Amid the complexity of policy and regulation, evolving reimbursement models, and diverse stakeholder interests, health payers face a formidable task: managing provider contracts effectively.
Managing health plan provider contracts requires extreme precision and accuracy not only to comply with the intricate web of healthcare policies and regulations and ensure revenue, but also to optimize provider networks to guarantee member access to comprehensive, affordable services.
Equally important is the need for more trust and transparency within this process. Providers should feel empowered to better understand reimbursement rates and how claims are priced. This is tremendously important as the industry manages shifting regulations and priorities.
Needless to say, managing all the nuances of provider contracts is no small feat. After all, 98% of providers participate in Medicare alone, and together, Medicare Advantage plans contract with about half of all physicians.
Payers must negotiate, finalize, and review contracts with each provider they deem eligible for in-network coverage. However, contract complexity, payment accuracy and provider network optimization complicate contract management. Technology offers an ideal solution that can streamline the process, enhance how payers determine reimbursement rates, and create a more transparent process that reduces the potential friction between the payer and provider, fostering trust.
Top challenges of contract management
Provider contracts involve intricate terms and conditions, including reimbursement rates, compliance requirements and a comprehensive list of services the plan covers. As healthcare shifts away from traditional fee-for-service models and moves toward a value-based world, many contracts also contain details on quality metrics and performance standards, such as Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare Advantage and Part D Star Ratings. Providers must meet these standards to get reimbursed for the quality of care they deliver to beneficiaries. Managing these increasingly complex contracts requires a deep understanding of health policy, regulation, legal nuances, and industry standards. Contracts also differ by provider, making it difficult for payers to standardize a streamlined process.
Additionally, payers need to ensure accurate reimbursement throughout a contract’s lifecycle. The rapid growth of healthcare spending in the US necessitates strict negotiations between payers and providers to determine the appropriate rate for services while delivering a high level of care for patients . Payers must also track and monitor payments to reconcile discrepancies and minimize unnecessary spending.
Finally, payers need strong provider networks to offer high-quality, affordable care to beneficiaries. Contracts across a plan must provide beneficiaries with appropriate services, as well as enough choices. Payers must minimize network disruptions and maintain updated provider directories while balancing cost containment goals and regulatory requirements for networks.
Technology can play a critical role in managing the layers of complexity within contract management. However, current technology investments may not be meeting payers' needs as they handle evolving contracts.
"A major challenge in the healthcare industry is the need to integrate multiple vendors to source essential data like Medicare and Medicaid pricing, which complicates contract administration,” explains Mary Piecuch, senior vice president of product strategy at Zelis. “Additionally, the industry faces complex contract negotiation methodologies with providers, compounded by legacy systems that lack the necessary pricing platforms."
Technological solutions for contract management
At its core, a contract management solution provides a centralized place for contract information so payers can quickly retrieve and reference terms and conditions. The solutions should automate many aspects of contract management, including lifecycle management and compliance.
"Contract management should involve loading and managing contracts through a user-friendly platform that converts complex agreements into readable formats,” Piecuch says. “The system should support quick setup and modifications, enabling rapid response to changing contract conditions and provider negotiations."
However, traditional contract management solutions miss the mark as contracts evolve and healthcare spending grows. Next-generation solutions leverage advanced data capabilities for more sophisticated, automated contract management. For example, solutions that can tap into third-party pricing information, like Medicare and Medicaid rates, to support rate negotiations.
"A Medicare pricer capability can accurately reflect updates within two weeks of CMS publications, while Medicaid pricer capabilities need to comply with state guidelines,” says Piecuch. “Precision and integration simplify the complexities of network pricing and contract administration. Systems capable of handling complex reimbursement methodologies should also offer seamless API or EDI integration, speeding up claim processing to less than a second."
Both capabilities are key in contract management, with application program interfaces (APIs) creating real-time communication between contract management solutions and external databases that hold key pricing information, like Medicare and Medicaid reimbursement rates. Meanwhile, electronic data exchange (EDI) capabilities reduce the manual work of transmitting contract information, including claims management, to facilitate faster reimbursement and better tracking of payments.
“Solutions should also have multiple checks to improve the accuracy of contract implementation,” adds Ryan Stegall, product owner at Zelis. Contract management requires a balance of technological capabilities and human expertise.
“Initially, one team may load the contract while a second team reviews the contract details and tests claims to confirm correct configuration,” Stegall explains. “Any interpretation discrepancies should be quickly addressed through a help desk, promoting clear communication and proper alignment with client expectations."
Support is key to successfully leveraging technology in contract management. Payers should have access to experts who can address the complexities of contract management and quickly manage any discrepancies and disruptions.
Technology supports payers, providers, members
Increasing transparency, using data-driven insights and automating processes benefits payers, providers, and members.
Technology streamlines administrative processes related to contract management, reducing manual errors and improving operational efficiency. Payers can also easily access contract terms, track performance metrics, and ensure compliance with regulatory requirements. This enhances claims management, optimizes network utilization, and supports strategic decision-making to improve overall financial performance.
The transparency gained through technology can also simplify the negotiation process between payers and providers while building trust. Contract management can create friction between payers and providers, from negotiation to reviews. Bringing data to the table can level the playing field for more honest and open communications between these key industry players.
The ideal solution should both price at the current contracted rates and compare them to proposed rates at the time of contract renewals, which gives transparency to all parties about what rates are changing and what the impact will be based on past membership utilization.
“Showing all calculations and methodologies on every claim empowers providers by clearly outlining how rates are determined, thereby facilitating smoother negotiations and reducing disputes,” Piecuch states.
Ultimately, members benefit from a seamless exchange between payers and providers. Technology-enabled claims management quickens the claims process while improving the accuracy of reimbursements, resulting in fewer balance bills for members. Payers can also use the insights from contract analysis to optimize their provider networks to offer members the services and choices they want at an affordable price. Data analytics in contract management can also help payers identify care gaps and opportunities to support care coordination.
By incorporating key capabilities into their provider contract management technology, payers can improve operational efficiency, enhance compliance, and foster stronger provider relationships, ultimately driving better outcomes for their members.
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Zelis is modernizing the healthcare financial experience by providing a connected platform that bridges the gaps and aligns interests across payers, providers, and healthcare consumers. Zelis sees across the system to identify, optimize, and solve problems holistically with technology built by healthcare experts. To learn more about our latest solution, In-Network Pricing and Contract Modeling, click here.
