Most practices leave the negotiating of contracts to an office manager or medical director. However, even physicians with a hands-on approach to business and who have used various payers for years may not realize that their practice has more bargaining power than they previously thought. Keep in mind that insurers are responsible in the following order to: 1) shareholders 2) customers 3) contracted vendors (providers). If you want to get better rates, fewer denials and improve your contractual reimbursements, read on:
What you should know before talking with a payer’s rep
- First, identify payers who may be causing reimbursement problems through an analysis of your top CPT codes billed while comparing insurance reimbursement from all insurers. Creating a utilization report can help collect and review data showing where the inequalities lie.On a spreadsheet, enter the frequency of a frequently-used CPT code, with the number of times that was billed to a specific payer, and multiply by the current payment figures. You determine your break-even point by adding your physician reimbursement and overhead costs by the total frequency of all codes reimbursed by the payer for the weighted average costs. Compare that to the weighted average compensation figures. You should now have a better idea of which contacts will need more attention as well as the companies causing the most financial burdens.
- Now that you have solid figures to back up your negotiations, you need to set optimum and minimum target goals, and determine the range between the two. The minimum is the absolute bottom line that needs to be met. The optimum reflects the ideal terms, with the target where you would like to be at the end of negotiation. Once you have all of this information, you are in a better position to negotiate and counter any unsatisfactory payer proposals.
- Beware of “evergreen” clauses in contracts, such as those that typically renew automatically for another year, unless termination notice is given prior to the end of the term within a specified period. If this contract is with a new payer, or one with which you may have had past problems, be sure to write in an “out” period into the contract, such as for 90 days. If the current language doesn’t allow for enough maneuvering room, you won’t find yourself losing money by being stuck in a bad contract.
- Retroactive denials resulting in demands for refunds on claims, even those that are several years old, are not uncommon with some payers. Be sure that there is wording in the contract that prohibits automatically withdrawing payments older than 120 days unless there is a problem within the claim itself.
- Are the payer’s timely-filing deadlines reasonable?
- What is their definition of medical necessity and covered services?
- How do they define (and reimburse) the use of your most frequently-used modifiers
- If using ancillary services, where and by whom must these be performed?
- What fee schedules and payment guidelines do they use?
The role of value-based vs fee-for-service in payer contracts
No discussion of payer contract negotiations would be complete without addressing the part that value-based services are starting to play in reimbursements and renewing contracts. MACRA regulations are playing a major role in the move from fee-for-service (FFS) to value-based care, and this includes coding and billing. Gradually including value-based components into the standard FFS contract can help ease the transition – and because this will be the “new normal”, it’s better to do this sooner than later. Medicare codes such as chronic-care management (CCM) and transition care management (TCM) no longer require face-to-face visits for care outside of the office, yet will continue to produce revenue – be sure that these coding and reimbursement changes are noted in the contract.
Six more tips for negotiating payer contracts
- Consult with an attorney experienced in healthcare provider/payer contract negotiations to review all current and proposed contracts. You should understand the terms, reimbursement rates as well as expiration dates in the contract.
- Know your state’s regulations: states can regulate how you conduct business, regardless of who-pays-what for reimbursement. State laws may affect which services may be covered, timely-filing rules, the amount of reimbursement or other provisions. Your attorney will be able to explain the relationships between state, federal and other regulations and their impact on your practice.
- Perform an analysis of the practice’s “SWOT” status ahead of meeting with payers. You should have data reflecting your practice’s strengths, weaknesses, opportunities, as well as any threats to it.One example of a practice’s strength could include the ability to identify and stop leaks in the revenue cycle without compromising quality of care. A weakness could be the need for analyzing the fee schedule, which is generally a percentage of Medicare’s fees. Having a detailed analysis of your practice’s expenses, spending, forecasting and cost controls can pay off handsomely with increased reimbursement rates.
- Review contracts well ahead of renewal dates so you can notify the company if you need to request changes or cancel. The Medical Group Management Association (MGMA) recommends requesting a 2 to 3 percent rate increase annually instead of one larger 10 percent increase all at once, for example.
- Know your market share: if you are the only provider offering your particular services in the area and get positive patient feedback, you will gain sufficient leverage to improve the chances of successful negotiations and raising your reimbursement rates. Newer practices can use patient-satisfaction surveys for the same reasons.
- Working with a trusted third party billing service can give your rate and term negotiations a boost by providing you with a record of clean, reimbursable claims that meet all payer criteria, whether CMS or private payers. M-Scribe’s experienced personnel, with access to state-of-the-art revenue management technology, have worked successfully with a wide variety of payers. Contact M-Scribe at 770-666-0470 or by email for a free analysis of how we can help with your contractual reimbursement needs.