How adept is your medical practice at negotiating insurance contracts? As you know, Medicare and Medicaid payments have not kept pace with the increased medical service costs. Negotiating your contracts with private payors is the best route to get higher revenues.
Did you know your insurance contracts are renewed at existing rates unless you negotiate a rate change? By initiating a rate change request timely, you can get at least a 2% to 3% annual increase in your insurance contract rates. Private payors also update their fee schedules mid-year; this is another opportunity for your medical practice to negotiate the insurance contract rates.
Gradually nudging rates in the right direction is a more viable strategy than negotiating significant hikes in insurance contract rates once every three to four years.
If you want to improve revenues significantly without increasing the patient base, you must implement a systematic insurance contract negotiation system at your medical practice.
Here are six tips to help you negotiate insurance contract rates from a position of strength –
- Begin by reviewing the current contract rate with the market rate.
Compare three things here – the market rate for in-network providers, your service fee schedule, and your insurance contract rate for each service. Do you have some payors whose rates are well below the market reimbursement rates? Also, the 80:20 rule will apply, i.e., 20 % of contracted payors will contribute 70-80% of your revenue collections. These are the payors you must approach first for insurance contract negotiations. The data can be extracted from your EHR or provided by your outsourced medical billing service.
As you negotiate reimbursement rates, focus on high-volume services, where even a marginal increase in payment rates can significantly improve practice revenues. At the same time, if certain low-volume services consume substantial provider time, you must also renegotiate those.
- Gather data on the reputation of your practice.
Your practice’s reputation, along with your value proposition in healthcare, will be significant in negotiating future insurance contract rates. Have a system for regularly conducting patient satisfaction surveys. Gather feedback on your practice’s reputation through hospital administrators and referring physicians.
Suppose your practice is the only care provider in your medical specialty in your location (or is known for specialized care), that gives you some negotiation leverage. Insurers offer more flexible contract terms in areas with little or no coverage.
Accreditations, special services, and high patient rankings all put you in a position of better bargaining power.
- Show numbers that substantiate your pitch for higher rates.
A payer’s top priority is ensuring the predictability of costs. If you have a track record of controlling costs or have demonstrated restraint in using expensive ancillary services, present that data in your meeting with the healthcare plan representative.
- Monitor the renewal dates of contracts.
As stated above, the health plan contract will renew automatically unless you propose a modification. Therefore, you must know when a contract expires and how much notice you need to negotiate the insurance contract rate change. To make things easier, nominate one person within the practice to monitor the healthcare plans. They can also upload policy changes on the hospital/ medical practice intranet and communicate the information to the clinical staff.
- Evaluate shifting to value-based payment from fee-for-service.
Healthcare plans are more likely to offer higher reimbursements for providers willing to shift to a value-based payment arrangement. With CMS and Medicaid moving in the same direction, it makes sense for medical practices to focus on meeting the quality and cost targets attached to value-based payments.
- Negotiate terms other than the fee.
While insurance contract rates affect your reimbursements the most, other aspects of the agreements will have a bearing on effectively you can collect. These contractual elements include:
- The time allowed by the insurance company to submit claims. For instance, if the contract provides for claims to be submitted within 60 days of the service date, try for at least 90 days.
- The time to appeal denied claims.
- The types of medical treatments which require prior authorization.
- The process for adding providers or new service lines to the plan.
- The time allowed to propose modifications to the agreement.
If you want to dive deep into the topic of payer contract negotiation, download this fellowship paper published by the MGMA in 2018. – Understanding the Shifting Models of Payer Contracts.
Remember – If you are unprepared for the insurance contract negotiation process, you could be leaving thousands of dollars on the table. Work with your medical billing service to identify lagging contracts, crunch the numbers, and submit recommendations to maximize revenue.
Also, outsourcing certain non-clinical tasks will give your staff more time for patient care (which will be vital to improving the practice’s reputation) and time to focus on critical aspects such as insurance contract management. PracticeForces virtual assistants can help you with patient eligibility verifications, prior authorizations, medical coding and billing, patient billing, and much more! Tailor your hiring requirements to support the unique needs of your medical practice. Starting @ as low as $1,000/month. Call us now – at (727) 202-5429