Fighting for higher payer rates is worth the effort

Michael Barron, MD, decided it made more sense to quit than fight. After months of wrangling with UnitedHealthcare over inaccurate payments, the University City, Missouri, family physician did not renew his contract with the insurance company last year.

“They would charge me  additional amounts and subtract it and add it back in a different way,” Barron says of his long dispute with United. “It was absolutely an accounting nightmare. The way they did it really punished me. I’m still not sure they paid me correctly.” 

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He feels the same sense of futility when negotiating contracts with other payers. So he accepts their automatic renewals without trying to negotiate higher payments. “That’s been my assumption that I wouldn’t get anywhere, but I don’t know,” Barron says, adding that as a small practice (himself and a nurse practitioner), he doesn’t have the time for lengthy negotiations.

That’s the prevailing attitude among members of Ideal Medical Practices, a Washington state-based nonprofit whose members, mostly solo or small practices, exchange practice management tips and discuss better models of care.

Most member practices don’t even try to negotiate, says executive director Jeffrey Huotari, MD. “For them, it feels like running into a brick wall,” he says. “Our members don’t have the time, the money or the legal help to get into negotiations.”

Next: Data as a weapon

He adds that the only increases he saw as a family practitioner were the result of joining a provider organization that negotiated on behalf of all small practices on Michigan’s Upper Peninsula.

Because of these real and perceived difficulties, practices can go many years without a payment increase, even as their own expenses rise. The good news is that it is possible, in some instances, to negotiate higher fees. The bad news is that it’s quite difficult.

Data as a weapon

Because it involves insurance companies, it should be no surprise that fighting involves a lot of paperwork. Payers don’t respond to emotional appeals, so practices have to arm themselves with data.

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Before approaching an insurer, a practice should conduct an internal audit, says Melody Irvine, CPC, CPMA, a practice consultant and owner of Career Coders in Loveland, Colorado. That means pulling all current and past contracts as well as years of payment records from insurers.

A practice needs to know how much it makes or loses on each contract, how much business it does with each payer, how many patients are covered by each insurer, which CPT codes it bills most often under each contract, the reimbursement for those codes and how the payments have changed over the years, if at all.

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Putting all that information into spreadsheets should reveal which contracts are the most and least valuable to the practice, which haven’t changed, and more. Billers and coders should be involved because they’re likely aware of which payers are the biggest problems, Irvine says.

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That’s a lot of work, especially for a small practice that may not have a manager who can dive into the numbers. Faced with that much paperwork and months of bargaining to follow, many practices, like Barron’s, decide they simply don’t have the resources for the fight.

“They don’t have the time so they just sign (the contract),” Irvine says, adding that practices should never accept an automatic renewal without at least asking for more money.

Others find it worthwhile to hire consultants, like Irvine and Marcia Brauchler, MPH, FACMPE, president of Physicians’ Ally in Highlands Ranch, Colorado, to do the analysis and negotiating for them.

“They [practices] take no for an answer and think they’ve tried. We have the time and personnel to persist through what the payers inevitably turn into an endurance test,” Brauchler says.

Next: Negotiating with giants

Negotiating with giants

So how does a practice negotiate with a big insurer that isn’t inclined to raise fees and has time and resources on its side? “You have more wiggle room than you might believe,” Irvine says.

In cases where fees haven’t been raised in five years or more, it might be enough simply to point that out. But chances are the payer will need more persuading. In that case, prioritize the biggest contracts first, Brauchler advises, and be prepared for the long haul. The insurer’s reflexive reply will almost certainly be “no,” delivered with a “take it or leave it” attitude.

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This is why it’s important for a practice to know its competitive market and to look for any small edge. For example, is it one of only a handful of similar practices in the area that contracts with the insurer? Does it provide services the others don’t? Can it prove it does a superior job at containing costs and providing top-quality care? Does it see a lot of patients who will be unhappy with their insurer if they’re forced to change doctors? (It’s not unheard of for practices to enlist patients to pressure payers to grant increases.) Is there a way for the practice and insurer to work together to produce mutually agreeable results?

If the negotiations are unsuccessful, the practice will have to decide whether to accept what’s offered or end the contract. Insurers don’t want to lose practices or drive them into joining healthcare systems with more negotiating clout, so it’s usually not in the payer’s best interest to push practices to the brink.

Next: Things to watch for

Things to watch for

Even if higher reimbursements are off the table, practices should scrutinize contracts and payment data for harmful aspects that they might be able to eliminate, experts say. 

This could include insurers’ use of “silent PPOs,”-organizations that access a discounted rate from a practice without its permission, usually after a service is rendered. Another thing to watch for is insurers’ growing use of material change notices to unilaterally alter a contract with 30 days’ notice and without consent of the practice.

One thing is clear: practices that don’t at least try for more money won’t get it. Or, as Irvine puts it, “It never hurts to ask.”