How long does it take to negotiate a contract?
Average contract negotiation timeframes can range from 3 to 9 months depending on a myriad of factors that can impact process and outcomes. Payor contracting departments are often minimally staffed causing tremendous workloads resulting in potential negotiation delays. Payor consolidations and acquisitions can often exacerbate a provider's ability to even decipher contracting opportunities. Successful (and timely) contract negotiations require a dedicated, experienced and informed negotiator to navigate the contracting course and deliver desired results.
How do I know if my contracted rates are competitive in my marketplace?
Providers are contractually bound by confidentiality clauses that prohibit rate sharing. Some healthcare trade associations offer members the opportunity to purchase rate data bank information, but the data is often too diluted to serve as a reliable measure. Competitive market rates are best achieved by experienced payor contracting consultants who, through negotiating hundreds of payor contracts for clients over a period of years, have compiled a reliable proprietary rate database that facilitates optimal contracted rates.
How many payor contracts should I have?
There is no magic number of payor contracts that a provider should have. Some marketplaces have a few major payors, some have many smaller payors. A better strategy is to have the right payor contracts, regardless of their number.
Do payors care what it costs me to provide my services?
Unfortunately, not really. They figure that's your problem, not theirs. This does not mean that cost data is not an important part of the negotiation process. If you know more about your business than the payor knows, your chances of winning at the negotiation table are much greater.
If I am the only provider who offers a particular service in an underserved marketplace, shouldn't I get more from a contracted payor for my services?
Yes. No matter how the payor tries to dodge this bullet, our job is to help them understand your value in their network in your marketplace. Don't forget, they have an obligation (sometimes legally) to offer their health plan members reasonable access to necessary services - if they don't, they risk loss of membership and lower earnings. They'll find a way to pay you what you deserve if they need you in their network.
My G&A expenses are out of control and I've recently had to make lots of unpopular cuts. I know I need help with my payor contracting, but how can I afford LMc Solutions' consulting services?
Many healthcare providers have discovered that cost-cutting alone does not produce a sustainable result. The quickest path in increased profitability is improved payor contracts. That's because every dollar increase negotiated on your behalf goes right to your bottom line - this incremental revenue comes with no expense. Your G&A budget is safe with LMc Solutions.
When is it appropriate to terminate a payor contract?
Although the answer to this question may seem obvious, the decision to terminate a contract can be quite complex. Obviously, if the contract rates are unacceptable and the payor is unwilling to negotiate increases, one option is to terminate the contract. Can your practice/facility withstand the loss of a caseload? Can you replace these lower paying cases with caseload from better payors? Will your remaining caseload cover your practice/facility fixed costs? Can variable costs be reduced to mitigate potential lost revenue? How will your referral relationships be impacted? A comprehensive case mix/payor mix impact analysis is necessary to answer these questions and is well worth the effort. Sometimes merely the threat of a term notice will get you what you want. Just be prepared -- bluffing is not an advisable strategy in a healthcare contract negotiation.
How can my practice/ambulatory surgery center make money under California's workers' compensation fee schedule?
Workers' compensation payors sometimes request substantial discounts off the fee schedule in exchange for access to patients via payor contracts. LMc Solutions can lead you through the workers' compensation maze and show you why substantial discounts are not necessary for access to patients.
How can I be assured that my contracts are paying according to the contracted rates?
The existence of a payor contract does not guarantee accurate payment. Industry experts report that over 40% of claims submitted are initially paid incorrectly including short pays, line item denials, improper bundling, and misinterpretation of contract terms (i.e., carve-outs). Payors are hoping you don't notice, and chances are this is exactly what is happening if you're not paying attention. If your computer system has an expected payment module for contract allowables, use it. If not, LMc Solutions provides a user-friendly contract allowables matrix that guarantees accurate payment reconciliation and optimizes cash collections.
What revenue cycle industry benchmarks should my business entity aspire to?
Whether you're a solo practitioner, a multi-specialty ambulatory surgery center or a large hospital system, "best practice" benchmarks provide a performance snapshot to best manage your business entity. High-performing business offices know the science of performance, including appropriate days in A/R, bill hold days, aging splits, and bad debt. The prescribed business office work flows and protocols that optimize efficiencies and cash flow are critical to the success of any healthcare business entity. What good is having good payor contract if you lack the infrastructure to get what you're entitled to? Working smarter, not harder, is the solution. LMc Solutions provides month-end analysis and report suites that track and trend benchmarks to assist leadership and facilitate maximum performance.
Why do I need contracts when I can get paid at higher rates without them?
Payors go to great lengths to keep patients "in-network". These include withholding authorizations, offering insurance plans with substantial out-of-network penalties, reducing contracted physician/facility reimbursements when patients are referred to non-contracted providers, paying less than your billed charges at arbitrary "usual and customary" or "out of network fee schedule" rates, crafting and selling insurance plans using a “narrow network” of providers, and denying claims. A good payor contract will ensure you have access to desired patient populations and that your services will be authorized and paid appropriately.
I have contracts but they don't seem to be doing anything for me. What am I missing?
A contract is your admission ticket. The contracted payor has welcomed you to "the club" and wants you to enjoy the benefits of membership. Market your services - participate in employer health fairs, provide referring providers a list of your contracts to encourage referrals, speak at community education events. Make your contracts more than just pieces of paper.