Trying to get a better deal from a payer? Hey, don’t laugh: It’s possible. But you’d better know your strengths and watch your language while at the negotiating table.
Why so glum? Is it time to renew you payer contracts? Now, now - while there’s no need to wail and gnash your teeth, there are certainly plenty of reasons to approach this endeavor with an air of caution. First of all, payer contracts are notoriously long and tedious to parse. Second, negotiating an insurance contract can be like making dinner for a mercurial toddler: Even though you both agree macaroni and cheese would be a perfectly fine meal, it might be another story when the plate hits the table. Similarly, once you agree to a payer’s rates, you also agree (and must understand) that they can change their reimbursement policies - medical or administrative - at any given time.
“It’s the only business where you sign a contract and it basically means nothing,” says Susanne Madden of the Verden Group. “They change their policies based on where they do not want to pay out money for care rendered. That’s the nature of the insurance business.”
And as if this abyss of uncertainty isn’t enough to cause you stress, that’s not all you need to look out for. Some of the other sticky spots are located in the language of the contract:
So how do you avoid getting caught up in this sadistic shell game? First, understand you have more power than payers would like you to believe. Even though you aren’t their primary concern (after all, you aren’t their customer, the employers are), without you their network dwindles in size. While you will have little success insisting that payers’ policies shouldn’t change, you do have some other negotiating tactics at your disposal to help you avoid being taken advantage of.
Get your facts
First, determine if a certain payer is even worth contracting with again. By going into negotiations armed with specific data, you drastically increase your leverage and, if all goes well, increase your bottom line. The process is pretty simple:
Once you see which providers are actually coming through on the volume and the reimbursement (and which ones aren’t), you know where you stand, and as Todd Welter of R.T. Welter & Associates, Inc., advises, “If they don’t bring the volume, you don’t allow the discount.”
Watch (their) language
If you’ve determined that a certain payer is worth working with, it’s time to fix the sticky parts of the contract so you have some measure of control. Some points you or, better yet, your attorney should insist on are:
While payer contract negotiations can be onerous tasks, they needn’t leave you in the dark wondering where all your money has gone. By following the advice above, you can avoid needless headaches, and hopefully avoid scraping too much macaroni and cheese off the floor.
Kellie Rowden-Racette is an associate editor with Physicians Practice. She can be reached at firstname.lastname@example.org.
This article originally appeared in the March 2009 issue of Physicians Practice.