How to Get Paid More for Your Medical Procedures: Negotiate for Higher Payer Reimbursement Rates for Your Practice

It’s a new year and that means that it may be time for your practice’s annual checkup. Checkup? We’re talking revenue here – specifically, gaining more revenue by negotiating with your payers for higher reimbursements.

“… Negotiating with payers for fairer payments is not impossible,” writes Dr. Gregory J. Mertz, MBA, FACMPE, in this article from the American Association of Family Practitioners Foundation (AAFP). ‘’With the right data and a reasonable approach, you may be able to overcome some inequities in existing fee schedules.”

Why You Should Negotiate for Higher Reimbursement Rates for Medical Services

Pre COVID-19, it’s no secret that healthcare costs keep rising. Then, in 2020, the Medical Group Management Association reported that 97% of PCP and specialty practices suffered a financial impact related to the COVID pandemic, and, nationwide, we saw a 55% drop in physician practice revenues

Whether or not your practice has been impacted, more equitable reimbursement rates can stabilize your financial future so you can continue to provide excellent patient care.    

The Best Time to Negotiate for Higher Payer Reimbursement Rates

As we know, annual checkups are all about being proactive, not reactive. Ditto for scrutinizing your payer contracts and overall revenue cycle. Ideally, your practice should conduct an annual review of all your health plan contracts – including each contract’s addendums or clauses. Also, there are three changes that should send you to that filing cabinet:

(1) changes or updates to CPT codes.

(2) A recent (2020) shift in your service line(s) and related patient cohorts.

(3) You suspect or know that some contracts have outdated codes that are no longer accepted.

Who Can Help You in the Payer Negotiation Process

In a recent article in “Behavioral Health Executive,” San Francisco-based Attorney Nathaniel Winer stresses the importance of supporting your payer-provider contract negotiations with strong health-outcomes data and metrics.

“The payer’s language now is data,” says Winer. “Show us what your data is for outcomes, how you can improve the cost curve and provide better care.” 

In other words, you won’t get higher rates just because you ask. Instead, before you contact your payers, assemble a strong, data-supported business case that demonstrates your practice’s positioning and value within the payer’s network.  In turn, building your case will require working with your practice’s internal and external stakeholders.   

Internal stakeholders:   Every health system is different, but typical inter-departmental or practice allies will be your EMS and billing professionals, office and practice managers and those clinical managers who oversee under-performing service lines.  Educate yourself about the fee negotiation process, and, if you lack the in-house resources to gather the needed data, enlist some Revenue Cycle Management (RCM) expertise.    

External stakeholders:  Typically, your first approach to your target health plans will be to the plan’s provider relationship representative who, in turn, may engage the contracting manager. Requesting higher rates for an a-typical or lesser-known medical service? The health insurance’s medical director may support your case, but will not engage in the actual provider-payer negotiations.

Pick Your Battles:  What to Include in Your Rate Negotiations Business Case

Even with a strong business case, don’t expect a unilateral or across-the-board rate increase. Instead, research and list the most frequently billed CPT codes, or those services that provide demonstrable value or health-spend savings within the provider network. For example, do you provide best-practice chronic-disease management? Has your patient care decreased high-cost inpatient or ED visits? Also, as many commercial payers’ base their rates on a percentage of Medicare’s fixed fee schedules, know the Medicare rates. You can find Medicare’s current rates for your geographic area through the “Medicare Physician Fee Schedule Look-Up” tool.  Base your cost calculations on the payer’s “allowed” not actual “paid” amount, and consider including ancillary – including laboratory – charges.

Next, shortlist your target health plans. This list may include the lowest-rate payers and/or the plans that correspond with your practice’s high-use or high-value services. Finally, present your practice’s patient data in a clear, easy-to-understand format (spreadsheets and/or graphics) and get ready to negotiate with your payers for mutual success.  

At first glance, asking your payers to pay more for selected medical services may seem like the proverbial David and Goliath setup.  However, with the right approach and with a clear, data-supported business case, you may be able to safeguard or advance your practice’s 2021 revenues and financial health.

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