Getting a claim right the first time is much less expensive than reworking it. Experian Health’s 2022 State of Claims survey illustrates most claims denials result from simple human errors. Automation and claim scrubbing software help lower the burden of denied claims. But payer contract management software offers one of the most critical strategies for optimizing revenue cycle. These tools help providers maximize reimbursements throughout the lifecycle of their payer contracts.
Experian Health client OrthoTennessee, which has an 86% successful appeals rate, recovers hundreds of thousands of dollars annually by conducting contract audits and recovering underpayments with these tools. This result could extrapolate across healthcare if providers consider implementing payer contract management software.
Understanding the financial impact of denial rates
Denial rates can significantly affect a healthcare provider’s revenue. One study showed these administrative complexities cause $265 billion in healthcare misspending annually. Preventing claims denials should be a high-priority issue for healthcare providers. It’s an untenable situation for cash-strapped healthcare providers, and by most accounts, the problem is getting worse.
Payer contract management software reduces denial rates. A well-managed contract ensures providers are reimbursed accurately and promptly, reducing denials due to billing errors or non-compliance.
Individual payer contracts stipulate how and how much a healthcare provider gets paid. In addition to critical payment terms, payer contracts contain:
- How many days a provider has to submit a claim
- How many days the payer will take to reimburse a correctly submitted claim
- The services and scope of coverage by payer
- Reimbursement rates for every covered service
- How to dispute a claim denial
- The term of the payer contract
- When to renegotiate or the notice period for a contract termination
Most of these reimbursement contracts allow payer amendments. Tricia Ibrahim, Director of Product Management, Contract Manager Suite, says, “Depending on how the contract is written, providers may receive very little notice of these changes. Without a way to systematically and efficiently monitor these agreements throughout the contract term, there is simply no way for a provider to ensure they’re paid properly.”
Better payer contract management can reduce denials and improve revenue collection by reducing the most common reasons for medical claim denials.
Proactive strategies for denial reduction
Proactive denial reduction correlates with a better bottom line. This effort entails a multi-faceted approach with two key elements at its core:
- Analyzing payer contracts for pitfalls
To mitigate denials effectively, healthcare providers must scrutinize payer contracts meticulously. By delving into the fine print, organizations can identify potential pitfalls and the sources of denials. Whether complex reimbursement terms, ambiguous language, or stringent coding requirements, a comprehensive contract analysis can unveil these challenges. - Crafting contract strategies for denial mitigation
With a deep understanding of contract nuances, providers can develop tailored strategies for denial mitigation. These strategies encompass streamlined claims submission and staff training. Additionally, organizations can engage in informed negotiations with payers to amend unfavorable reimbursement terms.
Through this fusion of contract analysis and proactive strategy development, providers can navigate the complex landscape of healthcare payer contracting with precision, ultimately reducing denials and bolstering financial stability.
Crafting comprehensive contract management strategies for denial mitigation
Developing proactive strategies within payer contract management is a critical component of denial reduction.
For example, when creating payer contracts in healthcare, providers must proactively negotiate advantageous terms for their organization. These negotiations should focus on fair reimbursement rates, reasonable timeframes for claims submission, and other favorable conditions that minimize the potential for denials.
Strategies should also encompass addressing ambiguities in healthcare payer contracting. These misunderstandings lead to disputes and denials. Clarifying any vague or unclear language within the agreement ensures all parties have a shared understanding of the terms and expectations.
Finally, to mitigate denials effectively, healthcare payer contracts should align seamlessly with billing and coding practices. These contracts must reflect current industry standards and guidelines to prevent discrepancies resulting in claim rejections.
Harnessing the power of payer contract management software in healthcare
Payer contract management software offers healthcare providers a powerful way to automate payer document analysis. A single provider can have 20 or more payer contracts to manage. From HMOs to PPOs, fee-for-service federal programs, third-party administrators, to ACOs and CINs—the payer list can be long. While a thorough analysis of healthcare payer contracting is essential to identify potential areas of improvement, it can be challenging to scrutinize all of these contract terms and conditions to mitigate future denial risks. But with the right software, this revenue cycle function can be a game-changer.
Payer contract management software can handle contract renewal and regulatory updates automatically, ensuring healthcare providers remain compliant. The software eliminates the hours spent manually reviewing data. Some of the benefits include:
- Centralizing contracts in one location
- Alerting significant milestones, such as contract renewals or changes
- Automating processes and workflows
- Linking contracts with provider procedures and complianc
OrthoTennessee Manager of Payer Strategy, Frances Thomas, uses Experian Health’s payer contract management software. She states, “The system gives us the information we need to be successful. They can’t really argue with you on that.”
The role of automation in error reduction
Healthcare runs on revenue. Automation is pivotal for reducing healthcare claims errors that tie up revenue in the denials process. Automation software streamlines workflows, reducing manual intervention and the likelihood of human errors. These tools can apply across the revenue cycle, including during the payer contract management process.
For example, Experian Health’s payer contract management software includes Contract Manager and Contract Analysis features that can automatically:
- Compare the expected payment with the actual reimbursement from payors
- Maintain and manage contract terms
- Pinpoint underpayments
- Audit claims
- Analyze claims data and the financial impact of potential changes to provider fee schedules
- Highlight bulk claims for appeal en masse
OrthoTennessee highlights the importance of the ability to handle claims in bulk. Thomas says, “We had over 600 claims for one day in the wrong network. I was able to take that bulk of claims and handle those—otherwise, I was going to have to sit there and go claim by claim. It’s a huge time saver to work smarter, not harder.”
Real-time verification and validation with automation
Automated systems revolutionize healthcare operations by offering real-time verification and validation capabilities. Automation technology streamlines the billing process and minimizes errors that can lead to claim denials. It enhances efficiency and precision, allowing healthcare staff to allocate more time to patient care.
As providers embrace automation, they can expect increased accuracy and financial stability. RevCycleIntelligence estimates the healthcare industry could save nearly 41%, or nearly $25 billion, of the $60 billion they spend annually by fully automating administrative transactions. But payers also stand to benefit; McKinsey says administrative automation could shave 30% off insurance claims processing costs.
Seamless integration of automation with payer contracts
Integrating automation tools with payer contracts in healthcare enhances efficiency. Integration ensures contract terms are consistently applied throughout the claims lifecycle, reducing denials. Interoperability between these platforms also improves the payer-provider relationship by increasing communication and streamlining processes.
Cross-platform integration creates two-way accountability that’s a win/win for both provider and payer. It’s a transformative step in healthcare revenue cycle management that could:
- Streamline claims submission, verification, and adjudication
- Continuously monitor claims for contract adherence and correct problems before they lead to denials
- Reduce human errors
- Apply advanced analytics to identify trends and patterns
- Improve contract negotiations with data-driven decision-making
- Lower administrative costs
Navigating challenges and embracing payer contract management software
Healthcare providers face numerous challenges in revenue cycle management, especially when handling intricate payer contracts and the need for standardized handling of these documents. These challenges create scenarios where providers underbill or are underpaid for services, in addition to tying up revenue in denials management.
Becker’s Hospital Review reports providers lose up to 3% of their revenue from underpayments. Plus, the insurance industry isn’t immune to making mistakes; the AMA says the claims processing error rate of public and private payers is more than 19%.
By harnessing the power of technology, healthcare providers can streamline complex payer contracts and standardize how providers handle these agreements. For example:
- To expedite negotiations, modeling tools within payer contract management software offer claim scenarios that help providers negotiate better rates from payers.
- These systems provide real-time feedback through smart log messages, enhancing staff training and refining registration best practices.
Most healthcare organizations lack the time and resources to closely monitor payer contracts. When these agreements are on auto-renewal, it’s easy to forget their importance. Payer contract management software helps these organizations wring the maximum amount out of these revenue streams.
Embracing Experian Health’s payer Contract Management software
Experian Health’s healthcare payer contract management software offers a comprehensive contract management solution that can substantially lower denial rates. By adopting this software, providers can maximize revenue potential and streamline their revenue cycle. Importantly, healthcare providers can implement payer contract management tools without adding staff or conducting major process improvements. This software is the one tool organizations need to ensure they don’t leave revenue on the table. Learn more or contact us to speak to our experts.
