggested modifications will positively or negatively affect the organization's bottom line, and to what extent. Moreover, revenue cycle management staff can input their own preferred changes into the contract modeling system to identify the optimal combination of rates and terms for maximizing revenue. These systems are capable of processing an unlimited number of scenarios, providing a comprehensive view of potential outcomes.

When combined with contract management software's ability to analyze and rank payers based on contract performance, providers gain substantial bargaining power. They have payer performance and accurate rate change outcomes in black and white. This proactive and assertive approach to contract negotiations and renewals is crucial for protecting and enhancing an organization's revenue streams.

For many physician groups and management services organizations), contract modeling capabilities are integrated into their contract management software. This integration streamlines the payer contracting process by centralizing contract storage, eliminating time-consuming data collection, and facilitating eligibility verifications and good faith estimates. As a result, RCM staff can focus on more strategic tasks, improving overall efficiency.

Revenue cycle leaders increasingly recognize that meticulous management of payer contracts, coupled with robust, transparent negotiation strategies, is fundamental to their future success. This growing awareness is reflected in market projections: Grand View Market Research anticipates that the global healthcare contract management software market, currently valued at over one billion dollars, will experience a compound annual growth rate of 22.8% until 2028. By then, the market is expected to reach USD 4.59 billion, nearly quadrupling its current size. This rapid growth underscores the critical role that contract management software plays in optimizing healthcare revenue cycles.

You can model exactly how proposed payer changes will impact your revenue. Experiment with your own changes in unlimited scenarios. Take a quick tour of efficient contract modeling in action here: 

Steps to implementing a payer contract management system

Once you determine a robust payer contract management system is in your future, envision having a central repository of your many contracts. 

Use these steps to give your payer contract management system a firm foundation:

1.  Reach out to your payers and ask for your most recent contracts. With all contracts available, implement an automated system to store and track them.  
2. Review fee schedules and payments to determine each payer’s performance. Start with your most commonly billed services.
3. Review contracts for recent increases in reimbursements. When was the last time you got a raise or an increase in fees of 3 to 5% on any of them? 
4. Compare your reimbursements across payers for each code. How much do they vary? Which is the worst payer for each code? Which is the best?
5.  Pinpoint which payers contribute the most to your total revenue based on the covered patient population. 
6. Consider seeking renegotiations with payers who offer lower reimbursements,
7. Develop your goals for renegotiations. Do you aim to increase net yields? Raise reimbursement for a popular service?  Stipulate penalties for late payments or underpayments? 

Payer contract management software: critical features

As you evaluate payer contract management software vendors, press each one about how their products optimize reimbursement rates, track deadlines, and improve terms. Ask for examples of how their software succeeded in these goals for clients. Request referrals, of course. 

Most payer contract management software offer similar features. These include: 

Contract negotiation and monitoring

Make sure that the software can monitor contract compliance, such as checking that payments are made on time. It should also keep track of and alert you to crucial negotiations, including deadlines for contract reviews and revisions.

Contract forecasting

 Make it easier on yourself to negotiate contracts with robust net revenue forecasting, a feature that should appear in all contract management systems. 

Analytics

Contract management software should also contain a range of healthcare payer analytics. These insights can help providers evaluate each payer’s profitability for their organization. Use them to identify trends, evaluate payer performance, and develop strategies to increase profitability.

Contract workflow automation

One of the best advantages of payer contract management software over a spreadsheet system is its ability to remove the workload from already overburdened staff. It shoulders the manual and timeconsuming data entry, exception monitoring, and payer follow-up that staff struggles through. The best systems delegate tasks to staff members based on variables set up at implementation. This automation frees staff to focus on higher-value activities like patient interaction.

Recharge your revenue cycle team’s confidence and organization revenue with robust contract control 

MD Clarity can bring transparency to your entire revenue cycle, boosting your bottom line and improving the patient experience. RevFind’s payer contract management capabilities digitize and consolidate your contracts into one place. It helps you easily benchmark your reimbursements against national standards like Medicare.

RevFind compares every payment to contract terms. It automatically flags any discrepancies, notifying your staff immediately. Not only does it provide the contract insights you need to negotiate proactively, but it also supports you through the recovery process and helps identify the root cause to prevent future underpayments. Get a demo to see it in action.

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