Your Billing Problem Started in the Contract

I'm sitting across the revenue cycle director of a multi specialty group, solid operations, excellent team. And she's frustrated because for the better part of a year, one of their commercial health plans had been consistently underpaying on a specific set of procedure codes. I'm not talking about denials, I'm not talking about rejections, just paying less than the contracted rate. Her team had worked the denials, so I asked her to pull out the contract. And buried in an amendment, one of the three amendments layered on top of that base agreement is a fee schedule effective clause that reads, quote, rates effective upon execution by both parties, unquote. So what does that even mean?

It could sound straightforward, except in this case, the payer's counter signature came six weeks after her organization had already signed and the payer had applied the new rate starting from their execution date, not hers. Six weeks of claims, high volume service line. That's real money. That wasn't a billing error. Her team did nothing wrong. There was a contract problem and it had been sitting there invisible for 12 plus months.

I'm Alex Yarijanian, I'm your host and what I'm going to do is talk about the version of the story I see consistently billing teams taking the blame for problems that were created upstream, meaning in the contract even before a single claim was filed.

Here's the structural issue. In most organizations, the people who negotiate these contracts and the people who run revenue cycle don't sit in the same room. Contracting is managed care, okay, or under the CFO's office. RCM, revenue cycle management, is operations. These are different meetings, different KPIs, entirely different vocab.

The result is that your billing team inherits a contract they didn't negotiate, written in language they most likely don't fully understand and governing payment logic their software wasn't built to catch. And when something goes wrong, the default assumption is coding error or payer system glitch. Sometimes it is, but when you see persistent underpayment on a specific payer or service line, patterns don't move no matter how many times you appeal. The root cause is often some contract provision, or some provision in the contract referring to some manual online that you can't find or that they change every month and that you can't keep up with. You can't fix the contract problem at the claim level. Basic point.

So I'm presenting this full framework on this at the HBMA, Healthcare Business Management Association, and I've been invited, as I said, to provide a training, a webinar for these attendees, largely revenue cycle managers. And what's going to happen is that they're going to walk away with a working contract audit list, but they're charging for this event. And what I'm going to do is provide you three things you can take to your next denial review right now and a sneak peek if you will on the webinar content.

So number one is looking at fee schedule effective dates when you renegotiate rates. The amendment language on the effective date determines everything. For instance, in this example I gave you, quote, upon execution, unquote. Sounds clean. Unless there's a 45 day gap between your signature and the payer's countersignature. Your amendments, know your effective dates, reconcile them against your billing system and make sure that they've actually flipped to the new rates so you even know what you're expecting. There's a study that talks about 73% of providers don't know what they're actually supposed to get paid. So this is a huge issue.

Okay, I want you then to look at your carve out clauses. So a lot of contracts exclude specific service lines from that base agreement. For example, behavioral health is the most common one. And make sure you route them to a separate fee schedule or a separate pay arrangement entirely. If your billing team doesn't know which services are carved out and where those claims need to go, the resulting denials are going to look like coding errors, which is misleading because they're not.

And the third area is appeals and dispute timelines. I do this so often with my clients. Most billing teams I'm seeing assume their standard denial management cycle is the clock that matters. It isn't. The contract has its own dispute window and in many agreements, especially Medicare Advantage, the window is shorter than your internal workflows. The number of times I've seen this. So you're not losing those appeals because your argument is weak. You're losing them because the clock ran out before your team got there. Go find that clause in your active agreements right now. If the contract dispute window doesn't match your denial management cycle, that's a configuration problem. And every day you don't fix it, you're leaving money on the table.

What I'm asking you to do is add one question to your denial review process. If there's one practical shift you're going to take from this, it's the following. Ask, when you hit a pattern that doesn't respond to standard appeals, is this a billing problem or is it a contract problem? Those require completely different escalation paths. Billing errors get resolved through the claims process. Contract problems require your managed care team, the original agreement, all the amendments, and sometimes formal dispute or renegotiation. If your billing team is routing everything into the same queue, the contract based underpayments are getting written off and you have no idea. Think of it.

So if you want the full framework, denial categorization methodology, contract audit checklist and all the works, I'm presenting this live August 12th through the HBMA. They are offering one CEU credit and I'll put details in the show notes. If you want to reach the checklist directly, reach out through VBCAPodcast.com and I'll get it to you. Again, I'm Alex Yarijanian. This is the Value Based Care Advisory Podcast.