5 tips to negotiate favorable payer contracts

May 22, 2018
Lisa Eramo, MA
Volume 95, Issue 16

Commercial payers don’t automatically reward physicians for being loyal members of their networks.

Commercial payers don’t automatically reward physicians for being loyal members of their networks. Physicians need to ask for higher payment rates, said Marcia Brauchler, MPH, CPC, president and founder of Physicians’ Ally Inc., a healthcare consulting company in Littleton, Colo. who spoke during AAPC’s HEALTHCON, April 8-11 in Orlando, Fla.

HEALTHCON offers educational sessions and networking opportunities for medical coders, billers, payer representatives, practice managers, attorneys, physicians, and other healthcare business professionals.

Brauchler provided these five tips to help practices negotiate more favorable commercial payer contracts:

1. Focus on payers that consistently pay below the Medicare fee schedule amount. Have some commercial payment rates remained the same over time even despite increases in the Medicare fee schedule? If so, this could be leverage for negotiating higher payment rates, said Brauchler, who posed this question to attendees: If a payer paid 100 percent of Medicare five years ago, why wouldn’t it pay 100 percent today when that rate is higher?

“If you were worth it then, why aren’t you worth it today?” she said. “Letting contracts live in perpetuity without negotiating year over year ends up costing your practice.”

2. Create a value proposition. Has your practice opened an additional office location, and are seeing more patients because of it? If so, ask for more money, said Brauchler. Are you reporting favorable quality data for HEDIS measures? If so, ask for money because this data ultimately reflects well on the payer and helps it gain customers, she said. If your practice has implemented an EHR, consider reminding the payer that it benefits from this technology even though it didn’t pay any financial incentives for adoption. Other items for consideration include the volume of patients seen annually (especially if volumes have increased over time), your practice location (especially if the practice is located near a large insured group such as a school), or extended hours or weekend clinics that help avoid costly emergency room visits, she said.

3. At a minimum, ask for a cost-of-living increase. If you can show that your medical malpractice premium went up, for example, you may be able to negotiate a higher rate, said Brauchler. “It’s hard for payers to argue against a rate increase if you can tell them that your malpractice premium just went up 12 percent,” she said.

Don’t stop there, though, said Brauchler. Look at your rent, staff health insurance, and staff salaries. Over time, have they gone up as well? “It should be an immediate win if your own health plan that you provide for employees hasn’t given you a payment rate increase-especially if you’ve seen premiums increase for the last three years,” she said. “Where is the annual premium increase going when you’re still being paid on a previous year’s fee schedule?”

4. Don’t forget ancillary services. This includes labs, x-rays, and HCPCS codes (e.g., durable medical equipment, supplies, and injectables). “If a contract pays 120 percent of Medicare, that’s awesome, but it doesn’t affect any of these services,” said Brauchler. “If you haven’t negotiated the value of your labs, you’re probably paid at the default 42 percent of Medicare by most of your payers. It’s pretty easy to get payers to agree that having a lab done at the time of service is worth at least 100 percent of Medicare.”

5. Involve your coders. Coders possess code-level expertise and can easily identify common payer-specific barriers to getting paid so you can solve these problems proactively through your contract. For example, does the payer refuse to pay an unlisted code? If so, advocate for payment when negotiating your contract-and ask the payer to put it in writing, said Brauchler.

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