How to prepare for renegotiating payer contracts

The end of year is a busy time for everyone, especially medical practices. The holidays are approaching, flu season has begun, and employees are taking any unused vacation time. It’s open enrollment time and, on top of all that, you probably have some payer contracts up for renewal. But taking a little extra time now to plan your payer negotiations could yield big benefits in the coming year.

What can I offer?

Before you start thinking about what to ask for, think about what you have to offer. This is especially important if you are a small practice. Small practices often worry they don't have much to bring to the table. But you probably have more to offer than you think. "Gather all your quality and cost data,” says Brennan Cantrell, commercial health insurance strategist for the American Academy of Family Physicians. “You want to be able to demonstrate that you’re providing quality care at low cost.”

Do you have a low rate of hospital readmissions? Do you have high patient satisfaction scores? Do you have innovative ways of keeping costs down? If you aren’t already collecting this data on your practice, now is the time to start. (Side note: If you’re looking for a New Year’s resolution, make it to start collecting this data.)

Endorsements from employers can help, too. Consider asking local employers if someone in human resources would be willing to write a letter to the payer letting them know how important your practice is to their employees. Similarly, if you have accreditation from the National Committee for Quality Assurance (NCQA) or another quality accreditation, be sure to let your payers know.

Collect, organize, and provide all this data to payers when you come to the table. In addition to helping you make a strong case, Cantrell says having this data at the ready will make you feel more confident when you start negotiations.

What do I need?

Now that you know what you have, you’re ready to think about what you need from payers. Create a spreadsheet of all your payers, rates, filing deadlines and most commonly used codes. This will help you identify and prioritize where you most need to renegotiate.

Rate increases aren’t the only things you can ask for. One area where you may be able to get some concessions is on timely filling deadlines. Cantrell says he has seen significant improvement on this from major payers. You also may be able to get some “carve outs” on specific codes. You may be getting 110 percent of Medicare on most codes, but for frequently used codes, you may be able to negotiate a higher rate.

If you’ve gathered your cost and quality data, you should be able to make a good case for why you deserve more.

Do your homework, find out what you need from your payers, and go into the negotiations confident and prepared. You may be pleasantly surprised at what you get.