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How To Maximize Performance in Payer Contracts

by | Dec 9, 2021


What Is Payer Contracting?

Understand Your Payer Contract and its Clauses

Unilateral Amendments

Fee Schedule and Performance Programs

Network Requirements

Maximize Reimbursement with a Payer Contract Management Plan

Hire a payer contract manager

Use payer contract management software

Healthcare continues to undergo an industry-wide shift toward value-based care (VBC), and groups and independent practices alike seek ways to incorporate VBC into their business models. Consequently, more and more providers are searching for ways to maximize their performance in payer contracts. 

Achieving optimum performance within payer contracts – also known as payer contract management – is one of the most important things healthcare organizations can do to both increase financial reimbursements and decrease financial risk.  

While optimal performance in value-based healthcare contracting is a process that takes time, it can be achieved when taking the right steps. These steps include: 

  1. Gaining  an understanding of how payer contracting works,  
  2. Learning the specifics of your healthcare organization’s particular payer contract, and 
  3. Leveraging tools and best practices for success in value-based care. 

What Is Payer Contracting?  

In short, payer contracting – also known as value-based healthcare payer contracting – refers to (in this case) the contract arrangement that lays out how providers are reimbursed for providing care.  

In other words, payer contracts, “define and explain a provider’s reimbursement arrangement for delivering healthcare services to patients covered by a specific health plan,” according to Xtelligent Healthcare Media. “The contracts cover everything from reimbursement rates and provider networks to medical necessity and provider credentialing.” 

It goes without saying that payer contracts are a central component of any healthcare organization, medical practice, or physician organization. These contracts dictate, or at least influence, how practices document visits, bill for services, collect certain patient health information (PHI), report population health metrics, and provide care for their patient base in general. 

While healthcare payer contracts have always been a crucial piece of providers’ business models, the advent and increasing adoption of value-based care are causing them to become even more important.  

As this shift to VBC places more of an emphasis on quality of care (versus simply the quantity of services performed) at the same time is payer contracting shifting – with more contracts tying reimbursement to patient outcomes.  

Understand Your Payer Contract and its Clauses 

It’s no secret that healthcare professionals are, to be frank, very busy and incredibly stressed. Between seeing patients, documenting visits, tending to administrative duties, and much more, there are hardly enough hours in the day for many workers in healthcare. 

For many, this means that taking the time to unpack and understand a complex and lengthy value-based payer contract is simply out of the question. Moreover, the lengthy and complicated nature of many payer contracts, generated from a complex system involving detailed legal requirements, and different agreements with many providers, makes this even more challenging. 

But whether your organization is negotiating, renegotiating, or simply seeking to better understand its healthcare payer contract, educating leadership and staff on your contract can pay reimbursement dividends in the long run. If practice staff understand the rules, they’re more likely to perform better. So, what are some payer contract terms every healthcare professional should know? 

Unilateral Amendments

Unilateral amendment is a term every provider should know before negotiating or reviewing a healthcare payer contract as unilateral amendment clauses can have the most impact.  

Unilateral amendments are clauses that allow the payer to reserve the right to make unilateral changes – that is, changes enacted with or without the provider’s agreement or input – in the middle of the contract term. As one might expect, these clauses tend to benefit payers more than providers. 

Keep an eye out for unilateral amendments in payer contract language. According to Gil Weber, MBA and practice management consultant, unilateral amendments are some of “the most dangerous provision[s] … in managed care contracts” for care providers, due to the discretion they give to payers. 

Fee Schedule and Performance Programs

The fee schedule is the level of reimbursement and where the rubber meets the road for healthcare providers as far as payer contracts are concerned – and for that reason, fee schedules (also known as reimbursement policies) merit special attention. Additionally, many payers offer incentives – or performance programs – where additional reimbursement is available for meeting certain benchmarks or closing certain patient gaps.  

The fee schedule is the negotiated rate at which physicians and practices are reimbursed for services rendered. To avoid leaving money on the table, be particularly careful when reviewing these clauses. Following the requirements in any incentive programs and fee schedules as closely as possible will ensure maximum reimbursement, and minimal financial risk/losses. 

Network Requirements

Amid the transition to value-based healthcare payer contracting, network requirements are increasing in importance. Network requirements refer to stipulations in payer contracts about which networks providers can operate within. Which physicians and entities are – and aren’t – allowed to be part of the network often depends on things like credentialing and data management. 

The goal of network requirements is to make it easier to track and manage care, in order to determine care value more easily. 

Maximize Reimbursement with a Payer Contract Management Plan 

While researching and understanding value-based healthcare payer contracting can be laborious and time-intensive, it truly is critical to ensure the timely and correct reimbursement that reduces the chance of claims being denied, thus maximizing reimbursement. Understanding the contract is a preface to performing well within it – and adequate performance within payer contracts is key for the health of both patients and the practice. 

Of course, doing all of this is easier said than done. Indeed, many healthcare organizations have and continue to shy away from payer contract optimization – simply due to its daunting nature, and the pressing nature of other priorities. But luckily, payer contract management systems and tools exist to help busy healthcare professionals stay on top of their payer contract performance. 

Payer contract management refers to leveraging workflow policies, software programs, and other tools and systems to ensure that what is necessary for proper reimbursement within payer contracts is handled properly. For example, documents are well stored, and progress is tracked. 

In short, payer contract management refers to a host of efforts toward improved performance within contracts – with increased revenue as a result. Such initiatives can take many forms. 

Hire a payer contract manager

Payer contract managers bring a blend of legal and healthcare expertise to both negotiate and interpret payer contract terms. Contract contents are then translated into directives staff can follow which helps a healthcare establishment reap more reimbursement benefits in the long term.  

While hiring a payer contract manager is an ideal way to go about managing your payer contracts, be aware that it can be expensive: according to Glassdoor, payer contract manager salaries average north of $70,000 yearly. A director of managed care contracts (also effective in payer contract management) comes with a similar salary. Recruitment of such expertise tends to happen in larger healthcare organizations such as hospitals and may not be cost-effective for smaller medical practices or groups. 

Use payer contract management software

With healthcare being no exception to the digital revolution, software has emerged to assist with payer contract management. Some of the most powerful examples of this are found in healthcare dashboards. By tracking and displaying how your organization is performing in key metrics – all in real-time, and without laborious reporting – your practice can identify and correct trends in areas and KPIs (Key Performance Indicators) for increased reimbursement. 

Medical Advantage Can Help 

Why not leverage a powerful combination of both techniques to maximize your organization’s performance in payer contracts? Medical Advantage’s team of expert consultants holds a unique blend of healthcare and IT backgrounds – as well as deep expertise in a variety of payer contract negotiation and management methods – to help your organization meet its goals. For more information, contact one of our consultants today


  • Dyana Gebauer

    accounts. She began her career at Medical Advantage specializing in communications, and since then has been an integral part of the organization’s success. Today, she oversees the Account Management Department at iHealthSpot. ​

    Prior to Medical Advantage Dyana worked a...

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