Actively negotiating with payers is an important aspect of both practice management and revenue cycle management activities for independent medical practices. Although the impact can be significant, most providers have had little to no experience doing so or have not seen much success in past negotiations, partly due to a lack of preparation.
However, there are a series of steps you can take to better prepare for a successful negotiation. If taken, these steps can ensure you are ready to ask for exactly what you want from each payer and leave any negotiation feeling more confident.
Prior to each payer negotiation meeting, it is important to do your research and understand practice-specific data to back up the plan you ask for. This is a great way to show you’re invested in your practice and that you understand the shared drivers from an operational and strategic standpoint.
Familiarizing yourself with payer-specific data is a great way to stand out, especially since—compared to the large amount of hospital-employed or large group providers in the U.S.—an independent practice can be perceived by commercial payers as a small fish in a big pond. Although you know why your practice is special, a large insurer may not.
To stand out, be prepared to know your practice’s global and payer-specific:
From a value perspective, also be prepared to present and explain your practice’s:
In today’s value-based world, knowing how you add value can be seen as an important aspect when working with various payers.
Before entering a payer negotiation meeting, it is helpful to know exactly what you are looking to achieve. Knowing your specific goal can help you collaborate and, in turn, more effectively negotiate with each payer.
In addition to approaching each meeting as a collaboration, it is also important to familiarize yourself with your current payer-specific contract terms.
While there is a lot of criteria to evaluate, two important items to understand prior to signing a payer contract may include:
While it may be easy to go with the flow and avoid confrontation, it is always best to stand up for what you believe is justly deserved. Coming prepared to each negotiation with quantifiable reasons why your practice is different than the rest and ideas on where your practice stands in today’s value-based environment is going to play a vital role in renegotiating a contract you are happy with.
Brooks Babcock is a Practice Management expert at R1. In this role, Brooks coordinates his team to deliver full range of practice management and business services across multiple physician specialties including Emergency Medicine, Hospitalist, Internal Medicine, Pediatrics and Anesthesia. Brooks obtained his bachelor's degree in history at Davidson College and his masters of business administration from the University of North Carolina at Chapel Hill.