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Health Care Practice Payer Contracts: How To Drive A Hard Bargain

Abstract
“Practices often allow their payer contracts to renew automatically each year without re-examining the terms. But that can be a bad mistake. This article discusses why it’s important to understand all of the practice’s contracts, individually and comparatively.”

Practices often allow their payer contracts to renew automatically each year without re-examining the terms. But the practice may have changed and added new providers, new services, or a larger patient panel, and perhaps gained an enhanced bargaining position. If so, you may need to make changes to the contract.

Review terms and documentation

First, you need to understand all of the practice’s contracts, individually and comparatively. Prepare a table or matrix displaying the payers, their contact information and key provisions such as:

– Termination requirements,
– Reimbursement history,
– Claims filing deadline, and
– Minimum response time to proposed amendments.

Look carefully at which contracts are better than others. The differences can point to opportunities for positive changes in suboptimal arrangements.

Get out your calculator

There’s a critical calculation to make before initiating negotiations with a payer. Start by ascertaining the fixed overhead of the practice. Then, convert the most common services into relative value units (RVUs) using the Medicare and Medicaid rates.
Next, divide…     READ MORE