Monitor Payer Contracts
Use a simple dashboard to track contracts and payer mix<

by: Bob Redling

Are you neglecting some of your practice’s most important financial assets? Need a hint as to what they are? We’re talking about the contracts you’ve signed with payers.

Payer contracts represent cash that your practice should pull in for providing reimbursable services to patients assigned to those payers. Understanding these agreements can even help you decide when — or if — you can add facility space, physicians, or new services. You’d think such an important asset would occupy center stage in every medical practice’s business office. Unfortunately, many business managers just file payer contracts away deep in a drawer after doctors have signed them.

Cynthia Dunn, RN, a Cocoa Beach, Fla.-based medical practice consultant, recalls an engagement with a practice that she identifies only as “the worst practice I ever visited.”

“I asked to see the contracts for their top three private payers, and all they had saved were the signature pages. They tossed everything else,” she says. “You can go to your provider reps and ask for a copy of your contract, but the chances of getting what you actually signed are about nil.”

Dunn says many managers rarely glance at contracts unless it’s renewal time or a big problem comes up. If you never look at a contract after you sign it, how will you know whether that payer is playing by the rules or even what the rules are?

“You have to know what your assets are and keep track of them, so at a minimum, gather up all of your contracts with payers and keep them in one place, like a folder,” says Debbie Welle-Powell, MPA, vice president of payer strategies and legislative affairs for Exempla Healthcare, a multihospital integrated healthcare system in Denver.

Welle-Powell uses Microsoft Access, a database program that also allows her staff to track key contract provisions, but many practices find that a straightforward spreadsheet does the job well.

“It may sound like too much extra work for the business office, but you can keep it simple, and it’s definitely worth it,” Welle-Powell says. “I was doing this when I ran a three-physician practice, so I know it can be done.”

What could a few hours a month eyeballing payer contracts be worth in dollars? Consider what a Medical Group Management Association (MGMA) survey of payer performance found. MGMA surveyed medical practices in Colorado in 2005 and discovered that the practices that failed to do even basic payer contract surveillance ended up with 4 percent lower reimbursement on average per evaluation and management (E/M) code billed. That can add up quick.

Suppose a West Virginia practice’s contract with a payer calls for 110 percent of the 2007 Medicare allowable ($56.40) for CPT 99213 (mid-level office visit by an established patient). Now what if instead of getting the 110 percent ($62.04) that the payer promised, the practice receives 4 percent less ($59.56)? That missing $2.48 per visit becomes serious money by year’s end. And that’s for just one code.

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