In July, the Medical Group Management Association released the results of a questionnaire that ranked members most pressing practice-management challenges. In this edition of Practice Makes Perfect, well tackle No. 6 on that list: negotiating contracts with payers.
Do you enjoy the payer negotiation process? Some practice administrators would rather have a root canal. Many believe they are poorly equipped to deal with a payers professional, full-time negotiators. Contracts are difficult to understand, practices sometimes have little negotiating leverage, and payers often present take-it-or-leave-it offers. Here are practical suggestions to help relieve some pain in an important process.
Plan ahead: Dont wait until the last minute to either initiate or respond to the negotiating process. Know when your contract expires and begin preparing months in advance. Know how much notice you have to give to terminate a contract. You want to have initial contract negotiations completed well in advance of the termination date if you decide to end the process with that payer.
Contracting leverage: Know how much negotiating clout you have. Your group may not have much influence in a highly competitive environment with like specialties. For example, the only orthopedic practice near a ski area may be in a much stronger position to secure an advantageous contract than an orthopedic group in a suburb with two competing organizations. A realistic knowledge of your negotiating leverage helps set the stage for the contracting process.
Financial analysis: Do you know your costs and how much reimbursement you need? What is the average reimbursement for professional services in your market? How important is this payer to your practice?
Documentation: Have your contract and backup documentation readily available for reference during negotiations. Give yourself ample time to review and digest new documentation. Dont focus solely on reimbursement. Adverse contract terminology can ambush you. Get legal or consultative assistance if necessary.
Contracting isnt easy, however, thorough preparation can lay the foundation for a less-confrontational experience and a profitable outcome. Know what you need and dont be afraid to ask for it.
Jeffrey MilburnIndependent consultantMGMA Health Care Consulting GroupColorado Springs, Colo.