5 Tips for Negotiating Payer Contracts

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5 Tips for Negotiating Payer Contracts Your
practice expenses are increasing, but your
Medicare reimbursements definitely arent. And
last time we checked, CMS wasnt negotiatingthat
means your financial future depends on getting
the best rates possible from your private payers.
But negotiating payer contracts is an area where
many practicesespecially small onesfall short.
They either arent comfortable with the process,
or they dont even know where to begin. It is
possible to up your practices revenue by
renegotiating payer contractsheres how. 5
Expert Tips for Negotiating Payer Contracts If
you know how to tackle the renegotiation process,
you can improve your practices bottom line and
manage the process moving forward, says Penny
Noyes, president, CEO, and founder of Health
Business Navigators in Bowling Green, Ohio. At
the MGMA annual conference in San Francisco
earlier this year, Noyes offered several tips to
help practices of all sizes renegotiate payer
contracts to get the best terms possible from
payers. Lets make a deal! Locate your contracts
and agreements for each payer. Do you know what
your fee schedules are for your largest payer or
network? Do you know when they were last changed?
What about how to find negotiation terms in your
contract? Do you even know where your contracts
are? Dont panic if you cant answer yes to
allor anyof these questions. When it comes to
payer contract rates and terms, the typical
practice has no idea where they stand. Blame
whoever came before you, jokes Noyes, Its
probably their fault. The first step to
renegotiation is gathering up all of your
contracts, but if you cant find them, dont
worry. Dont be embarrassed. Just request copies
from your payer or network, Noyes says. Start
immediately and dont expect it to be a clear-cut
process. Each payer has its own, unique way of
requesting fee schedules and contracts. You can
expect it to take two months to gather the
required info if youre diligent, and a year to
complete your first few renegotiations, Noyes
says. Ensure that the versions you have are both
current and fully executed, meaning that they
have been signed by the practice and payer. Make
sure you have any addenda and amendments between
the contracts effective date and the current
date.
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Assess the value of each contract. First, figure
out your fee schedules for all of your
codes. Payers put a lot of obstacles in the way
of finding fee schedules, and if you think youll
find it in the contracts youre wrong, Noyes
says. Payers have all sorts of ways to make code
rates difficult to get special fax and email
requests, web portals that provide only a handful
of codes at a time, or vague contract exhibits
referring to undefined standard market
schedules. Noyes suggests developing a
spreadsheet for all of your codes with modifiers
and places of service for each payer product, and
sending it to your payer representative to
populate for you. Hopefully, theyll do so, but
often theyll just send you a full list of codes
for you to search or direct you to a portal, she
says. Do whatever the rep tells you to do. Go
to the portal, send the fax in or email, but get
the rates for everything you do, Noyes advised.
Dont accept that theyll send you just a
handful or the top ten, and make sure you get all
of them. Once you have fee schedules for each
of your payers, you can compare them figure out
which contracts are benefitting you the most, and
which are ripe for renegotiation. Noyes creates a
utilization report to get a truer picture of
each contracts value. Ask yourself what if
each of these payers had all of my business, and
weight it by each code, she says. Its the only
way to get an apples-to-apples comparison of
fees. Once youve decided to renegotiate a
plan, contact your most frequent referrers and
ask them how significant that plan is in their
own practice. The less significant that plan is,
the more leverage you could have during
negotiations. Play hard ball, nicely. Negotiatin
g with payers often means being more aggressive
than you might be comfortable with, says Brenda
Laigaie, an attorney with Wade, Goldstein, Landau
Abruzzo, P.C., who regularly presents at AAO
and other industry conferences. Noyes
agreeswarning shots fired in the form of a
termination notice often begin the process, she
says. Why? Most friendly requests for term
renegotiations are fruitless. The most common
response from payers is Oh, were not
negotiating at this time, and thats why you
submit a notice.
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Keep your notice formal and simple, advises
Noyes. She suggests plain language,
like According to the terms of our agreement in
ltplace your termination section heregt, I can
serve you notice at this time. Please know that
the purpose is to renegotiate and not terminate,
but if we dont come to terms in 30 days, please
understand that this is my termination
notice. You need to know how much notice is
required to make any changes to your contracts.
Search each payer contract to find the notice
termsthey are frequently found in the
termination provisions. Decide which to pursue
first, based off of the notice dates and
financial impact upon your practice. Figure out
your dates and figure out who has the worst
schedules, Noyes says. Then marry the two and
go after the weakest. It might be a long time
before the termination notice works its way to
a human being, says Noyes. Send it to the
notice party stated in your contract, then send
it to your rep saying that it was sent by
certified mail on whichever date, but you thought
it was a courtesy to send it directly to them,
Noyes continues. Some payers say they dont
renegotiate under duress of termination. You can
try without it, but theres no sanction without
the threat . . . set the clock, tell them you
expect them to renegotiate in good faith, and
that you expect a follow up.Penny Noyes Push
for negotiation. You can expect most payers
initial response to inform you of a moratorium on
negotiation or a not at this time message.
Dont accept that. Tell them thats not in the
contract, then move forward on your mission,
Noyes said. Typically, payers will then ask what
youre going for. Ask them if you need to base
this on their proprietary fee schedule, or if you
can propose something based on a certain year or
percentage of Medicare. There may be something
they can put together more readily. The payers
are pretty darn stingy about rate increases
Noyes notes. Like, smaller single digit numbers
two, three, maybe four percent. But if those
codes represent 30 percent of a small practices
business, that can be thousands of dollars over a
year. Tell them your providers are really
disappointed with their offer, then ask to take
whatever percentage seems fair and take a
carve-out on certain
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profitable procedures, advises Noyes. Or,
accept the offer if you can make it a three-year
deal and put a 2 percent escalator in the
contract. Tip MGMA recommends against allowing
payer contracts to go unchanged year after year.
Its easier to ask for smaller increases more
frequently as opposed to a larger increase all at
once. Know where you stand. Ask yourself this
very real question are you willing to walk out
on the contract and actually terminate if the
network or payer wont work with your terms?
Select outdated or outmoded payer contracts, and
be firm on the terms you want. Its up to you to
decide what to accept. Its important to create
realistic expectations of potential rate changes
for yourself and your physicians. Know that your
major payers are more or less aware of each
others rates when you try to leverage
them. Tip Beware of payers who try to shift
money around. It may make it look like youre
getting a better deal than you actually are. For
example, a payer might increase your EM codes
but decrease your drug reimbursement. You
should be verifying your rates annually. Ask
yourself, what if you get notice saying rates are
changing in 60 days, and by not objecting within
30 days of notice youre accepting them? Noyes
says, advising that you manage your payer
contracts even if you dont plan to renegotiate.
Its good to have these on hand so youre never
crunched for time. You cant ignore these things.
Rates can change without you knowing, so keep
your amendments in order and up to date once a
year.