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You are here: Home / General News / What Is Hospital Contract Modeling?

What Is Hospital Contract Modeling?

July 14, 2024 //  by Parathon JDA

Parathon Reaches Growth Milestone – 20% of largest hospital systems in US

Key Attributes Of Hospital Contract Modeling:

The very best contract modeling solution will offer three key attributes:

1. “What-If” Scenarios

Hospitals should ensure their contract management partner has experts in contract interpretation on staff, as well as experts in contract coding. That team is essential to undertaking the time-consuming contract loading process and helps eliminate an error-prone process.

Great partners have expertise in contract language and can effectively translate that language into expected revenue while working to standardize contract language among multiple payers. A good partner should also offer a robust library of contract calculations that can automate the proposed contract and allow new calculation methods to quickly be added.

This ensures those responsible for contract modeling compare various “what-if” scenarios and can deliver analytics-driven comparison reports to determine expected reimbursement.

2. Impact Of New Payment Methodologies On Expected Reimbursement

Hospitals have thousands of service codes that can signal different prices for inpatient and outpatient services than what is currently billed. The best contract modeling software analyzes both what is currently billed and the expected reimbursement as a base for comparison.

Those same claims are then modified to reflect the specific changes to the service code and re-adjudicated against the current contract to determine where an increase or decrease in the contractual expected reimbursement may result.

3. Gains Or Losses For Service Lines

The best partners offer modeling based on price sensitivity that can determine how hospital prices affect ultimate reimbursement for services. Knowledgeable revenue cycle executives know price increases don’t always result in higher revenue.

The best price sensitivity models allow revenue cycle executives to reprice any service to help them understand how that price might impact volume and reimbursement, accounting for multiple payer contracts. This allows hospitals to identify which prices are sensitive to increased reimbursement and how each adjustment will impact overall revenue.

This requires an advanced modeling and report library that can:

• Compare expected reimbursement for all payers for a specific service.

• Show the liquidity of the pricing between the current expected reimbursement and proposed new terms.

• Identify specific claims and claim lines that have reached outliers, “lesser of” or stop-loss thresholds.

• Create line-level modeling reports that identify and help assess and manage cases involving ambulatory care.

• Create claims and remap specific data points on claims.

• Determine the impact of charge changes.

Multistate payers have vast resources to understand how contracts will perform in various complex scenarios and use that capability to squeeze hospitals. It is past time hospitals have the same capabilities.

*** This information was taken from a broader Forbes article written by Chandler Barron, President at Parathon. To read the entire article, visit Accurate Modeling: A Competitive Advantage In Payer Contract Negotiations (forbes.com)

Category: General News, SolutionsTag: Contract Modeling, Hospital Contract Modeling

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