Effective healthcare payer contract negotiations are crucial for the financial viability and success of a healthcare organization of any kind and size. One of the goals of payer contract negotiations is to achieve the most favorable reimbursement rates from insurers. This allows healthcare organizations to maximize their revenue.
Revenue on paper isn’t enough, however. Your business needs cash flow, and effective negotiation can help. If you’re able to get better rates or more efficient payment schedules, you can improve cash flow and overall financial performance.
Contract negotiations help to ensure fair terms and conditions. You can ask for appropriate billing and coding requirements as well as for reasonable payment timelines. Crucially, these negotiations also improve provider–payer relationships, making it easier to collaborate.
Ultimately, contract negotiations allow you to improve patient outcomes. With better cash flow, you’re able to reinvest in your practice, which enhances the quality of care you can provide for your patients.
Getting the chance to negotiate with payers isn’t a given, however, and neither is getting the terms you’re looking for. To strengthen your negotiating stance, you can take specific steps.
The key question is this: “How do you negotiate with payers in a way that is effective?” Learn about five strategies that can make a difference to your organization as you begin negotiations.
Before you attempt a negotiation, you need a clear idea of your organization or practice’s service costs. Start by analyzing the value of your current contracts. Look carefully at how important each payer is to your practice in terms of volume.
You also want to zero in on reimbursement terms and rates that your business needs to succeed. How do the ones you have now differ, and what does that difference mean, revenue-wise? The answers can help you set clear objectives for the negotiation.
Focus, too, on what your practice does well. This can provide the leverage you need to negotiate better terms with insurers. Showcase how you are an asset to the payer’s network. For example, you might gather patient satisfaction scores and present data on positive clinical outcomes.
If you’ve been able to implement cost-saving measures, offer this information, too. Compare what you bring to the payer’s table with industry benchmarks to show how much of an asset your practice is.
The next step is to gather all of the data pertaining to claim performance. A crucial aspect of this step is to pinpoint all date-dependent events in your current contract to ensure that you’re eligible to negotiate new terms. Timing is essential for negotiations, so set up a schedule to regularly review your contract’s terms and make sure to stay in contact with the payer.
To negotiate from a realistic position, you need to have an idea of what the industry benchmarks are. Payer performance tools can help you compare rates with competitors in your area. You can then share this data with the payers.
How do you negotiate a pay contract most effectively? By being a principled negotiator. This means coming up with win-win scenarios and avoiding all-or-nothing thinking. This type of negotiating doesn’t rely on tricks and helps you maintain a positive relationship with payer representatives. Be ready to make concessions to achieve results.
You’ll need to request to negotiate with the payer. Make sure you know who to reach out to for the negotiations, and use the right official channel for the notification of your intent to negotiate. Usually, it will be by email first.
For your proposal letter, make sure to also use the same format as the original contract. This allows the payer to clearly see the changes you’re proposing.
The next step in the process of how to negotiate reimbursement rates is to write your proposal. You’ll need to add as much data as possible that shows how crucial your practice is to patients and to the payer’s network. Don’t be afraid to use patient reviews or to enumerate the unique procedures and services you offer.
State clearly that although patient care is the most important aspect of what your practice does, it’s also a business. Show the payer how better terms and rates can allow you to remain a valuable asset to the network.
Negotiate carefully, but always strive to be a principled negotiator. If you get a “no,” go higher up in the chain of command. If you get a “yes,” counter one more time. Don’t settle too easily, and take your time with any document.
Review the new agreement before signing anything. Once you’re happy with the contract, get ready to implement it. For this step, it helps to set up regular reviews, just as you did in Step 2. You want to ensure that the new rates are in place and regularly confirm that claims are being processed correctly.
Payer contract management is an important part of a thriving healthcare practice. Better rates and payment schedules can make a difference in your cash flow while improving your relationship with the payer.
Rivet Health can help with all of this. Our payer performance services centralize your payer contracts so that you have a better idea of what needs to be negotiated based on what competitors in your same area are doing. You also get a chance to compare payers with one another to see what your best options are.
Furthermore, Rivet Health’s services will help identify short payments and why they occurred — while also making it easier for you to appeal and perform reprocessing and resubmissions.
To learn more about negotiating with payers, download the ebook 7 Steps to a Successful Payer Contract Negotiation or schedule a demo of Rivet Health.