The Value of Negotiating Your Payer Contracts

Explore The Value of Payer Contracts Analysis!

Typically, for healthcare organizations, payer contract review and negotiations fall on the Practice Manager, Office Manager, Chief Financial Officer, or Medical Provider who owns the practice. Most of the time, physicians not as involved in the business side of the practice may not fully comprehend the extent of their practice’s bargaining leverage. Let us explore the value of the payer contract negotiation as listed below:

• Start by Prioritizing Payers:

  To optimize your efforts in contacting payers, identify your top 5-10 payers by revenue. This list will serve as a helpful starting point.

• Establish A Connection With The Payer:

  Once you have identified your priority payers, it’s essential to establish direct communication with a payer representative who can assist with your contract. Building a relationship with a live person is crucial to establish rapport and trust, which can ultimately lead to an allyship during payer contract negotiation. Start by contacting someone in the credentialing, provider enrollment, or network management department, as they can guide you to the appropriate representative.

• Obtain the Current Contract and Fee Schedule:

  The best way to understand what each payer is supposed to reimburse your organization and providers is by obtaining and reviewing an original copy of the contract from the payer. Remember that this process may take 45-90 days when requesting it. Recently, most payers require the contract request to be made via email.

• Payer Contract Analysis – “You Can’t Manage What You Can’t Measure”:

  By conducting a payer reimbursement analysis, healthcare providers can better understand the financial implications of contracting with different payers and can make informed decisions about which payers to work with and how to negotiate payment rates and terms. Some of the critical steps in this process include:

  • Identifying the high-volume and high-value medical procedures and services rendered at your medical practice or healthcare organization.
  • Review the fee schedules and reimbursement rates of the payer you want to negotiate with for the above procedures and services.
  • Analyzing the payer’s reimbursement policies, such as deductibles, copayments, and coinsurance, to understand how they affect the amount you will be reimbursed for each claim.
  • Researching gaps in reimbursement between contracted amounts and payments received for specific CPT’s
  • Evaluate the payer’s contract terms and conditions, including exclusions and limitations, to ensure that you comply with their requirements and maximize reimbursement.

• Gain Insight into Your Value Within the Network:

  Evaluate your ratings on social platforms and focus on setting yourself apart from other providers in your area to provide added value to the payer network. Consider what unique services the payer would find beneficial beyond just the size of your practice or the revenue generated. Do you provide preventative care that reduces the number of emergency room visits? Do you offer convenient office hours that patients appreciate? Strive to build additional value for your patients and, therefore, the payer.

• Build Relationships with Payers:

  Create a plan to communicate regularly with your payers. Payers are interested in hearing about how you improve the quality of care you provide, increase value for their members, and reduce costs to steer more patients toward high-value practices. If you only contact payers when you want to pay contract negotiations or have issues, they may not be interested in speaking with you when you seek higher reimbursement rates. Building trust and nurturing payer relationships is crucial for establishing mutually beneficial partnerships.

• Recognize the Differences Between Payers:

  Not all payers are created equal. Therefore, the approach to secure contracts with one payer may not work with another. Are you collecting payer contracts? Are you negotiating? Different payers utilize different channels, and understanding the best one for each payer is vital. As you gain more experience dealing with payers, you will notice patterns and trends that will improve your efficiency.

• Contracting for Multiple Networks:

  Frequently, payer contracts will cover various networks such as commercial, Medicare Advantage, and Managed Care. As a result, it is essential to familiarize yourself with how the payer operates with these products. Each payer uniquely handles these contracts, so becoming acquainted with the language used will be advantageous in navigating them. For example, a significant payer may have a universal contract that is compliant with CMS regulations. In contrast, another major payer may have a contract section for commercial payers that supersedes Medicare Advantage patients.

• Establish Your Unique Selling Proposition:

  When requesting a reimbursement rate increase, illustrate the value you offer relative to your competitors. For instance, emphasize that your practice offers extended business hours during weekdays or telehealth appointments on weekends. To obtain this data, you can use a payer’s website or services like Zocdoc to find nearby physicians. As a result, you may be unaware of your market dominance within a few-mile radius.

• Incorporate an Escalator Clause:

  An escalator clause is a contractual provision that guarantees a specific payment increase during a defined period. For instance, practices could negotiate a three-year contract but include automatic annual increases of 1%. Thus, you will need payer contract negotiation to resolve the prevailing grievances and issues.