STOP LOSING REVENUE THROUGH IMPROVED PAYER CONTRACT MANAGEMENT

Transcription

1 STOP LOSING REVENUE THROUGH IMPROVED PAYER CONTRACT MANAGEMENT 3 WAYS TO TAKE CONTROL OF YOUR CONTRACTS PREPARED BY

2 HOSPITALS & HEALTH SYSTEMS ARE FEELING THE FINANCIAL SQUEEZE Leadership teams at hospitals and health systems are under constant pressure to grow their revenue, but at the same time, they re stuck watching as margins shrink quickly. In 2014, 61.3% of hospitals reported a decrease in their profit margins over the year prior. 1 One contributing factor is that costs are constantly expanding. According to Moody s, hospital expenses are growing at a faster rate than their revenue. 2 On top of that, payments are getting increasingly difficult for providers to collect. The use of Medicaid and Medicare for patient payment is growing - in 2014, 53% of hospital revenue came from these government plans, with 58% expected by Making things even tighter, both programs are regularly cutting reimbursement rates. In 2015, Medicare cut their reimbursement rate by 21% and Medicaid cut their rate by 43%. 4 In 2014, 61.3% of hospitals reported a DECREASE in their profit margins. Waste or leakage in revenue cycle management is another major factor of the financial strain. It s been estimated that 15 cents of every healthcare dollar - $400 billion annually - is wasted on revenue cycle inefficiencies. 5 Taken together, this all adds up to very real - and very scary - implications for hospitals and health organizations. Healthcare providers want to focus on providing the best possible care for patients, but their attention is constantly being redirected to the bottom line. In fact, in 2015, the #1 challenge that hospitals reported facing was financially related. 6 There isn t much that a hospital or health system can do about cuts to government programs, and often, controlling expenses is almost as much out of their control. But reducing leakage in revenue management, however, is where real action can be taken, and real returns can be realized. One of the best ways to start fixing revenue leakage is to take a look at how payer contracts are managed. 15 cents of every healthcare dollar- $400 billion annuallyis WASTED on revenue cycle inefficiencies. 1 English, Brendan. The 4 Admin Pitfalls that Drain Hospital Revenue. September Trustee Staff. Moody s Points to Growing Expenses, Shrinking Revenue in Hospital Outlook. January Mulvany, C. Margins Under Pressure. April Matthews, Merrill. Doctors Face A Huge Medicare And Medicaid Pay Cut In January English, Brendan. The 4 Admin Pitfalls that Drain Hospital Revenue. September American College Of Healthcare Executives. Top Issues Confronting Hospitals in

3 MANAGING CONTRACTS ARE A PAIN POINT - AND GETTING WORSE With thousands of different code combinations across hundreds of contractual agreements, it s difficult to determine underpayments, violations, missed payments, and unauthorized discounts, and what it all really means for the bottom line. Managing this can quickly snowball into a huge challenge for healthcare providers. It s a problem that can t be ignored: in 2014, 38% of all hospital revenue came from private insurance. 7 Payers constitute a significant slice of the revenue pie, so favorably negotiating contracts and working to maximize their terms is critical, but it quickly becomes a complicated and ongoing pain point for hospitals and health systems alike. Poor contract management - or worse yet, no active management at all - will have a negative impact on your bottom line. THE REAL WORK IS IN ANALYZING & MONITORING While many providers feel overwhelmed by the thought of actively analyzing and monitoring payer contracts, it s a necessity. Insurance companies are unquestionably doing regular, in-depth analysis of their contracts, and have teams of analysts and actuaries calculating and modeling break-even points while monitoring performance. Many organizations have contracts scattered across various divisions and departments, living in multiple systems with different people owning them. Time and resources are wasted in trying to track down and synthesize the information when analysis is needed. This means that leadership has no clear visibility into the financial ecosystem that their agreements create - and therefore won t be able to pinpoint problems or replicate favorable terms. There is a real cost to this lack of insight. 7 Mulvany, C. Margins Under Pressure. April 2016.

4 THE TRUE COST OF POORLY MANAGED CONTRACTS It s been estimated that the average healthcare organization loses 5% of their annual revenue to leakage that s considered preventable, due to claim denials, underpayments and unfavorable, complex contract terms. 8 And it isn t just about reimbursements - unplanned costs and unapproved discounts compound the problem. It costs a provider $15 to rework and resubmit a denied claim, on average, when accounting for time spent, overhead costs and interest fees. 9 And up to $3B collectively is lost each year due to silent PPOs - when an organization gets a discounted rate for services without authorization. 10 But any time there s a risk, such as here, there s always a potential opportunity - if it can only be accessed. THE MASSIVE POTENTIAL OF BETTER CONTRACT MANAGEMENT There is real financial value in store for hospitals and health systems who get better, more strategic control over their payer contracts. They ll be able to reduce fees, minimize missed or discounted payments and maximize potential opportunities from favorable terms that might otherwise be overlooked. Just how much potential value is there? Reuters estimates that $332B could be saved across the healthcare industry over 10 years, through the automation of administrative tasks which are primarily manual and paper-based today, with hospitals and physician practices pocketing half of that savings. 11 And according to Pricewaterhouse Coopers, up to 2% of annual costs could be saved by reducing manual errors in contract management. 12 So, what s really meant by better payer contract management, and what s the key to unlocking the secret - and its value? $332 billion could be SAVED across the healthcare industry over 10 years Healthcare IT Forum, Advisory Board 9 Deborah Walkder Keegan, Elizabeth W. Woodcock, and Sara M. Larch in The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid, 2nd Edition (MGMA, 2009) 10 American Medical Association. Silence of the PPOs: A stealthy way to pay you less. September Kelley, Susan. UnitedHealth sees $332 bln in U.S. health savings. June Pricewaterhouse Coopers, 2014

5 WHAT DOES THE SOLUTION LOOK LIKE? The key lies in technology. An intelligent solution to payer contract management needs to be both automated, to remove the risk of error, and scalable, to manage the contract complexity that most organizations are facing. The right technology would provide 360-degree visibility into contract terms, and handle everything from modeling and forecasting to deadline monitoring and variance tracking, with alerts to let you know when something s gone amiss. There are 3 major ways to take back control of your contracts, and any technology solution needs to address all of them in one integrated package:

6 3 MAJOR WAYS TO TAKE CONTROL: CONTRACT MANAGEMENT A contract management system needs to compile all payer contracts into an organized, centralized location, where everyone who might need access to them can find them quickly and easily, saving time and eliminating confusion. A simple user interface would mean that anyone in your organization could access and pull contracts the moment you need to reference them. Contract loading should be so simple that health system staff can do it themselves without incurring additional costs or delays imposed by vendors. Your contract management system should distill complex contract agreements and terminology into plain English, so that you can understand and take action on it. It also needs to make it easy for you to identify at a glance when a contract is - or isn t - yielding the cash you need to remain financially sound. The right solution should also be automated to perform calculations in real-time so you can predict payments and begin to forecast income accurately. 3 American Hospital Association s RACTrac Survey, 3rd quarter

7 3 MAJOR WAYS TO TAKE CONTROL: CONTRACT MODELING Modeling is a critical element of effective contract management, and one that can take providers days, hours or even months to do. Testing different real-world scenarios against your contracts is the only way to see how they will actually impact your bottom line. You need a tool that can easily forecast the implications of common scenarios, such as revenue changes based on shifting populations or future costs for at-risk or high-risk populations. Modeling can also help during negotiations, as it gives you better visibility into long-term impacts. You need to be able to test what/if scenarios during contract negotiations to bolster yourself with a stronger bargaining position. Modeling contract revenue and financial impacts in real-time not only saves time and money, it also eliminates the risk of human error, meaning that your forecasts are reliable and accurate - and always up-to-date.

8 3 MAJOR WAYS TO TAKE CONTROL: PAYMENT VARIANCE TRACKING You need an automated way to know when terms of a contract have been violated with a view across your enterprise, at each facility down to the individual claim. A technology for contract management should monitor violations and alert you once they happen so that you can take action. Alerts should also be automatically delivered when a claim is paid incorrectly, helping you to accelerate your cash collections. This eliminates the need for costly zero-balance recovery vendors. But, an intelligent solution would do more than just provide automatic alerts. It needs to help you analyze the underlying causes behind contract underpayments and provide it in a clean, easy-to-understand dashboard that gives you an at-a-glance view into the overall health of your contract performance.

9 THERE IS A TECHNOLOGY THAT DOES IT ALL Thankfully, there is a solution that addresses all of this and more. ZirMed offers simplified payer contract management via a centralized hub and an easy-to-use wizard interface. The solution elegantly addresses all of the challenges outlined above. You ll: Create, maintain and model payer contracts in real-time Get unprecedented visibility into payer performance at the enterprise and facility level - down to the individual claim Quickly assess the performance of different payers and contracts for areas of improvement Get a clear view into expected revenue See when contracts are underperforming and why Accommodate all commercial and government payer contracts and terms Run complex modeling & forecasting in minutes Be alerted when claims are underpaid or a contract is violated Calculate payment variance to the claim, line and category level Allow staff to drill down to payer term violations to rapidly categorize and resolve similar issues Rapidly address appeals with an integrated solution This allows for faster collections, more accurate revenue forecasting, fewer denials and underpayments, and gives you the insight you need to have a stronger footing in future negotiations. ABOUT ZIRMED ZirMed empowers healthcare organizations to optimize revenue and population health with the nation s only dynamic end-to-end platform of cloud-based financial and clinical performance management solutions including Claims Management, Charge Integrity, AR Management, Eligibility & Coverage Detection and Value Based Reimbursement. Start boosting your bottom-line performance visit