Tips for Doctors on How to Negotiate Reimbursement Rates with Health Care Plans

As practice expenses increase, the best way to stay in business will depend on how successful you are with negotiating contracts with health care plans. The best way for negotiating fees with health care plans is to have more leverage. Below are some tips and tools on how to effectively negotiate.

“Readiness is everything and benchmarking will provide the quality and efficiency needed to engage in strategic planning.”

  • Analyze strengths and weaknesses
  • Maintain data about utilization, revenue, and expenses
  • Measure quality
  • Regularly survey patient satisfaction
  • Rank referring physicians by frequency and type of referrals
  • Keep abreast of the industry and learn from others

“Analyze the fee schedule of a payer will help with calculating the weighted average reimbursement payment.”

  • Create a spreadsheet listing every CPT code and the number of times it was billed for that payer
  • Multiply the use of each code by the proposed payment of the payer
  • Add together all of these products, and divide by the total frequency of all codes to determine the weighted average payment for that payer.

“Monitoring contracts provides a systematic way of allowing contracts to go unchanged for several years.”

  • Know when each of your contracts expires and how much notice you must give to make changes
  • Analyze the contract and determine whether changes are needed
  • Caution physicians in your practice against signing any paperwork they receive (e.g., addressing rates, charges, reimbursement, or network participation)

“Determining your position is important in order to determine what percentage of your business the payer represents.”

  • Know your alternatives including BATNA
  • Monitor your payer mix year to year
  • Set a bargaining range that includes an optimum, minimum, and target goal.

    • Optimum is the starting point, the terms you consider ideal
    • Minimum is the point that must be met for you to sign
    • Target is the point you would like to end up after negotiation

“When you should walk away? When you are receiving low contract rates.”

  • Do not accept poor contract terms
  • Decide on your bottom line ahead of time after weighing all the factors

“Negotiating the contract is important so that you are meeting your market needs.”

  • Contact the plan representative and set a face-to-face meeting
  • Present well-organized and clear data
  • Present requests for changes based on your optimum objective before new terms are offered
  • Basic negotiating principle is that you are negotiating a relationship, not a transaction
  • Understand the goals of the other party, be polite and listen carefully to what the other party has to say

“Fees are not the only items to negotiate there are other contractual elements to consider.”

  • Authorization process for treatment
  • Period specified for submitting claims
  • Period allowed to appeal a denied claim
  • Requirements regarding use of oral or injectable drugs
  • Time specified for timely payment and interest paid for late payment
  • Process for adding new service lines or adding new physicians to the plan
  • Period required for providing notice of modification proposals
  • Cancellation clause, including the advance notice required