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Addressing the Challenges of Provider Contract Management

Today, the vast majority (96%) of health systems have no provider contract management platform in place, or they use a system that’s outdated and lacks key functionality. The result is that provider organizations collectively lose nearly $157 billion each year, according to a survey from Black Book Market Research. Those losses come as the result of operational inefficiencies, payment inaccuracies like overpayments, lost productivity, unrealized revenue opportunities, and more.

The industry’s shift towards value-based reimbursement just underscores the growing need for a more effective provider contract management solution. By 2025, the Centers for Medicare & Medicaid Services (CMS) is expecting that close to 100% of reimbursements will be tied to value-based contracts. This means that today’s health systems and medical groups will need a more modern approach to provider contract management – one that enables them to monitor the intricacies of their provider contracts more closely, and one that bridges the gap with provider compensation.

Even the few contract management tools that are available today are typically more oriented toward contract storage rather than contract management while being fundamentally unable to handle the complexity of a provider contract. As a result, they offer little-to-none of the functionality required. For example, there are often:

  • No controls to ensure the right version and language are used
  • No way to reliably see what’s been done and what’s still needed for each CAR workflow
  • No ability to quickly identify exceptions, errors, or compare to templates or benchmarks
  • No way to ensure standardization for contracts or CAR processes
  • No functionality in place geared specifically to providers

Physician contracts (and many APP contracts) are more complicated than ever. Any individual provider’s contract might include a dozen or more different contract terms and pay elements. Many of these elements could be scheduled to activate or expire at varying times or only under specific conditions. For example, compensation terms might change across pay periods as productivity and other value-based metrics fluctuate with each provider.

In turn, these challenges can potentially lead to massive fragmentation in contracts and leave organizations trying to manage dozens of types of contract types whose variability and complexity make them difficult to track and, worse, can lead to heightened compliance risks. Consider: If the provider organization offers a temporary stipend to one provider and a special allowance to another, both pay elements must be tracked individually to ensure they’re paid as agreed but also terminated when appropriate. Under a manual approach, it’s easy to miss these dates and either miss a payment (angering the provider) or continue paying unnecessarily (wasting money). Now multiply those issues by dozens or hundreds (or thousands) of providers.

Health systems and medical groups cannot overcome the challenges described above without a more powerful, provider-centric contract management solution. Nor can they settle for disconnected, inefficient processes and spreadsheet-driven workflows.

There is an alternative: Heisenberg II Contract Management (HII CM). HII CM is a feature-rich, highly configurable cloud-based solution that enables organizations to centralize and manage complex provider contracts. With this type of platform, organizations can easily draft any type of employment agreement, mitigate risks, manage compliance, receive alerts, and collaborate across departments.

The key is introducing automation, efficiency, and standardization into the contract handling process. A dedicated provider contract management system addresses the costly deficiencies of manual or substandard contract management by:

  • Automating the creation of provider agreements populated with the right data/language/terms
  • Enabling users to find contracts according to any terms or language
  • Standardizing agreements, terms, language across the organization
  • Controlling against compliance or internal policy violations
  • Generating alerts and notifications for impending deadlines, expirations, exceptions, etc. 
  • And, in the end, seamlessly bridging the gap with compensation calculation 

These features mean that health systems and medical groups can significantly reduce time spent on contract management even as they protect more effectively against error and compliance issues. Robust reporting and notification capabilities proactively draw attention to necessary actions on each Contract Action Request (CAR) when and where they are required so that unnecessary delays can be avoided. That means far fewer inaccuracies, oversights, and compliance violations slipping through.

The result isn’t just eliminating an administrative nightmare. It could also potentially offer health systems and medical groups the ability to realize financial gains under the right conditions: “Organizations could realize savings that equal up to two percent of total annual costs by eliminating inaccuracies and noncompliance through contract management automation,” reports Becker’s Hospital Review.

This explains why health systems and medical groups need a provider contract management solution. The next question is how they work in practical terms. In upcoming entries in this multi-part series on provider contract management, we’ll examine the functionality and use of smart contract management systems in more detail.

For more information on Heisenberg II Contract Management, visit or call (855) 749-7267 to schedule a demo.