How to Successfully Negotiate Payer Contracts

How to Successfully Negotiate Payer Contracts

Payer contract negotiation is complex and often stressful, but it is essential for maximizing provider revenue. Most healthcare practices assign contract negotiation to their practice manager or administrator. However, even experienced managers may not realize their practice has more bargaining power than assumed.

Knowing when contracts renew and when payers require notification is crucial for successfully negotiating payer contracts. Reviewing contracts and noting important dates is critical to avoid missing them. Although it sounds simple, providers can easily overlook renewal dates with many contracts. Keeping up with these dates requires knowing where to save payer contracts for easy access. Without readily available agreements, you won’t know when to negotiate.

Next, perform a payer reimbursement analysis on essential services or frequently used CPT codes. Calculate the revenue generated from specific CPT codes and compare it to practice costs. Identifying payers that pay lower than contracted amounts for CPT codes helps determine revenue loss. This process lets you understand which payer contracts to review and where to negotiate for profit.

Thirdly, the contract language and terms must be closely reviewed, especially the evergreen clauses. These clauses automatically renew the contract unless you provide a termination notice before the term ends. Always negotiate a clause that allows contract termination with a 90-day notice period to avoid losses.

Another situation causing revenue loss is retroactive denials, which demand refunds on claims, including older ones. Ensuring the contract prohibits withdrawing payments older than 120 days is essential unless there’s a claim issue.