Payer Contracts Simplified: Boost Revenue and Reduce Denials
Today, let’s explore a crucial topic: reviewing and understanding payer contracts. Whether you’re an experienced provider or just starting your practice, knowing what you agree to in insurance contracts is vital. Discovering that certain services aren’t covered too late can be costly.
When reviewing these contracts, focus on key points like specific carve-outs or required billing practices by the payer. This process is more than paperwork; it forms the foundation of your revenue cycle and your practice’s financial health.
Key Takeaways:
- Carefully review payer contracts to avoid billing errors and denials.
- Understand carve-outs and billing limits to protect your revenue.
- Use the correct place of service codes as payers may have specific billing rules.
- Negotiate higher reimbursement if limited by CPT code restrictions.
- Document all interactions with payers and confirm agreements in writing.
- Keep a cheat sheet of key contract details for easy reference.
- Train your billing team on contract nuances to minimize denials.
- Consider hiring an in-house coder to bridge gaps with billing companies.
- Focus on sending clean claims to streamline revenue cycles.
The Importance of Thorough Contract Review
Carefully examine each contract line by line and paragraph by paragraph. Many providers sign contracts without fully grasping the details hidden in the fine print. They assume their usual billing practices will work until denials pile up.
Imagine billing as you always have, then facing numerous denials. Hours spent resolving issues with the insurance company reveal that you didn’t follow the contract’s billing requirements. This mistake can disrupt your cash flow and even lead to financial losses.
Key Billing Requirements and Place of Service Codes
One common area of error is billing the correct place of service. Most doctors use place of service code 11 for outpatient offices, but other codes apply depending on where the service occurs. Here’s a table summarizing some key codes:
| Place of Service Code | Description |
|---|---|
| 11 | Outpatient Office |
| 20 | Urgent Care |
| 2 | Telemedicine |
| 12 | Home Health |
| 31 | Skilled Nursing Facility |
Each payer might have specific rules for these codes. For example, urgent care providers using code 20 often face restrictions on billable services. Some payers may only allow one CPT code per visit, regardless of how many services you provide.
If you work in urgent care, you might be limited to billing one code even when offering multiple services like sutures, vaccines, or lab work. This can shock your revenue if you expect separate billing for each service.
The Cost of Carve-Outs
Carve-outs can significantly impact your revenue. Many providers budget based on the expected average reimbursement per patient. If your contract caps billing to one code per visit, your revenue may drop, especially if you rely on billing multiple services.
To avoid this, negotiate before signing the contract. Approach the payer and request higher reimbursement rates if limited to fewer CPT codes. Without this adjustment, you might deliver care at a loss, especially when handling multiple interventions per visit.
Taking Notes and Clarifying Contract Language
When reviewing a payer contract, keep a notebook handy. Write down key points, carve-outs, and specific billing instructions. After reading, review your notes and identify areas that need clarification with the payer.
If the contract language is unclear, contact your provider relations contact. Ask them to explain important points, especially about CPT code reimbursements. Always get answers in writing. A follow-up email after a call can prevent future misunderstandings and provide a record of the agreed terms.
Understanding Exclusions and Non-Covered Services
Payer contracts rarely include a clear section on excluded services. Often, exclusions are hidden within the contract’s language. For instance, some payers bundle procedures under a single code, limiting you to billing only one service even if you provide several, like a vaccine, office visit, and lab work.
Carefully review each clause to understand these limitations. Ask the payer for clarification to avoid unexpected revenue losses if something isn’t explicitly mentioned.
Negotiating Before Signing
Negotiation is key when handling a new payer contract. Once signed, renegotiating terms becomes more challenging. If a payer restricts billing codes or imposes carve-outs, push back during negotiations.
Explain your situation clearly. If limited to one CPT code, request a higher reimbursement rate to cover your service costs. Present data on average visit costs to support your case. This approach can help secure terms that better align with your revenue needs.
Documenting All Interactions
Document every interaction with the payer, especially contract discussions. After phone calls, send an email summarizing the conversation to create a paper trail. This documentation can be invaluable if disputes arise later.
For example, if your provider relations contact states a specific CPT code’s reimbursement rate, confirm it in writing. This ensures you have evidence of agreed terms and protects you against future denial attempts.
Creating a Cheat Sheet for Contract Details
After thoroughly reviewing the contract, create a cheat sheet with all crucial details. This quick reference should include:
- Allowed CPT codes for each place of service
- Carve-outs or bundling rules
- Specific reimbursement rates for key services
- Any unusual billing requirements, such as prior authorizations or documentation specifics
This cheat sheet helps your billing team stay aligned with payer requirements and can expedite addressing questions with the payer.
Setting Up Your Billing Team for Success
Ensure your billing team, whether in-house or through a billing company, is fully informed about your payer contracts’ special requirements. Providers often assume billing companies understand these nuances but don’t always.
To set your team up for success:
- Provide the Cheat Sheet: Share your contract notes with the billing team.
- Discuss Specific Scenarios: Walk them through real-life examples based on the contract.
- Clarify Denial Management Protocols: Ensure they know when to escalate issues related to contract terms.
The Value of In-House Coding Expertise
While billing companies are useful, having an in-house coder can enhance your understanding of payer contracts and reduce denials. Coders can interpret contract nuances and spot potential issues before submitting claims, especially with complex or multiple-payer contracts.
An in-house coder can:
- Review contracts for specific coding or billing requirements
- Ensure correct CPT codes are used per payer rules
- Assist with appeals for claims denied due to contract misunderstandings
If you work with a billing company, your in-house coder can bridge the gap, ensuring accurate coding.
Benefits of Sending Clean Claims
Submitting clean claims that align with payer requirements minimizes the need for rework, follow-up calls, and appeals. This proactive billing approach reduces denied claims, ensuring a steady revenue stream and a more efficient revenue cycle for your practice.
Frequently Asked Questions
Why is it essential to review payer contracts thoroughly?
Thoroughly reviewing payer contracts prevents surprises like unexpected denials. Many providers assume they can bill as usual, only to discover that specific requirements weren’t met later, leading to revenue loss and cash flow interruptions.
What are the main billing requirements for different places of service?
Different places of service, such as outpatient offices, urgent care, telemedicine, and home health, have unique billing codes. Using the correct one is essential as it affects reimbursement. For example, urgent care may only allow billing for a single service, impacting revenue if multiple services are provided.
How can carve-outs in payer contracts affect revenue?
Carve-outs limit the types of services billed or cap reimbursement rates. Providers may lose revenue for additional services if a contract only allows billing one code per visit. Negotiating these terms upfront is essential to maintain expected revenue levels.
Why is taking notes and clarifying contract language important?
Taking notes on contract details, carve-outs, and billing requirements can prevent misunderstandings. If the language is unclear, contacting the payer for clarification and keeping a written record of all discussions can save time and prevent disputes over billing terms.
What should providers know about non-covered services?
Many payer contracts exclude specific services or bundle procedures under a single code, limiting what can be billed. Reviewing these clauses and asking about unclear items helps avoid unplanned revenue losses due to non-covered services.
How should providers approach negotiating payer contracts?
Negotiation is crucial before signing any payer contract. Providers should request higher reimbursement rates to compensate if a payer restricts billing codes. Presenting data on average visit costs can strengthen the case for favorable terms that better cover the cost of services.
Why is documenting interactions with payers important?
Documenting all interactions with payers, especially contract discussions, provides a record that can be referred to in disputes. Confirming verbal agreements in writing ensures that providers have evidence of agreed-upon terms, protecting against future denials or policy changes.
How can a cheat sheet benefit the billing team?
Creating a cheat sheet of key contract details helps the billing team align with payer requirements. It should include allowed codes, carve-outs, and unusual billing instructions. This ensures everyone follows the contract rules, reduces denials, and maintains smoother revenue cycles.
What should billing teams know to avoid contract-related denials?
Billing teams should be briefed on specific payer contract details, including unique codes, denial management protocols, and example scenarios. This helps them submit accurate claims, recognize non-standard denials, and know when to escalate issues for resolution.
Why is in-house coding expertise beneficial?
An in-house coder helps interpret payer contracts, ensuring correct coding and minimizing denials. Coders can bridge the gap between providers and billing companies, especially when multiple contracts with unique rules are involved, helping avoid costly billing errors.
What are the benefits of sending out clean claims?
Submitting clean claims that align with payer requirements minimizes rework, follow-up calls, and appeals. This proactive approach to billing reduces denied claims, ensuring a steady revenue stream and a more efficient revenue cycle for the practice.
Final Thoughts: Strive for Clean Claims and Avoid Rework
You aim to send accurate claims that meet payer requirements on the first try. This reduces rework, follow-up calls, and lengthy appeals processes. Proactively reviewing and understanding your contracts minimizes issues and ensures smoother revenue cycles.
Every denied claim represents lost revenue. Investing time now to understand payer contracts pays off through fewer delays, fewer denials, and a more efficient revenue cycle. Knowing each payer’s expectations allows you to set up systems that align every claim from submission to payment.