Assessment and Renegotiation of Payer Contracts

Bellevue, WA—For most rheumatology managers, payer contracts represent the bottom line of their practices’ earnings; putting these contracts in order is thus a necessity for the financial health of the organization. At the 2015 annual meeting of the National Organization of Rheumatology Managers (NORM), Penny Noyes, President, CEO, and Founder of Health Business Navigators, offered strategic advice for dealing with this painstaking process.

1. Gather your current contracts and rates

“Gathering all your current contracts and rates is actually much harder than one would think,” said Ms Noyes. “If these contracts can’t be located, don’t be embarrassed…you can always blame an assistant that you had years back!”

In the event that these contracts are missing, the next step is to contact one’s reps in writing and request copies of agreements and addenda.

Then, it’s on to the rates. Although there may be many sources, however, locating one’s current rates is often easier said than done.

“Contract exhibits are often vague and refer to undefined standard market schedules,” Ms Noyes explained. “Not to mention, rates change over the years under perpetual agreements with ‘evergreen’ clauses.” Amendment provisions frequently allow the payer or network to modify the rates without the written consent of the provider. Sometimes notice is required, she said, but often silence equals acceptance of these changes.

Once contracts are collected and rates confirmed, Ms Noyes proposed the following approach:

• Create a spreadsheet with “Code,” “Modifier,” and “Place of Service (POS)” for each product health maintenance organization (HMO, PPO).
  
• Send the spreadsheet to your rep to populate the dollar amount of your current reimbursement by product.
  
• Create a side-by-side lineup of all your payers’ and Medicare rates. “It’s best to include ‘charges,’ ‘max allowable,’ and ‘utilization,’ too,” she added.
  
  

2. Determine which contracts to tackle first

“Use your ‘inventory notice dates’ and ‘reimbursement rates’ to determine what to tackle and when,” she advised, highlighting the following questions:

• What payer rates need most attention?
  
• What date can you notify the payer or network?
  
• Does the contract allow off-anniversary notice?
  

At this stage, Ms Noyes recommended that managers resist the temptation to negotiate too many contracts simultaneously, which can get “overwhelming.”

3. Create a timeline for each negotiation

Once notices are sent to initial payers, Ms Noyes suggested that managers create a timeline (see Timeline) so that they know when to “go to the table” for renegotiations.



“If the majority of rates are acceptable but a few are not, try carve-outs,” she said. “You are aiming for the best overall result and may have to give on a few codes to gain much more on others.”

4. Send notice to renegotiate

At this point, said Ms Noyes, managers should expect resistance from payers, but it’s important to be persistent.

“You should view the payer’s reluctance as an unacceptable roadblock,” she said, advising managers to prepare a list of qualities that set their practice apart.

Finally, once rates are renegotiated, it’s important for managers to scrutinize the fine print.

“There are many provisions that favor the payers,” she said. “Read the agreement, mark it up with your requests, and require a response.”

Although this can be a discouraging process, Ms Noyes urged the audience not to lose sight of the ultimate goal along the way, which is getting paid.

“For the most part,” she concluded, “usually a good negotiation ends in mutual respect…and hopefully, an increase to your bottom line.”