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Provider Contracting and Everything You Need to Know

Provider Contracting and Everything You Need to Know

The provider contract is a vital element for any health care provider who wishes to operate a smoothly run facility with high patient satisfaction and on-time payments. However, there are many different types of healthcare provider contracts. Each is filled with lots of unfamiliar legal jargon and confusing clauses, amendments, and stipulations. 

To get a better idea of what to expect in a provider contract and how to negotiate the most beneficial terms, follow along as we break down everything you need to know. By the end of this article, you’ll also learn the benefits of using a healthcare contract management system for your healthcare facility. 

Why You Need to Understand Your Provider Contract Fully 

To receive reimbursement for medical services, providers depend on provider contracts in healthcare. The contract details all of the information that needs to be collected by physicians from their patients before sending a claim for reimbursement to the payer. Reimbursement or refund can be delayed or even denied if the claim procedures don’t strictly follow the guidelines set up in the provider contract.

To ensure correct claim procedures and a steady revenue flow, here are a few essential details that will be outlined in any provider contract:  

  • Rates for billed medical services 
  • The time frame within which the health care provider must submit a claim for reimbursement 
  • The time frame within which the payer must reimburse the provider once a claim is received 
  • Scope and type of health care services that the payer covers 
  • The procedure by which the provider can dispute a claim denial  
  • How many days either party must notify the other before terminating the contract

How to Negotiate for Better Terms in a Provider Contract 

The first step in any successful provider contract negotiation occurs long before you reach out to the payer with demands. Prior to engaging in formal negotiations, you should arm yourself with as much knowledge as possible. Familiarize yourself with your current contract, and research the legalese to become more comfortable speaking the payer’s language. 

Then, engage in each of the following best practices. 

Gather Internal Data

Once you have mastery over the contract’s components, it’s time to gather internal data. Because most providers are contracted with multiple payers, start by reviewing your top 5 or top 10 payers. Determine your most frequently billed services and compare the payment amounts you receive from each of your top payers. With this data, you can analyze the financial performance of each provider contract. Then you can set target goals for the negotiation. 

You can also analyze your past claims to determine which payers reimburse you the least for certain health care services. With that data, you can argue in future negotiations that the payer should offer a reimbursement rate that is more in line with the rest of the marketplace. 

Survey Patient Satisfaction

Another important data point to collect is the rate and quality of patient satisfaction. Because this data has some subjective elements, you may need to rely on patient surveys. Still, positive patient surveys can demonstrate your facility’s efficiency and effectiveness. 

You can also survey other physicians who refer patients to your facility, as well as any hospital administrators you work with. Systematically surveying the people in your business landscape can provide a clear picture of your value.  

Conduct Market Research 

Think about your facility in the context of your surrounding area. Find out information on these key questions: 

  • Is there a niche service that your facility specializes in? 
  • How many other facilities in your area offer the same services as you? 
  • Do you have a good reputation among top referring physicians in your area? 
  • How does your facility compare in size to those around you?  
  • For how many residents are you the closest medical facility?  

Suppose you can demonstrate that your facility is an integral part of your community, a unique healthcare offering, and a top option for patients. In that case, you will have more leverage in contract negotiations.  

Prepare Specific Demands 

When you finally sit down to engage in proper negotiations with your payer’s representatives, you should have ample data to back up your demands. Keep in mind that your requests should be specific and evidence-based. It’s much easier for the payer to deny a general plea for better contract terms than, for example, a data-supported demand for a 5% increase to your ultrasound therapy reimbursement rate.

Contracting or being ‘in network’ is an optional relationship offered by most insurances that makes you an official ‘participant’ with that insurance. Being contracted restricts your freedom to charge and collect from patients and often involves negotiating rates with that respective insurance company. That said, being in-network means you’ll likely get a steadier patient stream because patients typically receive better coverage for in-network services.

Often providers enroll in a plan and then never review the performance of the contract. Years go by, insurers do not update your contract to reflect updated reimbursement rates. Does your biller or associated billing company periodically review contract performance and update your contracts?

The entire process of credentialing and contracting is complex and tedious. Does the staff member or biller submitting your applications understand the regulations or are they just trying to complete a form? Thousands of dollars can be lost and payments may be interrupted if there are errors or inconsistencies in your contracting and credentialing. This is entirely the reason why you need to work with a Contracting Company that can help you not only save up on time but also make sure the quality of Contract for you. A company with over 40 years of experience can do exactly that. 


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