A frequent question arise from every physicians is how they can negotiate better Payer contract. It’s not easy negotiating the best Payer contract terms requires a significant amount of preparation and work along with good negotiation strategies. In addition, there are many specialty specific and practice specific nuances that physicians need to consider as part of their Payer contract negotiation plan.
You have more control over the terms of your payer contracts than you realise (including how much you’re paid). Knowing how you can get the highest return from payer contracts is essential to your practice’s success especially when you consider that about half of your revenue is most likely tied to your commercial payer contracts’ fee schedules.
When researching a Payer, particularly if your practice has not previously contracted with that Payer, you should consider the following questions:
⇒Which products does the Payer/medical group/IPA offer (i.e., HMO, PPO, ACO, POS, Medicare, Medi-Cal, ERISA/self-funded, Workers Comp, etc.
⇒What is the Payer’s market share in your area
⇒What is the total number of enrollees by product
⇒Is the Payer financially solvent?
⇒Are your referral sources participating?
⇒How many and what is the nature of patient complaints that have been filed against the Payer?
⇒Does the Payer have any plans for increasing the number of enrollees in your service area or for adding new products? (read their press releases)
⇒What is the average turnaround time on payment of claims?
Best Practices for Payer Contracting
Negotiating a new or preexisting contract with a Payer can be tough, but it doesn’t mean that your practice has zero chance of getting what it wants.
The key is to go in prepared. With a few proven strategies, called 10 Best Payer Contracting Practices you can increase your reimbursement and receive more patient referrals with a little help and it doesn’t matter whether you’re a novice or an expert negotiator.
1. PREPARE:
Practice 1
- Know your insurer. Know your history with the insurer. Volume of your clients;
- Why the insurer should include birth centres in their network
Practice 2
Benchmark against Medicare and other payers with which you have contracts to identify areas where you may be under reimbursed compared to the market. Use the “20/80” rule.
Practice 3
S – Strength
W – Weakness
O – Opportunities
T – Threats
SWOT Analysis for your payer fee schedules: Look for opportunities to increase reimbursement for services that are not reimbursed at market competitive rates, and assess your charge master.
Practice 4
Who will contract on your behalf and who at the Insurer “Reach out to the person responsible in your region for facility contracting at a Payer. Who is that person?
Practice 5
Proposal “After the Initial email or contact, prepare a Proposal Letter and Rate Sheet.
2. NEGOTIATE
Practice 6
Deliver highly impact proposal letter to a facility contracts manager at the payer. Have available data regarding your outcomes, birth centre outcomes, licensing, accreditation, etc.
Practice 7:
More follow up, follow up again and again, and keep the payer in constant communication.
Practice 8
Evaluate payer proposals and look for ways to optimise counter offers. If payer does not provide a proposal or counter proposal, don’t take first “No” as an answer.
Practice 9
Review contract for language that affects operations, including reimbursement.
3. MONITOR
Practice 10
Monitor payments, identify reimbursement issues quickly and work closely with your payer representatives to resolve any payment issues as quickly as possible.
What is a Closed and Narrow Network?
A closed network is a payer network which currently has participating providers similar to you and, therefore, is not adding more similar providers, including you, to their network.
A narrow network means it has just a few participating providers of a certain type and are not looking to expand further.
How to differentiate your value
- Clinical Benefits leading to cost savings
- Product Advantages
- Service Advantages
- Geographic Coverage
- Referrals
- Out of Network Business, Book of business potential
Review contract for language that affects reimbursements
- Term and termination (90 days without cause)
- Use of non-par providers, e.g., ancillary services, anaesthesia
- Timely submission of claims
- Timely claims payments (30-45 days from receipt of claims)
- Claims Payment Adjustments: You are responsible vs. a withhold from future payments
- Retrospective review of over payments, 90 days maximum, 180 is usual, pay them vs. payer deducts automatically
- “Favoured Nation”‐ Never!
Payer Market Fee Schedule or your billed charges
- Identify the top revenue producing codes which drive 80%+ of your revenue and compare payer’s fee schedule to your billed charges
- Compare the payer’s market fee schedule to local Medicare rates and to the weighted average rates of your commercial payer fee schedule for top codes
- Always make sure your billed charges exceed the highest rate of any payer contracted
- Rate for the same HCPCS or CPT code and it is best to set them at UCR thresholds
- Often these payer fee schedules are very low
Percent of Billed Charges
- This seems like it has no downside
- However, be aware of limitations such as “not >X% of Medicare”,
- Also, with complementary payers, if it is set too high this may prevent claims adjudication by the primary payer
Footnotes
If you’re tired of having to work harder and see more patients just to maintain your practice, then look at your payer contract could reveal ways to increase your income without increasing your workload. Follow the 10 Best Practices, in order (Prepare, Negotiate and Monitor), know your value proposition. Before you sign a contract, audit the contracts’ language even if you have not had operational problems and be aware of the types of fee schedule amendments and optimise them.
Speak to one of our experts today for Payer Contracting Questions, please phone us at +1(302) 613-1356 or write us to support@wonderws.com
We look forward to hearing from you and are glad to provide information that helps you to run a more profitable practice.
