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Payer contract management is important in handling the relationship between payer organizations and healthcare providers.
Read on to discover what it is, and how contract management software can help.
But before we dive into the benefits of payer contract management software and how to choose the right solution, who is a payer, and what is payer contract management?
Who is a ‘payer’?
A ‘payer’ refers to an entity or business that pays for services rendered by a healthcare provider. This payer could refer to a commercial insurance company, government program, employer, or patient.
Payers are usually used by practicing physicians, who may come into contact with a variety of clauses when negotiating the terms and conditions of payment for services. Physicians might also contract with third-party administrators or intermediary contracting entities, including other healthcare providers who have assumed financial risk from a payer.
What is payer contract management?
Healthcare organizations and payer organizations all require agreements to be made over the terms and conditions for medical services, coverage, and payment. In fact, managing payer contracts is one of the primary challenges of healthcare providers.
Payer contract management is the process of managing these contracts and tracking the difference between revenue generation for each individual payer. Without effective payer contract management, healthcare providers are limited in their ability to see if they are being paid correctly.
The goal of payer contract management is to standardize contracts and make them as consistent as possible, while maintaining beneficial terms.
Most standard contract management best practices apply to payer contracts. However, there are a few notable differences between payer contracts and other types of business contracts, including that:
- Many payers retain the right to change reimbursement rates at will - this means that both providers and payers must stick to strict reimbursement stipulations
- Healthcare providers are often required to negotiate competitive terms with health plans and providers
- Attribution is often treated as a tick-box exercise, which makes it difficult to focus on managing patients and hitting targets for full payment
This means that those working with payer contracts, usually as part of a healthcare provider contract management process, have a few extra things to consider when handling these complex contracts. Let’s explore those in more detail now.
Payer contract management tips for 2024
1. Assess your current payer mix
If you’re starting from scratch, it’s important to determine the current mix of payers your organization has and which ones are the most important to your organization. Analyzing your payer mix enables you to determine which of these payers you should prioritize in contracting efforts.
Consider your past relationship with them, the terms of their existing contract, and their overall track record. This can derisk your contracts further down the line, as you know what to expect from the partnership and may reduce the chance of disruptions and contractual disputes.
2. Keep contract terms clear
Payer contracts are value-based contracts, which means they often come with confusing terms, so it’s best to be clear about those terms from the get-go.
For example, payer contracts may extend remuneration based on factors such as bonus payments, bundled payments, or a more risk-based attribution. While others could rely on withholds, meaning that a set portion of expected payments are held and only released when certain conditions are met.
All these moving parts mean that it’s fairly easy for a payment to go wrong, no payer is going to tell you you mistakenly underpaid them! Consistency is key here, so using standardized or automated contract templates for your payer contract management will ensure you’re able to track and keep on top of terms.
3. Track and monitor compliance
The healthcare industry is hot on compliance, as the regulatory landscape is complex and ever-changing. As a result, healthcare providers and organizations have to deal with multiple stakeholders beyond just payers.
From regulatory requirements and privacy laws to provider-specific reimbursement structures and shifting payment models, payer contract management is complex. It’s important to monitor everything from delivery timelines to quality control and other contractual obligations.
If you don’t have a set source of truth for this information, it can be difficult to track and monitor your compliance. If you want to speed up this process, you’ll need a centralized contract repository and fully searchable contracts.
Want to know where to get started? Check out this simple guide to contract compliance.
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4. Be prepared for renewals
As with monitoring compliance, it’s also incredibly important to take a proactive approach towards payer contract renewals. This allows you to negotiate more favorable terms, and revisit existing clauses and conditions before the contract terminates.
Payer contracts typically come with expiration dates meaning they can be renewed, renegotiated, or terminated. Auto-renew contracts can be problematic if payors are changing contract terms (especially rates) and changes are not transparent to a physician or healthcare organization.
A proactive approach involves setting up contract reminders over time to give you more time to make strategic decisions on how to approach a renewal.
Learn more about how to take charge of your contract renewals in this guide to renewal management.
5. Invest in payer contract management software
Investing in contract management (CLM) software could be transformative for your payer contracts. A solution like Juro can allow healthcare organizations to create, agree, execute, and manage payer contracts up to 10x faster than traditional tools. Healthcare organizations using CLM can benefit from:
- Full visibility into contract data
- Reduced contract administration
- Faster and more efficient workflows
- Opportunities to identify cost savings
Juro’s AI-enabled contract automation platform empowers organizations to accelerate the creation, execution, and management of contracts. When it comes to payer contract management, software like Juro mitigates the risk of human error and missed renewals, helping you to be compliant.
You can find out more by hitting the banner below.
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