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Is it Time to Renegotiate Your Payor Contracts?
There are too many times to count where we’ve encountered physicians who haven’t renegotiated their payor contracts for years and sometimes never. If you fall into this category then don’t waste another minute. Don’t miss out on getting paid more for the work you are doing. Get those contracts out, dust them off and prepare to renegotiate.
The following steps will help you through the renegotiation process and alert you to some key terms that payors don’t want to include in your contract but you should make sure they do.
- Study your current contracts and fee schedules
- Review contract terms
- Know your term and termination language and notification requirements
Do Your Homework
- Generate a list of DX codes with frequency for the quarter and the year
- This will show you what codes you use;
- 20% of the codes are used in 80% of the cases and those are the ones you want to have the higher fees
- Know your highest volume CPT
- Benchmark reimbursements against the Medicare fee schedule
- Prepare and excel spreadsheet listing the top reimbursement and the top highest carrier.
- Know your practice model
- What makes your practice unique?
- Do you have an in-house lab, are you bilingual, do you provide consultations, are you double or triple boarded? Are there demographic advantages? Do you provide ancillary services? These things could get you higher reimbursements.
- Make sure you are on ACH for all carriers. Your billing service should do this for you.
Know what you Expect/Require from the Payor
- Do not allow the carrier to just look at your taxonomy number because they might not understand or see the whole picture.
- Require the carrier to review your prior utilization
- Address the top 25 used ICD-10 codes that you identified when you did your homework
- Determine carve-in and carve-out ICD-10 codes.
- If you have an evergreen contract (one that renews automatically) then you should have a set percent increase every year. If it isn’t an evergreen contract you have the right to renegotiate every year.
- Claim adjudication should be daily not weekly and make sure this is spelled out.
- When they ask for records, make sure the contract spells out the turn-around-time for their review. It should be 14 days.
- The contract should spell out the denials management process, i.e. TAT, appeals.
- How are refunds handled? Take backs should be written out of the contract.
- Check and comply with their CAQH and professional liability update requirements. You must stay updated or the can kick you out for non-compliance.
- Understand the language of the contract.
- Prepare an impactful proposal letter. This is a sales pitch. Most physicians don’t like to think of it as a sales pitch but that is what it is. Sell yourself and your practice.
- Don’t mention pricing at this point
- Send your proposal to a specific person, i.e. your network representative.
- Track it. The payor will take approximately 4 weeks to internally evaluate your proposal and do their utilization review.
- Follow up. Call every 15 days. Don’t be surprised if you get the run-around. Just hang in there, call and remind them that you have called before and that you are checking on the status.
- Do not accept the first round of negotiations. Always counter
- Evaluate, compare and decide on next steps.
- There will likely be things you like and don’t like but decide what is most important to you and be prepared to compromise. Both sides should win and lose something.
- Is the rate increase retroactive? If so, to what date?
- Before you sign, verify that the contract includes the reimbursement rates, the increases, and all terms.
- Sign the contract and return it certified mail.
- Tell your billing company. Your hard work will only pay off if you have good revenue cycle management. The billing company needs to know
- the new fee schedule;
- claim adjudication terms;
- denial management terms;
- turn-around times; and
- refund management terms
- Track your reimbursements
- Check EOBs for the first few months and periodically thereafter to make sure reimbursements are consistent with the new rates. If you have been underpaid you can rebill for the difference.
Renegotiating payor contracts is time-consuming and can be frustrating but it is so necessary. You already know that insurance companies aren’t going to look out for you. You must look out for you so start today and take it one step at a time until you get your raise.