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All Payers are not Equal

From the very transparent CMS, to commercial payers who often keep you in the dark when it comes to payment, all payers are not created equal. The approach you take to obtain contracts successfully for one payer may not work for others, so it’s important that you validate your process. Are you collecting contracts? Are you negotiating? Different payers have different channels, and understanding the best one for each payer is key. As you get more familiar with working with payers, you will begin to see patterns and trends that will make you more effective. 

At Rivet, we have a wealth of real-world examples from our team who know the process of collecting payer contracts first-hand. When looking at just three of the largest US payers, we have seen very different contract collection systems. For instance, one major payer requires you to submit a request through their online portal for participating provider agreements, while another major payer requires a faxed, signed letter stating business case for provider agreement request. And yet another major payer requires a phone call to a specific department. This variation in channels illustrates how diverse the approach to collecting contracts can be between payers.

Contracting for Different Networks

Along with navigating the different channels for obtaining contracts comes the need to understand how contracts are structured. Many times contracts can cover more than one network (i.e.. Commercial (PPO, HMO, POS), Medicare Advantage, Managed Care (Medicaid)). As a result, it’s important that you make yourself aware of how the payer operates with those products. Each payer will treat these contracts differently, so becoming familiar with the language used will be helpful in navigating these contracts. For example, one major payer might have a blanket contract that is in compliance with CMS guidelines, while another major payer has a contract section for commercial payers that overrides Medicare Advantage patients. 

Contract Terminology

Once you have collected and compiled your contracts, what do you do with them? To put it simply, read through them! When reading, it is helpful to make yourself aware of these common clauses, terms, and phrases that you should watch out for to aid in your understanding of how they can be advantageous to your practice. 

  1. Timely filing 

    This refers to how quickly you must bill your payers. If you do not bill them within a certain time window the payer does not have to pay the bill.   
  2. Change notification period

    If you would like to make changes to a contract you must do so by letting the payer know before the expiration/renewal of the contract. 
  3. Termination clause (with/without clause)

    This clause allows either party—you or the payer—to end the contract for any reason. This type of clause sets a certain period of time that must pass under the contract before either party can initiate a termination.
  4. Clean claim payment window and interest

    Many states have statutes in place stating that if there is no denial or rejections of a claim a payer must adjudicate it in a timely manner or else the payer will accrue interest (12%, 18% annually). 
  5. Lesser-of clause (pricing optimization)

    This approach will ensure that your CPT codes are above your payer contracted rates.
  6. Notification requirements (mail notification, online notification, email)

    A blanket statement at the end of the contract stating that the payer has the ability to edit or override any component of the contract as long as they notify you. 

Understanding Reimbursement Actually Matters

Knowing how your contracts are constructed, what your baselines are, how your fee schedule has evolved, and what all of that information might mean for your practice can be significant when considering contract analysis. For instance, we know that a lot of contracts are based on Medicare and sometimes there are fixed Medicare years. However, oftentimes your fee schedule will get updated shortly after Medicare pushes a new fee schedule. If your contacts are structured so that your reimbursement is a percentage of current year, you may not actually know that your contracted rates are changing, just because Medicare is changing. 

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CMS National Payment amount 2019, 2020, Non-Facility place of service source:https://www.cms.gov/apps/physician-fee-schedule/search

Terms Can Lead to Unwelcome Volatility 

Another key to understanding reimbursement is knowing how your fee schedule is constructed. If a payer states they are %/conversion factor from current or fixed year Medicare, you would likely be aware of the baseline. However, if the payer states they are a % of “market fee schedule” or “[payer] RVU” or “[payer proprietary schedule]” then you have a lot more to understand. When you are going off a % of a “market fee schedule” or their proprietary fee schedule, and a payer states that they can periodically update the fee schedule, that may be cause for alarm. In this instance, payers can slash reimbursement for a code because it is part of the market fee schedule, and when that changes, your reimbursement changes. Depending on your agreement, some payers will not even have to let you know about these types of changes. 

Measuring Against a Common Baseline

After gathering contracts and obtaining better knowledge regarding what they contain, how can you start to align good payers? CMS is a great uniform baseline to compare your payers. We recommend trying to cluster by similar product/network (commercial vs. Medicare advantage) to get a clear understanding of good/bad schedules.  

Screen Shot 2020-05-07 at 10.08.20 AMWhen it comes to payer contracts and fee schedules, knowledge is power. For more resources on compiling and understanding payer contracts: 

Watch the full webinar
Article: 4 Steps for Strategic Payer Contracting
Article: Making Use of Payer Contracts and Fee Schedules