Performance Strategies: 
Do More with Less, Part 2 – Financials Volume 7, Issue 1

Hospital08

Recouping Revenue through Effective Contract Management

Provider identifies payer contract variances to protect reimbursement

Amid growing demands from government, payers and patients, health systems today face mounting financial pressures while trying to provide the highest standard of care. Effective contract management is a key method to seek out the reimbursement and revenue we need to survive and thrive in this market.

With 27 facilities across eight regions, CHRISTUS Health processes 9,000 claims daily, including 700 payer contracts, 100 of which are Medicare or Medicare-based. Complex contracts must be carefully reviewed, or they can result in underpayment. As a result, we use contract management software to model projected revenue under the proposed terms, providing greater confidence we will receive adequate reimbursement for our services. Modeling the revenue has enabled us to successfully negotiate appropriate contracts with payers in a timely manner.

Data Deluge: Negotiating with Detail
Contract negotiation, building and management are important to the financial health of the organization, since the process sets and protects reimbursement. Before 1997, CHRISTUS Health — much like everyone else — was using various manual techniques to negotiate contracts at various levels within CHRISTUS. In the years that followed, we have fine-tuned and centralized modeling practices using contract management software to improve the process of negotiation.

Using the software, we can exploit detailed organizational data at an unprecedented level. In negotiating contracts, we can ensure that what we are modeling is what we and our payers can expect from the terms. By extracting various elements of ad hoc data, we can outline the situation and associated reimbursement in a clear, concise way. Using the modeled data, we can identify potential problems with a contract term and renegotiate.

Modeling Matters: Optimizing Reimbursement
Using modeling at the claims level, we review specific cases and issues rather than assessing a sea of aggregate data. Those working directly with the payers have at their fingertips the full spectrum of information regarding various contract scenarios prior to discussion. This enables the teams to compare contract alternatives, forecast potential revenue and, of course, negotiate equitable contracts based on hard claims data.

The model’s appearance is standardized, so regardless of payer, staff is familiar with the appearance and location of important information. With optimal modeling data to back us up, we can speak with the authority that only informed intelligence can bring. The payers know we will have all necessary material for negotiations, including payment levels and types, thresholds for outliers, and business rule qualifiers.

Reviewing Variances: Recouping Revenue
Our contract management solution also reviews payments for variances from the negotiated contract and flags them for review. In assessing underpayments, we use the detailed data to determine payment variances. We started with larger projects and transitioned to smaller areas for underpayment assessment, a responsibility previously held by our Business Office team. We use our software to identify the origin of variances at the line level, enabling us to communicate these variances to our regional facilities so they can review the underpaid claims with the payer.

In navigating the complexities of payer reimbursements and variances, over the past three years, we have identified more than $15 million in variances and recovered more than $10 million. By pinpointing underpayments, we are supporting revenue management and improving cash flow, recovering funds faster to our bottom line.

CHRISTUS provides 350 services at facilities that include more than 60 hospitals and long-term care facilities, 175 clinics and outpatient centers, and dozens of other health ministries and ventures across numerous states. Our sophisticated reimbursement model enables us to provide our organization with optimal contract management and revenue performance. That’s the bottom line.

For the past 10 years, Claire Rabalais has been System Director for Decision Support at CHRISTUS Health, based in Irving, Texas. She joined CHRISTUS in 1994, helping to develop a surgery scheduling system and later transitioning to clinical informatics.

CHRISTUS Health Recoups Revenue Using Contract Management
CHRISTUS Health has used contract management software to assist its staff in:

  • Identifying more than $15 million in reimbursement variances and recovering more than $10 million
  • Modeling contracts and comparing contract alternatives for potential revenue
  • Negotiating equitable contracts based on hard claims data