Money is an important aspect of the healthcare revenue cycle due to the rising declining rate of Medicare reimbursement and new value-based care models. Healthcare organizations should focus on negotiating claims reimbursement contracts with payers to optimize revenue cycle management.
Several key factors such as communication with stakeholders compare expected and actual revenue yields, evaluate service lines and understand the organization’s financial position are important for successfully negotiating payers contracts.
Healthcare organizations should communicate with various important stakeholders, such as financial leaders, patient accounting experts, and physicians. This communication builds a platform for a successful negotiation.
Healthcare organizations should also focus on developing actionable strategic direction during an engagement with stakeholders. Moreover, these organizations should establish a committee of key stakeholders not only to discuss actionable strategic directions but also periodically review contract portfolios.
It is critical for healthcare organizations to compare expected and actual yield from contracts. Many contracts failed to reach expected yield value due to the high variance between actual and expected yield. Variance is the difference between actual and expected yield. The healthcare organizations should look for an acceptable variance range before the negotiation with the payer.
The committee should evaluate actual yield for each contract with the organization’s contractual allowance budget are aligned or not also, compare actual yield across different payer contracts. The objective of this evolution is to minimize the variance in actual yield across top-tier contracts.
The healthcare organization must assess service lines to understand the impact of different clinical services on the contract’s claim reimbursement structure.
Another important aspect of successfully negotiating a payer contract is to understand the financial position of the organization.
Moreover, Healthcare organizations should regularly communicate financial goals and performance with stakeholders which helps the negotiation team to fulfill the organization’s needs with the payer’s contract.
Apart from key factors, three rules for negotiating contracts with payers include defining the baseline population, developing objectives, and preparing for changes. These rules must be addressed by healthcare organizations before negotiating the contract.
The healthcare organization should identify the baseline patient population which helps to understand the treatment of various patient groups by their providers and the services they consume.
Clear objectives of the healthcare organization enable them to achieve their objectives during negotiation. Moreover, these objectives are expected to share with the prayer to let them know about the expectations of healthcare organizations.
While negotiating the payer’s contract the healthcare organizations should be adaptable to various changes suggested by the payer. This enables negotiation teams to create the best approach to countering these changes. For long term contracts, both the healthcare organizations and payers must agree upon price adjustment.