7 tips for medical practice payer contract negotiations
In the chaos of managing a busy medical practice, important tasks can easily fall through the cracks. Payer contract management should not be one of them. In fact, successful payer contract negotiations are often the key to improving your bottom line and promoting long-term financial sustainability. This is true regardless of whether you’re negotiating fee-for-service or value-based care contracts.
Not surprisingly, ‘renegotiating payer contracts’ was one of the top five reasons why finances improved for physicians in 2022, according to the 94th Physician Report published in Medical Economics. (Note: Other reasons included seeing more patients, increased revenue from telehealth, receiving pay-for-performance incentives, and change in the practice model).
In this article, we’ll focus on payer contract negotiations, providing seven tips to help you navigate the process effectively.
Tip #1: Understand that you can renegotiate payer contracts
Far too often, physicians simply accept their existing contract as the status quo without realizing they can—and often should—ask for more money. At a minimum, a three to five percent increase every few years is not unreasonable. Grab your current contracts for each payer and adopt a ‘can do’ attitude for negotiating fee schedules that are more in line with what you deserve.
Tip #2: Craft a data-driven argument
Demonstrate your value to the payer using quality and cost metrics. Also know your ratings on Google and other review platforms such as RateMDs and ZocDoc. Highlight the important work you do and how you go above and beyond your peers (e.g., by offering telehealth appointments on the weekends or hiring a behavioral health specialist to provide behavioral health integration). During payer contract negotiations, payers will want to know why you deserve to be paid more. The more objective you can be using data, the better.
Tip #3: Compare payer rates
Again, it’s all about the data, and a reputable practice management system can help with negotiating fee schedules. If one payer consistently pays below-market rates, ask for a raise. Use de-identified information to build your case—either rate by rate (e.g., payer 1, 2, 3) or an average amount across all payers. The bigger the payment discrepancy, the stronger your case for a rate increase.
Tip #4: Ask for carveouts
Focus on negotiating fee schedules with higher rates for high-volume services such as office visits to help you maximize medical billing revenue for your medical practice.
Tip #5: Focus on payer relations
This tip doesn’t relate directly to the actual negotiation process, but it can indirectly help with negotiating payer fee schedules when the time comes. It’s about initiating regular contact with payers and establishing a mutually beneficial partnership. For example, notify payers when you notice a positive trend in quality metrics. Let them know when you’ve redone your waiting area to improve the patient experience or expanded your office hours to improve patient access. Payers benefit from these changes as well.
Tip #6: Use a payer contract negotiation checklist
When negotiating payer fee schedules, you don’t want to accidentally overlook something and miss out on a valuable opportunity. That’s why using a payer contract negotiation checklist can be helpful. This checklist included in the American Medical Association’s (AMA) payer contracting toolkit, for example, includes important contractual elements and encourages physicians to seek answers to important questions such as: Does the contract clearly describe physician’s services covered by the contract, along with any limitations or exclusions? Does the contract specify within how many days the payor must pay the physician? Aside from payment, for what other purposes does the payor use claims data? Does the contract automatically renew? Are there fees associated with receiving payments through virtual credit card or electronic funds transfer (EFT)? Interestingly, the Medical Group Management Association (MGMA) recently published a position statement indicating that two-thirds of medical practices say insurers are charging them fees they did agree to when sending payments via EFT.
The AMA toolkit also includes sample contract language to help physicians differentiate between language that favors payers vs. language that favors providers. It also encourages physicians to be aware of unilateral policy changes for which physicians may have limited awareness notice (e.g., language permitting downcoding or language on the adoption of electronic payment requirements through third parties that may impose additional costs on physicians).
Here's another more succinct payer contract negotiation checklist from the MGMA. Again, a reputable practice management system with detailed data analytics capabilities can help you build your case.
Tip #7: Don’t be afraid to walk away
If a payer continually refuses to raise your rates even despite your best efforts, it may be time to terminate the contract.
Conclusion
Don’t let payer contract management become an afterthought. With a little effort, you can secure favorable payer contracts that promote maximum revenue for your medical practice. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
