Navigating payer relationships to boost urgent care revenue

Payer negotiations are important for RCM: ©Dmitry – stock.adobe.com

Revenue Cycle Management (RCM) remains one of the largest challenges for today’s urgent care (UC) providers. Regularly faced with rising costs, contract disputes, and inflation, the industry is navigating a complex landscape that continues to evolve beyond the Covid-19 pandemic. As patient expectations shift toward an expectation of on-demand health care, urgent care centers must adapt their revenue cycle processes to stay competitive and ensure financial stability.

UC providers should address trends that impact their revenue cycles, including the competition for urgent care dollars from retail health centers, continuous process improvement, readiness for sudden market changes, and regular re-evaluation of payer contracts. It’s essential that health care providers understand and effectively manage payer contracts in order to secure fair compensation and maintain their ability to deliver high-quality care to patients.

Global vs. fee-for-service contracts: Understanding contact options

In the urgent care market, the types of contracts UCs receive from payers can vary significantly based on differing factors. One of these is the ownership model type, including independent ownership, hospital-based ownership, or part of a clinically integrated network or Accountable Care Organization. Other considerations include the type of contract, the contract’s issuance or renegotiation date, the saturation of urgent care centers in a given area, and the specific populations served – such as Medicare Advantage or Managed Medicaid. Most urgent care clinics either operate under a global or case-rate contract or a fee-for-service contract, both of which come with specific challenges and advantages.

Global contracts: Simplicity with potential limitations

For urgent care practices that primarily handle low-acuity cases such as rashes, muscle strains, or sprains, global case rate contracts can offer a straightforward reimbursement structure. These contracts provide uniform compensation for all patients, regardless of the severity of their conditions. The simplicity of global contracts means that clinics do not need to credential each provider individually, and they can avoid the administrative burden of billing for every service.

However, a potential downside in a global contract is that low-acuity and high-acuity patients are reimbursed at the same rate, which can lead to a financial shortfall if the clinic sees a higher volume of complex cases. Additionally, services such as follow-up care, vaccinations, and laboratory work may not be covered under the case rate. These must often be billed as cash-pay visits, even when patients have insurance, which can complicate billing and potentially degrade the quality of care provided.

Fee-for-service contracts: Flexibility for diverse offerings

As urgent care practices expand and diversify their service offerings, fee-for-service contracts often become the more appropriate option. These contracts are especially fitting for clinics that handle more complex cases, offer hybrid models to incorporate primary care visits, or provide additional specialty services such as behavioral health, orthopedics, radiology, and more.

Under fee-for-service arrangements, providers receive payment for each service rendered, making it a more lucrative option for high-acuity cases that involve extensive evaluation, management, or procedures. One drawback to this model is that it requires each provider to be individually credentialed, which can create additional work in the administrative process. Despite this, fee-for-service contracts can be advantageous as they encourage clinics to attract new and established patients, allowing for a wider range of ancillary services like labs, vaccinations, and radiology.

Strategic approach to negotiation

Payer contract negotiation is a complex task due to variations in reimbursement rates for similar services, as well as differing network participation requirements. Successful negotiation requires a strong understanding of both clinic trends and the local urgent care market landscape. To enable this, data-driven insights are crucial for making a strong case to payers in the negotiation process.

Payers' ultimate goal in the negotiation process is to reduce their costs. Keeping this in mind, UC providers should prepare a compelling argument to highlight their value for not only the patients they see, but for the community's overall well-being. A few of the most pertinent points include:

Documenting Overhead Costs: Clinics should present data that demonstrates increased overhead costs, such as higher salaries, extended hours of operation, or other relevant expenses that justify the need for improved contract terms.

Showcasing Long-Term Benefits: Businesses should illustrate how their services contribute to the community’s long-term health. Examples of this include reducing the burden on local emergency departments, lowering the cost of critical care, providing convenient access to care for underserved populations, and offering preventative services like flu shots.

Emphasizing Community Impact: They should highlight how the success of the UC positively impacts community wellness and quality of life. Stronger community health outcomes can be a persuasive argument for payers to agree to fairer contract terms.

Once contracts are finalized, it is important to review and understand the fine print in order to establish a centralized management system. Notably, most contracts include a date after which they can be renegotiated — staying on top of this date is essential to revisit the contract conditions and secure better terms over time.

Positioning for growth in a dynamic market

The on-demand health care market continues to grow, driven by patient demand for convenience, affordability, and trust. UC leaders have demonstrated resilience by facing significant challenges and adapting their strategies to meet patient needs, as was seen in 2020 during the pandemic. As the industry returns to a more stable pace, now is the time to reassess growth goals, revisit standard operating procedures, and delve into RCM to identify new opportunities for improvement. By staying proactive and adaptable, urgent care clinics can foster strong payer relationships, ensure fair compensation, and continue delivering high-quality care to the communities they serve.