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Payer Negotiation: A Little Preparation Goes a Long Way


A little preparation by your practice before reaching the negotiating table with payers could mean a big difference in reimbursements.

Reading the fine print on your payer contracts may seem like more trouble than it's worth, especially if you assume the terms are set in stone. However, physicians have more leverage than they might think, experts say, and with a little preparation may be able to negotiate a better deal.

"A lot of practices don't like to negotiate with payers and may have contracts filed away that have never changed for five or 10 years," said Jeffrey Milburn, healthcare consultant with the Medical Group Management Association. "You should monitor and manage your payer contracts just like you would your investments."

Involve your whole staff in preparing for contract negotiations, said Melody Irvine, owner of Career Coders, a medical billing and coding school. Your billing staff is well versed in common claims issues and can zero in on terms that might be negotiable.

"Look at insurers who reimburse the least and start with them - it may be a tedious job but if you continue automatically signing the contracts every year they will continue to pay you less," said Irvine. "If you are highly paid for one code that is used infrequently but lower for another that you use often - that's something to take up with the insurer."

While it's tempting to gloss over much of the industry jargon in contracts, you should pay attention to a few key terms and conditions to get the best deal, experts said. Also, consider any unique strengths or services of your practice that may help strengthen your bargaining position.

Here are some additional tips:

• Build relationships. Like physicians, health insurers are under pressure to control costs and improve quality of care, and you can help them achieve those goals, said Milburn. "Ask them what concerns them most and what costs are out of control. Pharmacy expenses? Hospital admissions? If you participate in quality or pay-for-performance programs, you can sell the idea to the payer that your practice is worth more because you have those programs in place."

• Differentiate your practice. Size, specialty, and geographic location affect the value an insurer places on your business, but there are other ways to make your practice stand out, said P.J. Cloud-Moulds, head of consulting firm Turnaround Medical AR Recovery. For example, one physical therapy group she worked with offers cardiac rehabilitation, aquatic therapy, and pregnancy support to its patients.

• Read the fine print. Make sure there is an annual renewal option, said Irvine. Often, contracts stipulate a window for negotiating and if you miss that deadline it is renewed automatically. Also, pay attention to notices of changes, said Cloud-Moulds. "Insurers often change contracts mid-year and send out postcards telling you to look up the change on their website. Most providers just toss those cards but you should pay attention because they could be changing something important."

• Beware of 'silent PPOs.' A silent preferred provider organization (PPO) can access discounted rates for services without your authorization, preventing you from billing patients for amounts above the contracted fee. "You could be taking on a lot more patients that you expected because of all these silent PPOs that are signed up with this insurer," said Irvine. "Make sure they are not part of the contract."

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