Real-Time Visibility into Contract Performance: Why & How to Move Away from Manual Review 

The typical payer contract contains 1,000 stipulations, each using complex legal language to cover aspects of the provider-payer relationship. 

Toss that on a staff member’s desk for a contract performance review. Watch that reaction. 

Your staff member faces aggregating data from multiple sources, including electronic health records (EHRs), billing systems, and payer portals–a time-consuming, error-prone process. They manage this data in complex spreadsheets, which are difficult to update consistently. The next step is choosing the right manual calculations to compare actual reimbursements against contracted rates. Finally, they juggle multiple spreadsheets to cross-reference complex, evolving regulatory requirements and payer restrictions with contract terms to ensure compliance with government mandates and payer changes. 

It’s easy to see how this process can take weeks or more. And the individual carrying out this task won’t be excited to take it on again in just another few months. Imagine if they have over a dozen contracts on which to perform this operation. 

You can see how quickly this payer contract review recedes into history. Revenue cycle leaders, and healthcare management services organizations (MSOs) increasingly recognize the critical need for real-time visibility into payer contract performance to succeed in today's challenging healthcare landscape. Data, analytics, and insights that are months old risk lost revenue, missed opportunities, and inaccurate acquisition valuations. 

Here, you can review how modernizing via the addition of real-time visibility into contract performance empowers your healthcare organization to stand up to payer shenanigans and gain confidence in your decisions and demands.

What is real-time visibility into contract performance?

Real-time visibility into contract performance in healthcare is the ability to monitor, analyze, and act upon payer contract-related data and metrics as they occur. This capability is crucial for healthcare organizations to optimize revenue cycle management, ensure compliance, and improve financial performance.

Real-time contract performance monitoring systems often integrate with existing healthcare IT infrastructure to provide dashboards, alerts, and analytics that enable quick decision-making and corrective actions.

Why real-time visibility into contract performance is important

Real-time visibility enables healthcare providers to track key performance indicators (KPIs) such as reimbursement rates, denial rates, and contract compliance in real time. This visibility allows for immediate identification of issues like:

• underpayments
• contract violations 
• missed opportunities for optimization 

Organizations like the Healthcare Financial Management Association (HFMA) and McKinsey emphasize that such visibility is essential for proactive management of payer relationships and revenue cycle optimization. This level of insight helps healthcare organizations maximize revenue, reduce leakage, ensure regulatory compliance, and strengthen their negotiating position with payers.

Real-time visibility also brings in the modernization that impresses buyers, investors, and lenders.  

Of the dominant U.S. industries, healthcare is one of the last to scrutinize contracts. Manufacturing, construction, financial services have been unleashing their attorneys on these documents for decades, even centuries. On the other hand, healthcare organizations' legal and financial departments (if they even exist) have been stuffing payer contracts into drawers, sacrificing potential profit to their prime directive of providing care.   

But now demographic shifts and digital transformation opportunities have sparked the consolidation that turned physician groups and practices into investment targets. Suddenly physician groups and practices need to have robust profit and loss statements to compete for the highest investor or lender dollar. To remain viable, revenue cycle leaders and CFOs must optimize revenue and contain costs to collect. Proactive contract management and performance monitoring lead to improved reimbursements and crystal clear data on real payer value. Providers who can gather this critical information in real-time can act in a timely and nimble manner to optimize revenue, eventually improving EBITDA and gaining a competitive edge. 

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

‍The downsides of manual contract performance tracking

If real-time visibility into contract performance appeals to you, know that it does take software to find, compile, and analyze data from many different sources within minutes. This means accessing real-time insights will require an investment. Still, this list of the negatives of manual contract performance tracking will convey how worthwhile that investment will  be. 

Manual contract performance tracking leads to :

Delayed insights and reactive management

Periodic reports punctuated by long periods of time delay insights leading to a reactive rather than proactive management of contract performance issues. Problems may only be identified after they've already impacted revenue or compliance. At that point, penalties may have accrued. 

Increased risk of errors

 Manual processes are proven prone to human error, with estimates suggesting that up to 90% of manual spreadsheets contain mistakes. Errors lead to inaccurate financial forecasting. No RCM leader wants to make decisions based on flawed data. 

Limited ability to optimize revenue:  

Without real-time insights, providers miss opportunities to address underpayments promptly. They might not identify trends in denials or contract violations until it's past payer deadlines to take corrective action. 

Inefficient resource allocation 

Manual tracking of contract performance is time-consuming and resource-intensive. Staff may spend significant time gathering and analyzing data rather than focusing on strategic initiatives or patient care. The AI and automation in contract performance software alleviates staff workloads significantly. 

Reduced negotiating power: 

Without up-to-date performance data, providers enter contract negotiations at a disadvantage. They lack the real-time insights needed to advocate effectively for more favorable terms based on the most accurate, current performance metrics.

Compliance risks

 Manual processes make it challenging to ensure ongoing compliance with contract terms and regulatory requirements. This increases the risk of audits, financial penalties, and potential legal issues.

Difficulty in scaling operations 

As the volume of contracts and complexity of agreements grow, manual processes become increasingly unwieldy. This can hinder a provider's ability to scale their operations efficiently. Software has an almost unlimited capability to scale. 

Limited data-driven decision-making

Providers lacking solid data may rely more on intuition or outdated information when making strategic decisions about resource allocation, service offerings, or growth opportunities. Poor decisions lead to revenue deterioration. 

Challenges in performance tracking

Without software crunching the numbers, providers may struggle to accurately track key performance indicators (KPIs) and identify areas for improvement in their contract management processes. Staff find it hard enough to even get to and request current contracts. 

Reduced financial stability 

The cumulative effect of these challenges can lead to reduced financial stability. Providers may experience cash flow issues, revenue leakage, and increased administrative costs associated with manual contract management.

In the absence of real-time visibility software, providers typically rely on a combination of manual processes, periodic reporting, and basic analytics tools. While these methods can provide some insights, they fall short of the comprehensive, timely, and actionable intelligence that real-time visibility solutions offer.

6 advantages providers gain from real-time visibility  

Real-time visibility into contract performance offers several significant benefits for healthcare organizations:

1. Improved revenue capture following fast underpayment identification

Quickly identifying and notifying payers about underpayments, denials, and other revenue leakage issues helps prevent payers from claiming you missed a deadline, an excuse they deploy all too often. Further, real-time data allows organizations to unleash prompt corrective action to reduce the gap between claim submission and payment.

2. A stronger negotiation position that improves payer rates and terms

Up-to-date performance metrics provide leverage in payer contract negotiations so that executives can confidently advocate for more favorable terms based on actual data. It takes real-time data to show payers you have robust insights, limiting room for their dispute. 

When healthcare organizations build detailed profiles of major payers, ranking them on the basis of performance, they can inform lower performers of their lower value, and even threaten termination, should data warrant it.

3. Accurate, current location valuation

Real-time insights are particularly critical for physician groups and management services organizations acquiring new locations. Contract performance measured three or six months ago may render inaccurate figures, failing to add in the most recent acquisitions to P&Ls. These inaccuracies can lead to poor deals.

On the other hand, dynamic forecasting models incorporate the latest trends in patient volumes, payer mix, and service utilization. Real-time data lets leaders more accurately forecast cash flow, so they can be more discerning about offers coming in or opportunities the location should capture. 

4. Enhanced compliance

Government regulations and payer restrictions both change throughout the year. Real-time monitoring of contract performance helps ensure compliance with these moving targets. Real-time reporting reduces the risk of audits and penalties from both the government and insurers. By adhering to the most recent payer and federal changes, you minimize the risk of legal disputes and financial penalties.

5. Data-driven decision making

Opportunities and crises have their ways of coming up quickly. Real-time analytics provides actionable insights that keep you nimble. Telling managers and peers that your analysis of the last few weeks’ data portends an exciting opportunity or an impending crisis gets attention and respect. 

6. Proactive risk management

Real-time monitoring and alerts enable organizations to identify and address potential issues before they escalate. By enabling early identification of issues like trends in denials and underpayments you can put a quick end to any failures on your end. This data lets you examine and rectify root causes, avoiding expensive remediations. 

Implementing real-time contract performance visibility 

Due to the amount and complexity of data as well as the number of payer contracts most physician groups and MSOs handle, the only way to get real-time data and insights into contract performance is by using software powered by automation and AI. 

Follow these steps to optimize your ROI on contract performance software:

1. Evaluate current contract performance processes: Assess current contract management workflows to identify inefficiencies and areas ripe for enhancement. Document these. If you are starting from zero, rest assured you have plenty of company. 

2. Set clear goals: Establish clear, measurable objectives. Most organizations strive to: 

• identify underpayments and denials
• improve claim accuracy rates
• improve contract rates and terms
• boost operational efficiency
• strengthen risk management protocols

3. Select the right solution: When you evaluate your options, research various AI technologies available and their capabilities. Carefully choose a software platform that not only meets your organization's specific needs but also integrates smoothly with your existing technology. Identify specific areas where AI can bring the most value, such as optimizing operations, enhancing customer engagement, or improving decision-making processes. 

To bring your staff along in this initiative, create comprehensive training programs and ongoing support. Lean on your solution provider’s customer service team as much as possible to ramp up staff.

4. Data readiness: Ensure all contract-related data is accurately prepared, cleaned, and seamlessly integrated into the chosen AI system for optimal performance. Again, lean on your solution provider for specific guidance in this effort. 

5. Iterative optimization: Implement a robust framework for continuous monitoring and refinement, regularly analyzing performance metrics and incorporating user feedback to drive ongoing improvements.

KPIs for real-time visibility contract performance

Once you implement real-time contract performance management, you can use concrete, real-time data to prove your hunches to peers and decision-makers. Still, it’s best to complement your up-to-the-minute data by crunching it through your key performance indicators. 

Use these to dive into healthcare contract performance: 

• Payment accuracy: Monitoring the accuracy of payments received compared to contracted rates. This helps identify underpayments, overpayments, and discrepancies in real time.
• Clean claims ratio: The percentage of claims that pass all edits without manual intervention. The benchmark is 95% or higher. Lower values indicate issues that need investigation. 
• First-pass resolution rate: The percentage of claims paid on first submission, indicating overall revenue cycle management effectiveness.
• Payment variance: Comparing actual payments received against contracted rates, highlighting discrepancies in real-time.
• Net collection rate: The percentage of expected revenue collected within bills more than 120 days. The benchmark is over 95%.
• Gross collection rate: total reimbursements in proportion to total charges.
• Denied claims rates: Tracking denial rates by payer and reason, allowing for quick identification of problematic areas.
• Days in accounts receivable (A/R): Monitoring the average time it takes to collect payments.
• Financial impact metrics: Real-time analysis of revenue leakage, projected vs. actual revenue by contract, and payer mix impact on overall revenue.
• Operational efficiency metrics: Tracking time to contract execution, approval process bottlenecks, and contract template usage effectiveness.

These KPIs, when monitored in real-time through specialized software solutions, allow healthcare organizations to proactively manage their contracts, optimize revenue capture, ensure compliance, and make data-driven decisions to improve overall financial performance.

Overcoming barriers to adoption of automated contract performance software

Despite its clear benefits, the adoption of automated contract performance software faces several notable barriers in healthcare organizations. One of the primary challenges is 

First, resistance to change can feel intractable. Today’s healthcare staff have heavy workloads mostly entrenched in traditional, manual processes. This resistance is often compounded by the complexity of implementing new software, which can be time-consuming and disruptive to existing workflows. Data migration from legacy systems presents another significant hurdle, particularly for organizations managing large volumes of contracts.

Organizations may also harbor data security concerns, especially regarding cloud-based systems. The lack of standardization across departments and the need for customized solutions add layers of complexity. Gaining stakeholder buy-in and ensuring compliance with regulatory requirements pose additional challenges. Furthermore, overcoming data silos, addressing fears of job displacement, and dealing with technical limitations of existing IT infrastructure are significant obstacles. 

These barriers collectively highlight the multifaceted challenges healthcare organizations face when considering the adoption of automated contract performance software, despite its potential to greatly enhance efficiency and accuracy in contract management.

To overcome resistance to change when adopting new software, organizations should employ a multifaceted approach, using:

• clear and frequent communication that explains the reasons for the change 
• sharing of the new software’s benefits and its impact on employees' work
• early employee engagement that allows participation in decision-making 
• training and ongoing support
• direct answers to concerns 
• a safe environment for questions and doubts 
• incremental change using phased roll-outs and pilot testing
• conscription of early adopters and champions
• sharing of successful stories and benefits 
• incentives and recognition for adopting and mastering the new system 

These strategies help organizations can effectively manage the human aspects of change and increase the likelihood of successful software adoption.

Get real-time visibility into into your payers’ contract performance with MD Clarity

In an era of thin margins and value-based care, real-time visibility into payer contract performance is no longer a luxury—it's a necessity for healthcare organizations to thrive. By leveraging technology that prioritizes real-time insights and focusing on KPIs, executives can optimize revenue, negotiate effectively with payers, and ensure long-term financial sustainability.

MD Clarity's RevFind contract performance solution offers comprehensive contract management capabilities. It meticulously evaluates each payment against contractual terms, automatically identifying and alerting staff to any discrepancies. The system not only equips users with critical insights for proactive contract negotiations but also facilitates the recovery process for underpayments. Furthermore, it assists in pinpointing root causes of payment issues, helping prevent future revenue leakage. RevFind also equips managed care contracting teams with revenue modeling capabilities to assess the financial impact of proposed payer rate adjustments. Provider teams can model their own changes as well, spinning up unlimited scenarios to simulate the revenue implications of rate and term combinations. The insights gained from these models strengthen the team's negotiating position and help prevent the proliferation of unfavorable contract modifications.

Get a demo to see how RevFind can improve your revenue capture and empower your contract negotiations with accurate data. 

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