Rising inflation increases your practice’s costs. But Medicare fee schedule updates have not kept pace with inflation. Negotiating insurance contracts with private payers can grow your practice’s revenue without sacrificing patient care. Here is how to negotiate insurance contracts.
When Should You Negotiate Insurance Contracts?
Many insurance contracts automatically renew unless you request changes. Your practice should examine your contracts annually to determine where updates are needed. Negotiating for a 2% or 3% annual update will save you time and frustration over seeking large, infrequent payment increases.
Insurance companies also update their fee schedules frequently. Any annual or mid-year fee schedule update is an opportunity for your practice to negotiate a higher payment rate. If a payer’s fee schedule updates do not seem to be in line with the market, your practice can ask to open negotiations and work toward a better deal. You can also build a negotiation period into your contracts for any mid-year fee schedule updates.
If your practice is not regularly renegotiating contracts with insurance plans, you may be leaving thousands of dollars on the table. A strong contract negotiation process will make your practice more financially secure and help you provide the best care for your patients.
How To Negotiate Insurance Contracts: Five Key Steps
Many physicians find contract negotiations awkward or uncomfortable. But negotiating insurance contracts is a crucial skill for keeping your practice financially viable. Here are five steps to help your practice get the most out of the negotiation process.
1. Analyze Your Current Insurance Contracts
If your practice does not regularly negotiate insurance contracts, you probably have some payers falling further behind market prices than others. You should focus negotiations on those contracts that are furthest out of line with expected payments. Comparing your contracts and fee schedules side-by-side can help you identify contracts that are not serving your practice.
Your EHR and EPM system can also support the analysis of your insurance contracts. With tools like TempDev’s Revenue Cycle Dashboard NextGen EPM Report, you can monitor revenue by payer, denials, and adjustments to determine which insurance companies to target for negotiation. You can also dig deeper into average payment per visit and fees for specific services to identify insurance contracts that have fallen behind in reimbursement.
Publicly available tools like the Fair Health Consumer website let your practice see what insurance companies pay to in-network providers for specific services. You can use this data to identify services for which your practice is underpaid relative to the market.
2. Identify Your Options
Many insurance companies offer capitation, partial capitation, preferred provider, or other alternative payment arrangements. Willingness to participate in these programs can give your practice an edge in negotiations. If your practice is considering contract negotiation, identify what alternative payment mechanisms each insurer offers and assess whether they might fit your practice’s needs. Ask for detailed information about any payment approaches your practice is interested in, including which services are covered and any risk adjustment or bonus incentives.
Your practice may need outside support to help determine the potential effects of new payment arrangements on your finances. Third-party consultants like TempDev can help you model the effects of capitation and other payment approaches on your practice’s revenue cycle.
3. Leverage Your Strengths
Many physicians worry about losing patients if contract negotiations fall apart. But your practice likely has leverage over insurers, too. Once your practice has decided which contracts to negotiate, do some research to identify what you offer to your target company. For example, if the insurer has few in-network physicians in your area, you can use that information to negotiate a better deal. Accreditations, special services, or high-quality rankings can also be used as leverage.
4. Keep the Focus on Total Reimbursement
When negotiating insurance contracts, your goal is to maximize total reimbursement. It can be tempting to focus your energy on fees for specific services that have fallen below your other contracts. But full reimbursement depends both on fees and on the volume of services. Your negotiations should focus on high-volume services where even a 1% or 2% increase can yield significant revenue. You should also examine and renegotiate fees for lower-volume services that require substantial physician time, like in-office procedures.
As you negotiate, be on the lookout for attempts by insurance companies to offset fee increases for one service with decreases for another. Take time to estimate the effects of all negotiated updates on your total revenue.
5. Get Support
The legal language used in contracts can be confusing. Your practice may need temporary support from a lawyer to aid in negotiations. Retaining a lawyer will save you time and prevent your practice from accidentally signing a contract with unfavorable terms. Small and medium-sized practices may not have the capacity or expertise to analyze payment data and identify critical areas for negotiation. Revenue cycle consultants like TempDev can analyze your NextGen EHR and EPM data and develop dashboards and reports to support your negotiation process.
How TempDev Can Help with Negotiating Insurance Contracts
TempDev’s revenue cycle management services will help you stay on top of your reimbursement so you can easily identify lagging contracts. And our expert analysts and consultants can gather and analyze the data you need to prepare for negotiations.
Call us at 888.TEMP.DEV or contact us here for help negotiating insurance contracts.