How best to negotiate contracts with insurance companies

June 25, 2011

Gather some tips on negotiating contracts with health insurance companies.

Q: Although I believe that my office staff is doing a great job collecting fees from my patients, I remain concerned that the insurance companies continue to underpay or, worse, deny paying for services. Do you have any quick, general tips on how to best negotiate my contracts with health insurance companies? Second, how do I ensure proper reimbursement?

A: More often these days, an individual practice has little ability to negotiate specific terms with managed care companies unless it is in a position of being one of few in a geographic area or if it covers a substantial number of covered lives for that carrier. However, this does not mean that a doctor should not manage his or her relationships with the payers and make every attempt to optimize the practice's position.

The first step is to assess payments on individual services from the detailed explanation of benefits (EOBs) to see what is being paid for each class of service billed. This exercise also will show if changes occur or if some payers are markedly lower in reimbursement than others. The payers to work on are obvious-those that pay in the lowest range for your services and those that are contributing the most significant percentage of your practice revenues.

Answers to readers' questions were provided by A. Michael La Penna, The La Penna Group, Inc., Grand Rapids, Michigan; and Judy Bee, Practice Performance Group, La Jolla, California. Send your practice management questions to medec@advanstar.com
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