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Convincing payers to change contracts may seem like a losing battle, but experts say getting what you want isn’t impossible
The divide between practitioners and insurance companies continues to grow as regulations mount and reimbursements shrink. Being prepared with the right numbers and list of demands could help private payers be more flexible during contract negotiations.
After owning her own practice for more than 30 years, Rebecca Jaffe, MD, MPH, says she has never been successful negotiating with private payers on contracts. “The big payers don’t want to negotiate with small practices in any way. They say take it or leave it,” says Jaffe, owner of Jaffe MD and Associates in Wilmington, Delaware.
Many practice owners can relate to her frustrations, as reimbursements shrink and communications with private payers often make them feel like small fish in a big pond. Size matters when it comes to negotiating with private payers, and the reality is that small practices are at a disadvantage. Experts agree that insurance companies don’t make negotiating the specifics of contracts an easy process. But they say it can (and should) be done.
“Every practice needs to engage payers about rates,” says Reed Tinsley, a healthcare consultant in Houston, Texas. “How do you know what you can and cannot change in a contract if you don’t try?” The biggest mistake that many practitioners make is thinking that negotiating contracts is a waste of time.
What’s your relationship status?
Before calling a payer to demand more from them, it is important to know the current value of the relationship you already have. Tinsley says this starts with creating a spreadsheet with your top eight payers and your top 25 current procedural terminology (CPT) codes to analyze financial performance of the payers and their reimbursements. This will help you to identify what increases in reimbursements you want and be able to quantify it to payers.
“What you are currently getting is the floor, and what you optimally want is the ceiling,” Tinsley says. “You want to negotiate between the ceiling and the floor. The definition of a successful negotiation is any betterment of the current situation.”
Know the market
How many other solo practitioners or specialists are in your area? How many patients do you have with this payer? Knowing these numbers are important, because they put your demands into perspective.
“The more patients you have with a particular insurance company, the more willing they will be to work with you because they don’t want to lose your business or lose the contract with employers,” says Melody Irvine, medical consultant and owner of Career Coders LLC in Loveland, Colorado.
However, if you know you have substantial competition from other practices, be prepared to play hardball with payers. It will be important for you to stress that your goal is to create a better, cost-effective healthcare experience and be able to show payers the numbers. “For example, if a solo practitioner is trying to negotiate better rates with a payer, most likely the payer will tell them something to the effect of, ‘We have 100 providers in this area that will see your patients if you don’t want to accept our terms,’” says Nancy Brown, chief financial office and partner of Think Big Health Care Solutions in Wellington, Florida.
Talking the talk
Once you decide exactly what you want in your payer contracts, an important step is deciding who is going to do the negotiating. This depends on who in the office is the most confident and has the most experience with complex negotiations. Many physicians hire consultants or attorneys because they lack the time to talk to payers themselves. If you want to do your own negotiating, it’s important to make sure you can keep your emotions and your business separate.
“Negotiating a practice’s contract must always be done by the most qualified person the practice can find/afford. These contracts are legal documents that can be confusing and damaging to the practice. It’s not going to matter how efficient and well-oiled your practice operations are if the contracts are poorly written/negotiated,” Brown says, adding that someone with a cool head should be doing most of the talking with payers. “Ultimately, they may need to bring the practitioner in to finalize the deal or talk peer-to-peer with the insurance company’s medical director, but that is it.”
Your business manager, a consultant, or a healthcare attorney often has more experience with negotiating. “There are always risks involved in negotiating contracts, and the doctors feel caught between their ability to keep their practices open and contracts that are unreasonable. I always feel it’s good for a healthcare attorney to view the language of the contract,” Irvine says.
Reimbursement will be the biggest area of debate in the contract. To make sure your requests are reasonable, you will have to focus on procedures you perform most often.
“Calculate your revenue per visit. Calculate the total dollars you received for your work over the previous 12 months and then divide that by the total number of visits. Next make the same calculation for each insurance company. Run reports to look at the top CPT codes you bill and compare reimbursement with your all your insurance contracts. This analysis will help you identify low payments for codes that you use frequently,” Irvine says.
Brown says requesting flat rates for in-office procedures is smart because these are often easier for patients and lower costs for payers.
It is important to know how your rate would compare to a hospital or surgery center. It is also important to know what other area physicians charge for similar services. If you are already cutting costs with certain procedures, now is the time to bring those numbers to the negotiating table.
“If you have done the procedure in-house already, use your practice’s data to your advantage-if the data shows improved outcomes from performing the procedure in-house,” Brown says. “If you’ve been doing it outside of the office and wish to continue, you’ll need to provide the insurance company with evidence of improved outcomes, lower admittance rates, etc.”
There are areas to negotiate in your contacts beside reimbursement. The long-term goal of any contract negotiations should be a more fair landscape for patient care, and cutting down paperwork could make your and your staff’s workflow easier. Tinsley suggests asking payers to eliminate pre-authorizations and other back-end documentation for common services you provide that the payer has never denied in the past.
Irvine says to it’s important to go over coverage for wellness, preventive care, and ancillary services that you already offer or may be adding to your practice within the year. She adds that you should negotiate adding language that allows you to get out of any agreements that aren’t working.
“Write a 90-day out into the contract. If you find yourself in a bad contract where you’re just losing money hand-over-fist, you can get out in 90 days without cause,” Irvine says. Clauses that ask for prompt communication with the payer are also important. “Make sure the contract did not revert back to the original contract before negotiations,” she adds. “Eliminate retroactive denials-demands for refunds on claims that can be many years old. Have wording in your contact that would prohibit health plans from rescinding payment [after a certain amount of time] after receiving the claim.”
Meeting payers halfway
Negotiating with payers doesn’t always have to be a David-versus-Goliath showdown. You are instrumental in showing the payer how changes in your contract can lower the overall cost of healthcare for them as well. Tinsley says it is important to show payers how you practice efficient and cost-saving healthcare-and you should be paid for that too.
“Some payers agree that doctors need a raise, but they don’t want the word to get out,” Tinsley says. “The reason why outcomes are so important is, if a payer agrees that you are operating cost effectively, but won’t give you a raise, they are saying they don’t care about cost-effective healthcare.”
Tinsley says that you could request a temporary increase in a service, such as a complex nosebleed, that requires more intensive treatment, but would keep a patient out of the emergency department. If you agree to evaluate the cost-effectiveness of this increase for a year, and it saves costs for the payer, it’s a win for both parties.
When to walk
Jaffe says she had to walk away from a payer that paid her less than her costs for immunizations. “Some patients left the practice because their employer had the insurance. We revisited the contract two times to make sure it was the right decision,” she says.
If a payer is costing you time and money, then you may want to consider walking away from contract work with them. This doesn’t necessarily mean your relationship is over. “You might make more money being out-of-network with certain payers,” Tinsley says.
In a situation where you are deadlocked with a stubborn payer on an important clause, you may be able to circumvent them altogether. “Some physicians are now even working directly with employers. Direct agreements compensate the physician fairly without compromising potential savings for the employer,” Irvine says.