How Your Independent Practice Can Better Negotiate with Payers

Brooks BabcockJanuary 31, 2020

Evaluating payer contracts

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.


Know Your Data

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:


  • Patient Volume
  • Patient Charges
  • Reimbursement History
  • Reimbursement as a Percentage of CMS Published Rates
  • Patient Co-pay and Deductible Payments as a Percentage of Patient Responsibility
  • Reimbursement from Payer as a Percentage of Contracted Rate


From a value perspective, also be prepared to present and explain your practice’s:


  • Patient Satisfaction
  • Patient Follow-up
  • Percentage of Patients Referred to Higher Levels of Care
  • Reduction in Utilization of Labs, CT, X-Rays and Procedures for Each Measurement Period

In today’s value-based world, knowing how you add value can be seen as an important aspect when working with various payers.


Know the Terms of Each Contract

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:


  • The reimbursement schedule. Important to the health of any medical practice, this process begins when a patient first contacts your office. Understanding the reimbursement schedule, then, can ensure your practice is prepared to meet important deadlines for maximum reimbursement and cash flow planning purposes.
  • The claims filing data. Understanding what data is required to properly file a claim under certain insurers is important, and it is a great way to ensure you understand everything in the payer contract you’re signing. Improperly filed claims can be denied, causing costly delays in reimbursement.


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.


Download our latest whitepaper to learn how to restructure payer contracts and achieve a higher fee schedule.



Author Bio: Brooks Babcock is a senior vice president supporting R1’s Enterprise Revenue Cycle Management Solutions. In this role, Brooks leads a team to deliver performance accountability and meaningful results to customers. In previous roles with R1, Brooks managed and delivered a full range of practice management and business services across multiple physician specialties. 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.