22 Nov 3 Things to Know When Negotiating Payor Contracts
We’re heading towards the end of the year, and it’s a busy time for medical practices. The holidays are almost here, flu season has begun, and employees are starting to use unused vacation time. It’s open enrollment and, on top of all that, you probably have some payor contracts up for renewal. Despite everything, taking a little extra time now to plan your payor negotiations could yield big benefits in the new year.
Know your stats Having a firm grasp on your practice’s performance data is essential to entering a contract renegotiation with a solid foundation. Payors are constantly looking for ways to reduce the cost of care. Additionally, with the move to value-based contracting, being able to quantitatively assess the ways in which you provide quality care is essential. Do you have a low rate of hospital readmissions? Do you have high patient satisfaction scores? Do you have creative approaches to keeping costs down? If you aren’t already collecting this data on your practice, now is the best time to start.
Know your fee schedules Keep an eye on changes to the Medicare fee schedule. Many commercial managed care fee schedules are calculated as a percentage over Medicare. If your commercial payors’ rates have remained static even as CMS has bumped up their payments, you’re potentially missing out. Even marginal increases can add up to significant amounts over time.
Know your codes Take an inventory of your most commonly billed codes, and track your payment and denial rates. These will provide a focus for your time and energy when beginning the renegotiation process. You may be able to advocate for some “carve outs” on specific codes. For example, you may be receiving 110% of Medicare on most codes, but consider negotiating a higher rate on those you bill most frequently.
Negotiating and renegotiating are unpleasant processes for most of us. David Norris, MD, MBA has some great words of advice on what to keep in mind:
Know what you want—and the outcome you seek—even before you start the renegotiation process. You’re renegotiating these contracts [with insurers] so that you have capital to continue to provide excellent care to their beneficiaries.