Accounts Receivable Best Practices: Manage Payer Contracts

If you’re consistently getting remittance on your submitted claims, you may think your billing system is working just fine. But how accurate are your reimbursements? The Medical Group Management Association (MGMA) estimates that payers underpay practices in the U.S. by an average of 7%-11%.

The main cause of underpayment is the complexity of all the contracts a medical practice has signed. If you’re not using software that manages those contracts, you’re almost certainly losing money.

Power Your Practice understands the financial challenges medical practices are facing and is here to help. Every week during our A/R Best Practices series, we’re describing the must-have features managers need to look for in practice management systems to manage and collect all of their receivables.

Don’t Let Underpayments Go Unnoticed
The complexity of payer contracts is causing practices more inconsistency in cash flow than is commonly realized.

For example, four different patients could come in for the same Level-3 office visit, each with different coverage from, say, Blue Cross Blue Shield, Aetna, United, and Medicare.

Even though all of the patients received the same service, the practice could be reimbursed four different amounts due to the individual contracts the doctor has with each payer.

With all the other work that must be done in a medical practice, it’s almost impossible to manually keep track of every payer contract. Therefore, it’s impossible to know when the practice is being underpaid.

That’s why it’s important to select software that eases the tracking of contracts and can automatically compare the actual payments the practice received against the payments specified in each payer contract.

Those systems allow practices to load the details of their contracts and calculate the amount they should be collecting for each claim, making it easy to spot underpayments.

This feature allows practices to:

1. Collect the payments they are owed – Automatically checking contracts for underpayments can allow practices to raise their net collection rates (NCR, or the total percentage of claims that are paid the full amount allowable according to the contract) up to 100%.

2. Increase efficiency and organization – Keeping contracts
in an electronic system eliminates a lot of the manual work required when staff members need to look up contract details.

3. Forecast future collections – The system can use contract terms to give A/R an accurate picture of what money will be coming in and when, which is a big help for making budgeting decisions. Automating the process means those predictions will accurately match future collections.

How is your practice reviewing payer contracts to identify underpayments?

Next week, we’ll discuss how a practice management system that allows for daily aging of receivables can speed up your collections.

 

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