A few tips for payer negotiations by physician practices

April 15, 2019

Think of all the payer contracts your practice has to manage. Although they cover many of the same procedures, each payer contract contains a unique set of rules and terminology that affect your practice’s financial well-being.

Because there are so many, even minimal gains on multiple contracts can provide a huge boost to profitability. So when you’re going into payer contract negotiations or renewals, use the following tips to ensure your practice comes out ahead.

Look for Evergreen Clauses

Evergreen clauses are included in the contracts of all types of companies, and honestly, they’re a bit sneaky. These clauses allow payers to renew contracts automatically upon expiration. So, if an expiration date slips by, you could end up stuck with outdated contract terms that don’t meet your practice’s current needs.

Try to get evergreen clauses eliminated from your payer contracts. If a payer refuses, get language written in requiring the payer to provide advance notice that the contract is set to expire. This way, you can terminate the contract and renegotiate if necessary.

Obtain a Reasonable Timely Filing Date

Although practice management software has made it easier for providers to file claims on time, some practices still incur timely filing claim denials. The problem is that some payers, like Medicare, don’t even allow providers to appeal timely filing denials under normal circumstances.

Therefore, identify the terminology regarding timely claim submissions and make sure your practice has at least one year from the time treatment is rendered to file claims. Anything less, and you increase the likelihood of receiving an excessive amount of timely filing denials.

Build Towards Optimum Reimbursement Rates

It’s difficult to secure substantial reimbursement rate increases all at once. A better way of obtaining ideal reimbursement rates is requesting small increases during each payer contract renegotiation until you reach the ultimately desired rate. Remember, a slight increase on a popular procedure can go a long way toward increasing revenue.

Gauge the Market

Go online and conduct research to determine if you have any competition in your area. The further the nearest competitor is, the more leverage you’ll have during contract negotiations. Since payers don’t want to lose out on procedures from an entire market, a lack of competitors means you have a better chance of locking in higher reimbursement rates.

Advanced Notice of Policy Change

Sometimes contracts include vague legalese that allows payers to change fee schedules without providing advance notice to providers. There isn’t really anything a provider can do about a change if the terminology allows for it.

That’s why it’s important to negotiate notices of policy change into your contracts. Demand that the payer provide advance notice to your practice and lets you decide whether or not you agree to the terms. If the terms aren’t favorable, you should be able to terminate the payer contract without penalty.

Payer contracts are an essential part of the revenue cycle. Unfavorable terms can hurt your practice in both the short- and long-term. So, don’t be afraid to go back-and-forth with payers until ideal terms are reached.

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