Practice Management Alert

Hint: Keep the pandemic and its effects in mind as you negotiate.

Payer contract negotiation season is coming up, and 2020 has provided a lot of points to keep in mind. And even if you aren’t planning to approach the negotiating table with a bunch of changes, it’s important to know exactly what’s in each contract with each payer.

Knowing these particulars is crucial for other reasons too, like putting together a compliance manual for your billing/coding department. You need to know what’s in your contracts in order to make sure you’re remaining compliant and have the proper checks and balances, says Terry Fletcher, BS, CPC, CCC, CEMC, CCS, CCS-P, CMC, CMCSC, CMCS, ACS-CA, SCP-CA, owner of Terry Fletcher Consulting Inc. and consultant, auditor, educator, author, and podcaster at Code Cast, in Laguna Niguel, California.

Look to Your Advantage

Physicians, practices, and even large hospital systems have suffered during the pandemic, with fewer patients seeking care or even a temporary ban on providing some aspects of care. Payers haven’t faced the same problem; they’ve still been collecting premiums from those they insure but haven’t had to pay out as much or anything due to some of the restrictions, like the bans on elective procedures.

Keep these disparities in mind as you approach contracts for 2021, Fletcher says. Take a methodical, analytical approach to the negotiating table by doing your homework first.

Unprecedented challenges have rocked the healthcare industry due to the pandemic, and you should not discount those realities. Gather your quarterly and half-year reports and spend time evaluating how exactly the pandemic has affected your business, Fletcher recommends. For example, did telehealth services provide any kind of cash flow during the pandemic? Regardless of your answer for your practice, keep telehealth in mind as a point of negotiation.

Other things to consider: Look at current market trends, look at certain negotiating points, and look at what happened or is still happening during the pandemic, Fletcher says. Do your research on cost analysis by establishing dollar value on both tangible and intangible items. Delivering quality healthcare comes at a cost, and you need to understand that dollar value before you can negotiate effectively.

Three macro trends in healthcare to consider more closely: cost, consolidation, and new technology, says Stephen L. Ondra, MD, founder and CEO of North Star Health Care Consulting LLC in Williston, Florida, in “Macro Trends in Healthcare Delivery,” a chapter in a recent book, Value-Based Approaches to Spine Care. Looking at these macro trends can be an important starting point for figuring out a strategy for success, both in individual business and for a more accessible, equitable, and affordable healthcare delivery system, he says.

Whoever is doing the negotiating also needs to set the terms by which they personally will abide. Fletcher recommends asking yourself whether you’re willing to walk away, as well as knowing in advance which procedures or terms you absolutely won’t budge on and which you’re willing to use as concessions.

“Ask yourself what your practice can and can’t live without. You’re not going to get everything you want; remember, this is a negotiation. So, in the end, you will have to compromise on some points,” she says.

Get Everything in Writing — and Read the Contract

Healthcare contracts are legal documents, but the terms aren’t absolute until the contract is signed. As you’re negotiating, ask for everything to be put in writing in a preliminary format, Fletcher recommends. Verbal agreements by an individual representative may not pan out, and that could put lasting strain on the relationship between a provider and that individual representative or even the entire payer entity.

Once you have everything in writing — and before you sign — read the contract. Look out for one-sided clauses that may not be to your advantage at all, including on amendment provisions, definition of medical necessity, rate changes, timely filing provisions, and prevailing contract and termination language, Fletcher says.

Since healthcare contracts are legal, binding documents, you should also feel empowered to have a consultant help you figure out what to pursue and for an attorney to read over anything before you sign.