Practice Management Alert
Negotiate Your Payer Contracts With Confidence
Think about why your practice deserves a raise. “Most people will take ‘no’ for an answer, so many practices don’t even think about renegotiating their contracts,” said Marcia Brauchler, CPB, CPC-P, CPC, CPCO, CPMA, COC, CPPM, during her recent HEALTHCON session. You might not enjoy discussing payer contracts, but you must. If you're not scrutinizing them carefully, you might be missing out on rightful payments. By looking to enhance your rates or improve the conditions for payment under some payer contracts, you could increase the revenue of your practice exponentially. Prepare Before Negotiating Many practices have many different contracts to negotiate. Additionally, “for a typical negotiation, we might send a negotiation letter April 6 and won’t see a rate increase until August,” Brauchler noted. That means beginning negotiations early, and having all your ducks in a row before the process begins. Things you are going to need prior to negotiating include: Start Early and Prove Your Practice’s Value to Payers April through July is the best time to complete the negotiation process. After that, insurance companies have already locked in their directories and are ready to go to print for their open enrollment periods in October. During the negotiation process, it’s important to prove how valuable your providers and practice are to the payer. Have you made positive updates to your practice since you last negotiated with the payer? Mention things like staying open later on Fridays, opening new locations, or adding new providers to take care of more members — this proves you are increasing your value as a practice and are very appealing to the payer. Remember that payers aren’t interested in how your waiting room looks or what type of music is playing in it. They are interested in how you are keeping patients out of the emergency room, or that you are controlling costs. Learn Effective Negotiation Strategies In negotiations, use the payers’ notices or mailings to your advantage. “If they’ve ever sent you a notice of material change, you can say, ‘I just got this from you and I didn’t know what it was, but it made me look at my contract and I realized this contract is from 2010, so we’re going to need to renegotiate that,’” said Brauchler. A huge tip she offered to the audience: Look at your local hospital’s contacts. “If your doctor has privileges at a hospital in the market, those hospitals have directors of managed care who are responsible for negotiating with all the same insurance companies in your market. Just call and say, ‘Hi! Dr. Smith has asked me to look at our insurance contracts and I don’t know who to work with at Aetna. Can I borrow your Aetna contact?’” Brauchler suggested. Take note: Mandated fee schedules are non-negotiable. Watch Out for This Clause to Protect Your Bottom Line When you negotiate, never agree to an “escalator clause” your first year. You only want to agree to that in years two or three. “After you get a signable first-year rate, then you can agree to an escalator; otherwise, they are going to lock you in at a lower rate and escalate you up to where you want to be over years,” said Brauchler. Escalator clause defined: An escalator clause in a payer contract allows for an automatic increase in the rates specified in the contract. This increase is typically tied to an explicit index or rate of inflation. The purpose of an escalator clause is to ensure that the value of the contract keeps pace with economic changes over time. Make Permanent Improvements to Your Contracts “You want to define your year of Medicare and your geographic adjustment,” Brauchler said, meaning that if you live in an area with a high cost of living, you need to account for that. “Be sure your practice charges are in excess of your maximum contract at the allowable highest amount that anyone is willing to pay you for that service.” Additionally, avoid agreeing to any sort of anniversary date. Having an agreement where you can make revisions after 90 days or, better yet, any time something is submitted in writing and both parties agree, is more beneficial. Better still, you won’t need to watch a calendar. Also, be very clear with what you want as a rate from the payer. Do not be afraid to talk real numbers, and don’t make them guess what you want. Save time and tell them “we know you are going to send us 1.9 or 2 percent increases. That’s not what we’re talking about. This is a 20-year-old contract with 30 doctors who haven’t had a rate increase,” Brauchler suggested. Be prepared to still get turned down and go back and forth many, many times. Regularly revisiting and renegotiating your contracts is crucial. Maintain a fixed renegotiation schedule, monitor it closely, and initiate the process six months prior to the term end, especially for contracts spanning two or three years. Watch for the Official Contract and New Rates Finally, when negotiations are over, ask for a counter-executed copy of your agreement to be sent along with your welcome letter. This welcome letter, along with the effective date, is considered a legally binding agreement between you and the payer. “Most people never get this [welcome letter], so I recommend having a $20 gift card and telling whoever gets the mail that when that welcome letter comes in a big white envelope, with the company’s logo on it, you get this gift card, because you want everyone on alert for that document,” said Brauchler. Brauchler also reminded her audience that it’s up to them to make sure the new rates are being reflected correctly on the effective date of the contract. “It’s on you to police them and make sure they’re paying correctly.” To do this, you should give your billers and pre-authorization coordinators a cheat sheet, so they are aware of the correct contract payment amounts. Lindsey Bush, BA, MA, CPC, Development Editor, AAPC
Practice Management Alert
