Issue: May 2021
Disclosures: Bettridge and Leffert report no relevant financial disclosures.
April 12, 2021
5 min read
Save

Negotiate health plan contracts from a place of strength

Issue: May 2021
Disclosures: Bettridge and Leffert report no relevant financial disclosures.
You've successfully added to your alerts. You will receive an email when new content is published.

Click Here to Manage Email Alerts

We were unable to process your request. Please try again later. If you continue to have this issue please contact customerservice@slackinc.com.

In this issue, Jonathan D. Leffert, MD, talks with professional coder and medical auditor Heather Bettridge, BA, CPC, CPMA, about negotiating with health plans for your private medical practice.

Many physicians feel they cannot negotiate a health plan contract from a place of strength or simply do not know where to begin. They assume attempting to negotiate a contract is hopeless, according to Bettridge, who is associate vice president of the Texas Medical Association’s (TMA) Practice Management Services. Survey data from TMA show that persistence often pays off. Physicians who attempt to negotiate report achieving payment and/or term changes in their contracts.

Heather Bettridge, BA, CPC, CPMA, says these tips will help providers who are negotiating health plan contracts for their practices.

Jonathan D. Leffert
Heather Bettridge

Leffert: What steps should a physician take to effectively negotiate a contractual agreement with an insurer?

Bettridge: To secure a better contract, decide if you want to contract with the health plan in the first place, and if so, how badly and at what cost. To do this, you need to do some homework. Ask yourself:

  • Do the fees paid cover your true costs of doing business?
  • Do you fully understand how the fees are calculated and the implications for the services you offer? For example, is the contract paid on a percentage of billed charges, a fee schedule or a percentage of Medicare? If Medicare, how quickly does the plan update its fee schedules after a Medicare update?
  • Does the health plan drive patients to you?
  • Are the plan’s administrative requirements reasonable for your practice?
  • Is the health plan crucial to your payer mix?

Remember, you cannot carefully monitor payer contracts, payments and adjustments without loading payer fee schedules into your practice management system (PMS) — so load all contracted fee schedules into your PMS. This allows staff to systematically ensure the practice is paid according to contract every time.

If you cannot load your contracted fee schedules into your PMS, have a system in place to habitually spot-check payments. The following is a simple, manual process for monitoring payment and fee schedules:

  • Create a spreadsheet for the top 25 codes your practice bills, showing each health plan’s contracted payment amount for that code.
  • Each week, take a sampling of claims paid from carriers and compare the payment to the contracted amount recorded in the spreadsheet.

Appeal immediately if underpayment or an error turns up. In addition, notify your plan representative to discuss why the mistakes are occurring and how they may be corrected. Keep track of repeated errors; you may be able to use them in your favor during negotiations.

Leffert: What specific factors might help a practice negotiate a contract?

Bettridge: Every practice, large or small, has something to leverage. The key is physicians knowing their practice and local markets. Before engaging in negotiations, assess your position in the marketplace to identify where your strengths lie. Evaluate your competition, determine market saturation for your specialty, identify what makes your practice unique in your market, and be conversant about market issues that affect your practice.

Only after you have a clear picture of how a contract might play out in your practice can you effectively negotiate to get the terms and fees you need to make it worthwhile — or decide to walk away if you can’t. You won’t be successful in negotiations from a position of just saying, “I want to be paid more.”

To improve your chances of successful negotiations:

  • Schedule reminders for all expiring contracts to allow sufficient time for negotiation.
  • Review explanations of benefits to ensure consistent payment in line with the contract.
  • Prepare to speak about market issues affecting the practice.
  • Know the carrier’s competitors’ offerings.
  • Make note of Medicare’s fee schedule for common services and procedures performed in the practice.
  • Be reasonable — not excessive — with requests, and be willing to compromise.

Leffert: How often should a practice review its contracted fee schedule?

Bettridge: Review your contracted fee schedules at least annually and well in advance of your renewal date. Get to know your plan representatives and stay in touch regularly. Negotiations are not going to be successful in an adversarial relationship. The more you stay in contact with them and the more proactive you are, the less likely you are to get into a take-it-or-leave-it situation when negotiating.

Similarly, review your practice’s standard fee schedule for fees set at or below commercial insurance payments. As a guide, determine at what percentage of Medicare payment rates your standard fee schedule is set. If you find it is set at 500% of Medicare rates, this is likely considerably higher than other medical practices, which typically have their fee schedule set at 200% to 250% of Medicare.

Performing this analysis also allows you to verify that no fees are set equal to or lower than any plans’ allowable rate. This is important because if the practice submits a charge less than a plan’s maximum allowable rate, the payment will be the lesser of the two. Payments received at 100% of the practice fee schedule should alert your billing staff that the practice’s standard fee schedule is set too low.

Leffert: What aspects, other than the fee schedule, are negotiable?

Bettridge: When it comes to negotiations, physicians need to know what — and what not — to ask for. Higher payment is typically at the top of the list. Know that plans typically do not put their best offer forward first; assume there’s at least a little room to negotiate.

Your ask should not stop at dollars, though. Consider asking that terms not be set in stone when practice costs are constantly evolving; negotiate incremental increases at predetermined intervals. Legal provisions for liability, arbitration, termination or noncompliance penalties also are usually open for negotiation.

Also, pay attention to contract provisions that may be considered egregious, like requiring you to pay for the plan’s lawyers, judgment and court costs if there is a lawsuit. These are often not covered by medical liability insurance policies and may come out of your pocket. Likewise, contract terminations should be quick and seamless; 30 days’ notice should be sufficient, not 180 days’ or even a year’s notice.

Keep in mind that too many contract change requests can unnecessarily delay negotiations. Weigh the probability of certain things actually happening; sometimes the risk is not worth the time and effort to try to change it.

Leffert: Should practices outsource their contract negotiation function?

Bettridge: There are vendors that can manage practices’ credentialing and contracting; however, these operational tasks don’t necessarily need to be outsourced or become a regularly incurred expense. Your practice can perform them internally using a standardized process to monitor your contracts and review fee schedules, helping you determine continued participation in each plan.

Your practice should have copies of all contracts and fee schedules from the plans. If not, request copies of any missing contracts and fee schedules. If the contract does not contain a fee schedule and is paid based on the carrier fee schedule and not a percentage of billed charges, contact the plan for a copy of its allowables. It is critical to load all fee schedules into your PMS as this not only allows the practice to evaluate its contracted fee schedules, but also will help you determine when to increase your standard fee schedule.

Heather Bettridge, BA, CPC, CPMA, is certified as a professional coder and professional medical auditor by the American Academy of Professional Coders. She serves as associate vice president of TMA Practice Management Services. She can be reached at heather.bettridge@texmed.org.

Jonathan D. Leffert, MD, is managing partner at North Texas Endocrine Center, past president of the American Association of Clinical Endocrinology. He is an Endocrine Today Editorial Board Member and the Putting It Into Practice column editor. He can be reached at jleffert@leffertmail.com; Twitter: @JonathanLeffert.