The Financial Implication of NOT Negotiating Your Payer Contracts

Physicians and practice administrators typically spend a lot of time and effort controlling costs to address declining reimbursement, but if they fail to implement a coordinated managed care and revenue cycle performance strategy, they can see lower-than-expected payer yields, defined as cash collected vs. net expected reimbursement.

If a payer says, "This is your payment," that's not necessarily always correct.

Understanding the contract terms is vital in forecasting expected reimbursements. Validating the payments also sets the stage for what needs to be negotiated.

The Importance of Negotiations

Costs are on the rise and to avoid the crisis of a bursting healthcare bubble, more health systems and payers are increasingly realizing that working together may be their best hope of staying on the leading edge of analytics and cost savings.

A physician’s role at the negotiating table should be that of informed advocates for themselves. Many medical practices are filling an important gap and being reimbursed correctly is sometimes the only way to prevent charges from going up to keep the practice running.

The Financial Implication of NOT Negotiating Your Payer Contracts

The average #payer #reimbursement for doctors declined 2.4% in 2022, coming at a time when U.S. healthcare workers are facing significant challenges, including economic strains, a growing physician shortage and high rates of work-related #physicianburnout.

Also added to the list of challenges is a 2% Medicare payment cut for physicians after two decades of flat payments. In 2022, compensation was stagnant or down across many specialties, contributing to the overall decline observed across the industry.

You Need To Be Prepared and Aligned Well In Advance

Payers hold the upper hand. In particular, the large payers. They negotiate contracts for a living. They’re skilled and they strategize every day. They’re equipped with high-priced modeling software and large teams of analysts and economists, not to mention a hefty dose of leverage.

Fee for service. Value-based contracts. Price transparency. Debates about healthcare costs led by parties on both sides dramatically shape managed care contract negotiations. Having clear and compelling reasons to support your proposed contract terms will make a difference in the outcome.

In addition to understanding your practice’s financial needs and how that will impact what you ask for and how you ask for it, you have to have a communications strategy that supports your contract and negotiation strategy.

Best Practices for a Successful Outcome

Acknowledge the Obvious. Take a deep breath, this is a “process”, not an “event”.

Don’t Limit Your Focus to Rates. Because payer contracts govern such a wide range of activities for physicians, it is essential that healthcare organizations do not limit their purview to just rates. When negotiating with a payer, it is always tempting to extract the most amount of money for each service, but there are other considerations that are just as important.

Establish Your Value Proposition and Make Your Case. Any physician that is known for their high-quality service retains enhanced leverage during negotiations. MCOs inherently want to keep better providers in their networks to offer more value to their members, so this can easily be used as a negotiating tactic by providers that are known for great quality of care.

The Inherent Need for a Payer to Retain a Certain Level of Doctors

Without healthcare providers, MCO networks offer nothing to patients. This is an important concept to remember during negotiations. If MCOs think that it is possible that a provider will walk away from negotiations due to specific issues, they will be much more willing to make concessions.

Summary

Managed care contracts represent the basis of the relationship between healthcare providers and payers within our healthcare system. Healthcare providers must remain astutely aware of negotiating these contracts to ensure that they are getting the best deal possible for their practice.

Fortunately, longstanding patterns of poor attention to contracts can be broken by managing, analyzing, renegotiating and monitoring your payer contracts. We believe in a proactive approach, not a reactive one. #payer #reimbursement #physicianburnout

Partner with CodeToolz to Improve Your Managed Care Negotiating Process

Because healthcare providers tend to be at a disadvantage in negotiating managed care contracts, due to the size and scope of their payer counterparts, they should have a strategic partnership that will give them a leg up in the negotiating process.

That’s where CodeToolz comes in.

CodeToolz helps providers access the tools necessary to negotiate beneficial contracts. We identify the best contract opportunities that meet the specific needs of every provider we work with, regardless of size.

Working with CodeToolz lets you take all the hassle out of negotiating managed care contracts with payers. If you want to make the most out of your contracts, while getting the best reimbursement rates possible, Contact Us Today! (512) 787-1852