Handling health insurance contract negotiations can give any practice manager a headache. There’s so much to remember, including which terms to avoid, who your contact should be at the payer organization, which rates work best, and much more. Among the issues that many practices struggle with is how often to renegotiate with payer sources.
Read on to find out some best practices around timing and scheduling your insurance contract negotiations.
Include Timelines in Contracts
Some practices are working under contracts they initially negotiated 10, 15 and even 20 years ago. Think about how much has changed in the past decade—not only did the COVID-19 pandemic shake up your practice’s operations, but your rent probably rose on your location, your staff turned over multiple times, you may be working with a bigger range of insurers, and your specialty areas could have changed. In other words, a lot of factors may be dramatically different compared to when you first negotiated your contract.
One basic rule of thumb is to include a renegotiation timeline in your contracts from the get-go. When you write your contracts, make sure a provision in them states that you will renegotiate them under a certain timeline, such as every three to five years.
Outdated Contracts? Approach Payers Now
The advice above is helpful for practices writing new contracts or who are already in the renegotiation phase, but what if you’re operating on an outdated contract and you know it doesn’t include a renegotiation timeline? Your best bet here is to approach payers right away and let them know you want to renegotiate.
In the meantime, you must pinpoint how strong your negotiation position is. You can either work independently to figure out how reliant this carrier is on you and how reliant you are on them, or you can work with a consultant to help you do so. This typically involves evaluating how many of your patients are insured by that company, and whether you can afford to lose those patients.
If, for instance, just three of your 1,000 patients are covered by that payer, you likely have the upper hand in negotiations, because the payer knows you won’t lose much if they refuse to negotiate with you.
However, if your patient base with that payer is 500 patients and you only have 1,000 total, you don’t have a lot of negotiating power, because you can’t afford to lose 50 percent of your patient base. Therefore, you’ll need to leverage a few key areas during renegotiations.
Leverage High Patient Satisfaction Scores, Specialty Area
If you need to work with a payer who covers a large percentage of your patient base, your first step is to see how high your patient satisfaction scores are. If you have really good patient care scores and patient satisfaction reviews with that insurer, you should be able to leverage that information to negotiate for a better-paying contract.
You can also leverage your standing in your specialty. Perhaps you’re the only dermatologist in a 60-mile radius, so the insurer has no other dermatology practice where it can refer patients. That would also be likely to give you strong negotiation power.
Have Inflation and Other Numbers Ready
If you do get to the renegotiation table, remember to bring along solid numbers to support your position. Bring information about how much inflation has risen since you last negotiated, how your costs changed during the pandemic, what your rent increases have been, any malpractice insurance premium adjustments, staff costs and other information. Plus, the patient satisfaction numbers and other information discussed above.
In addition, if the Medicare Physician Fee Schedule contacted rates have risen since you last negotiated your contracts, bring that information to show that your rates haven’t risen even though Medicare’s have, and that you need to at least keep up with the government payers to stay in business.
Want more tips about negotiating for better-paying insurance contracts? Watch as expert Michael R. Lowe, Esq, provides you with plain-English tips that can help you implement an ironclad negotiation strategy. During his 60-minute online training, “Managed Care Contracts: Proven Language to Get Paid More,” Michael will walk you through the steps you must take to maximize your negotiation know-how. Sign up today!
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