Negotiating Payer Fee Schedules? Here Are 5 Tips to Help!

December 16, 2014 by Antonio Arias, MBA, CHBME

Topics: Medical Billing, Revenue Cycle Management

As your practice’s year comes to a close, now is the time to review your financial performance and consider the factors that impacted your revenue – including your payer contracts.

If your relationships with your payers are longstanding, it’s likely been a while since you’ve revisited (and renegotiated) your payer fee schedules. But if you aren’t regularly making sure your payment rates are up to par, you may be underpaid.

The key is to work with your medical billing service or staff to collect and analyze payer payment data, then use it as a bargaining tool with the insurance companies. Here are our top tips to help you make sure you get paid every dollar you deserve.

  1. Know Where You Stand
    Start by looking at the terms and timelines of each contract to know if now is the right time to renegotiate with each payer. Contracts are not immutable – so technically you can renegotiate at any time – but if a contract is only a few months away from its expiration date, it may help your position to wait until then.
  1. Get Actionable Intel
    When you come to the metaphorical bargaining table with an insurer, it will be critical for you to back up your ‘ask’ with real numbers. List out the top CPT codes for each payer and calculate how many times they were billed this year. Multiply each code by the payer’s reimbursement amount, then divide by the frequency of all codes for an idea of the payer’s reimbursement average. Compare payers against each other to spot who is underpaying, and prepare that data in a report that backs you up, code by code.
  1. Set Ranges
    Before negotiating, set a bargaining range for what you want. For each code you hope to change, set a fee for the following three categories: Optimal, Acceptable, and Unacceptable. That way if the payer balks at your ask, you already know your limits.
  1. Don't Be Afraid to Walk Away
    What to do if an underpaying payer won’t budge from fee terms in the “unacceptable” side of your bargaining range? Exit the plan. (It may be impossible if it’s the most popular plan in your patient network, but if it only covers a minor percentage of your population then the relationship may not be worth saving.)
  1. Stay on Top of It
    If your renegotiation with payers goes in your favor, don’t consider it the end. Work with your medical billing company or staff to continually monitor your payer data to ensure that your practice continues to profit and receive fair rates. A highly paying and frequently used code, when increased even by just a few dollars, can and should bring a drastic change to your medical practice’s bottom-line.

A reputable medical billing company should be willing and able to quickly answer your questions, and have processes in place to complement these key activities. A strong medical billing services partner is a team player and excited to be an extended part of your practice...

Are you interested in medical practice management or reading more medical billing tips? READ OUR BLOG to learn more!

5 steps to successful insurance negotiations


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