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Why is Managed Care Contracting most essential to your revenue stream?

Contract language and reimbursement rates are the driving force behind a payer’s payment structure. Charge levels, charge capture, clinical coding, as well as billing, payment posting, and appeal processes affect overall reimbursement. Additionally, aging managed care contracts may lack mechanisms that allow for appropriate reimbursement for new services, new locations and chargemaster increases.

What Do These Contracts Include?

A lot of legal and financial mumbo jumbo! Some key points:

  • Reimbursement rates – How much the insurance company will pay the provider for different services
  • Billing procedures – Rules for how and when providers submit claims
  • Utilization review – The insurance company can review which services and treatments are “medically necessary”
  • Quality metrics – Providers may need to report performance data on care quality
  • Referral processes – Rules for referring patients to specialists


You get the idea – insurance companies leverage these contracts to keep providers in check!

Monitoring Contracts Once They’re Signed

Phew, they finally agreed on terms! But managed care doesn’t stop there – insurers watch those contracts closely:

  • Data reporting – Providers must share utilization data, quality metrics, member complaints, etc. This allows payers to monitor spending and care.
  • Auditing – Insurers can do audits with little notice to ensure compliance and proper billing. No fudging the codes to get higher payments!
  • Oversight committees – Doctors and insurers form committees to review utilization data and referrals. This helps coordinate care and catch any overuse.

Changing Contracts When Necessary

Contracts need to evolve based on new regulations, technology, costs trends, etc. So amendments and changes happen by:

  • Renegotiation – Big updates can happen annually or every couple years. This modifies rates, targets, incentives, and more.
  • Amendments – Smaller changes happen as needed, often to payment rates, networks, reporting, etc. These don’t require redoing whole 200-page documents!

Flexibility allows the terms and tools to stay up-to-date. Providers can also enter or leave networks when contracts expire or changes happen.

A few quick ways to best monitor your processes, which SHP does for you as a client:

  • Prepare a matrix of all existing agreements and reimbursement rates to determine average discounts given MCO contract portfolio.
  • Review service lines in an attempt to include all components in the final agreement.
  • Review claim dataset to identify top payers and the most impactful agreements.
  • Review payer access to ensure discount given is commensurate with level of steerage.
  • Prepare a detailed grid of terms to be addressed during negotiation and summary of top issues.
  • Perform reimbursement analysis across the spectrum of payers and model against new contract offerings.

Other important steps that SHP tackles includes:

  • Recommendations for contracting actions based upon data analysis, payer penetration and market knowledge.
  • Request copies of current payer contracts and reimbursement rates.
  • Perform audit of current and annual participation status in various payer plans.
  • Recommend strategic contracting strategy.
  • Negotiate contracts and reimbursement rates as defined by the contracting strategy and approved by Client.
  • Prepare matrix of significant contract language.
  • Obtain data downloads for the last 12 months of claims.
  • Analyze paid claims data by payer in order to determine percentage of Medicare allowed or other applicable base line.
  • Summarize the data and compare the results to market rates.

How can SHP help?

Our ongoing support is intended to emulate the use of an internal managed care department for the health system. Typically, we maintain payer relationships and initiate any contracting discussions. The client can choose the degree of involvement. Typically SHP usually conducts payer negotiations directly with the payer, and then informs the client as to outcomes, recommendations, and next steps. After that, SHP typically maintains all current agreements and owns the process of validating contract performance and initiating negotiations/re-negotiations.

Contact us to learn more and receive a quote.

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