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Two Practices, One Solution

September 1, 2007
by Daphne Lawrence
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One IT finance solution solved the problem of managing payer contracts for two very different physician practices

When it came to managing payer physician practice contracts, the approach used to be "hit or miss." Not any more: shrinking reimbursements and the increasing complexity of insurance plans are mandating a more practical approach. Contract modeling software solutions available today can minimize denials and optimize reimbursement by enabling medical groups to evaluate overall contract performance, verify reimbursement and assess the financial implications of new and proposed contracts.

This new IT solution has worked for two very different practices. One, Lake Charles Medical and Surgical Clinic, a 26-physician group practice in Lake Charles, La., recently signed up for Austin, Texas-based MPV's (Medical Present Value) Phynance contract management solution. The healthcare provider went live with the product in August. UT Medical Group (Memphis, Tenn.), with 185 FTE physicians and a major hospital presence, has been using it since 2005.

Lisa Connor, business office manager of Lake Charles talked about the bad old days: "Everything was manual," she says. "In order to know that a payer paid us incorrectly, the person entering the payment had to recognize it as an incorrect payment. It could take months." The organization's appeals process was manual too. Copies of the EOB were sent back to the payer via a runner. "We worked them one by one," says Connor. "I was floored. The need (for software) was a no-brainer."

Most providers agree that some contracts are better written than others. For Lake Charles, with 15 payers, the MPV Phynance contract modeler got down to the nitty gritty to clarify the actual contract terms: What rate should be paid with an AD modifier (medically supervised by a physician for more than four concurrent procedures)? How many multiple procedures should be paid? And what about carve outs? "These are things that should have been defined in the contract," says Connor. "But you're often left trying to figure it out."

Contract Management Solution Providers






Vernon Hills, Ill.

Provider systems including Sutter Health, St. Joseph's Health System, University of Utah Hospitals & Clinics, Covenant Health System, Henry Ford Health System

Web-based application suite; track and enforce contract compliance; calculation engine

ClearContracts application entirely HTML-based

Kreg Information Systems


Enterprise-wide hospital decision support 200 healthcare organizations including hospitals, rehabilitation facilities, physician offices

Payment compliance; contract simulation; contract management that calculates accurate expected payments for patient claims


Reston, Va.

Single-site and enterprise-wide organizations

Solution for contract management. Modules for contract administration, re-pricing, modeling and reporting. All types of contractual arrangements

PMMC (Preferred Medical Marketing Company)

Charlotte, N.C.

Hospitals, health systems, physician practices

Microsoft solutions provider. Applications implemented under Web-based ASP and/ or locally installed LAN scenarios. More than 100 built-in audit, fi nancial and other reports

Connor gave MPV a copy of every single contract. Jeff Milburn, an active member of MGMA and senior vice president of Colorado Springs Health Partners, a 90-physican multi-specialty practice based in Englewood, Colo., agrees that's the place to start.

"What I tell practices is that the first step is to get all your paper in one pile, get all your updated contracts," he says. "You'd be surprised how many practices don't know where all their contracts are." In Connor's case, once they had the contracts, MPV went back to each carrier and got additional information.

UT Medical Group (UTMG), the not-for-profit private practice arm of the University of Tennessee Health Science Center, shares a similar experience, though UTMG is quite different. UTMG is a 300-physician multi-specialty practice with 185 FTE physicians in clinical practice. Because of its geographic location, the organization provides indigent and Medicaid care to several surrounding states, and deals with four or five Medicaid payers in addition to various commercials. Also, the group staffs the county hospital (a Level I trauma center) and bills the physician portion of the hospital visits. That means dealing with many payers from out of state—including a lot of small mom and pops.

UTMG, though larger and more diversified than Lake Charles, had a similar need. "This is a part of the revenue cycle," says Shannon Tacker, vice president of revenue services and decision support. "Verifying payment to the contract is what closes that loop." Tacker tried to verify manually and found a problem faced by many physician practices. "We could really only focus on our large dollar claims because of staffing issues," she says.