Utilizing Technology to Improve Contract Management

About 13 years ago, I was an instructional designer for a different healthcare organization enjoying my role creating curriculum, facilitating training courses, and building eLearning lessons. I even traveled quite a bit since my employer had several hospitals across the Midwest. Then my life changed; I would be a mom, and traveling for lengthy work trips was no longer an option. I heard about a newly created department within the Revenue Cycle that would build payer contract rates directly into our electronic health record (EHR). Honestly, I still needed to learn what this job entailed and if I had what it took. I ended up loving the role and staying for 11 years before I saw an opportunity to share my knowledge with another hospital, creating the same department.

Contract management creates, negotiates, builds, and monitors a contract within a healthcare system to maximize financial and operational performance and minimize compliance risk. Contract management is integral to the revenue cycle and involves several departments, including managed care contract negotiations, billing and coding, revenue integration, finance and accounting, and compliance. The challenge for healthcare organizations is that collaboration and communication between departments sometimes do not exist. Technology, such as contract management software, billing and payment software, and analytics and reporting tools, can vastly improve these other processes within the EHR.

I want to zoom in on the building process within contract management. Depending on the EHR your organization has implemented, you might be able to build contracts directly into the system. Another option is to use a third-party vendor to import contract rates instead of keeping them in-house. Both have advantages and disadvantages.

If your EHR enables you to build contracts into the system and you have decided to take this route, you must establish a team to build your payer contracts. This process will require hiring people with experience building contacts in an EHR and knowledge of hospital billing, professional billing, and health services. An advantage to selecting this option is having sole control over your contracts, organizational workflows, and processes. One crucial step is establishing communication within the revenue cycle, vital to contract management’s success. Utilizing reporting tools will keep all departments updated on contract performance to ensure accurate billing services and capture payment variances issues for building follow-up. Depending on a payer contract, your EHR might have rates where only a third-party vendor has the reimbursement methodology (i.e., Enhanced Ambulatory Patient Grouping); therefore, some of your built-in systems will require a third-party vendor.

Without internal resources to build the contracts in your organization, a third-party vendor can offer some benefits. These external resources provide expertise on contract management and free up time to focus on other areas. One disadvantage of third-party vendors is losing the ability to control contract management and placing it in the hands of an outside entity. You might not be able to see how the software calculates the reimbursement for troubleshooting payment variances. It is essential to know that not all vendors are the same, and you want to ensure that the software meets your organizational needs. Verify that the software is capable of all payment methodologies, including commercial, Medicare, and Medicaid. Make sure their processes align with your revenue departments, and carefully review the types of reporting tools they offer. Determine if patient estimates can populate into the EHR from their rates. With either approach, conducting thorough research on the pros and cons will help you decide whether to keep contract management in-house or use a third-party vendor. Reaching out to your EHR representatives can be a great resource, offering recommendations that work best with their system.

“The technology considerably impacts the contract management process, whether managing the volume of contracts and keeping track of renewals or building contract rates”

The technology considerably impacts the contract management process, whether managing the volume of contracts and keeping track of renewals or building contract rates. It can alleviate healthcare organizations' payer challenges and address communication concerns within departments. As the director of contract management at Wellstar Health System, my role initially was to guide my contract build team as we transitioned from third-party vendors to building payer contracts within the EHR. My team built all our contracts directly into the system a year later. We now use reporting tools to track our accuracy and spot variances before they fall through the cracks. Workflows and standardized policies keep communication fluid with the Revenue Cycle departments. Our contracts allow patients to see their procedure price estimate before making an appointment, and we can offer contract modeling to the negotiation team when contracts renew. These benefits demonstrate enhanced accuracy, efficiency, and patient experience, so I recommend building contracts in your EHR.