What's ruining medicine for physicians: No negotiating leverage with payers

At the end of every year, Medical Economics publishes a list of the top challenges facing physicians. This list is generated by surveying our physician readers.

For this year’s list, we decided to recast the question. Instead of asking what challenges physicians face, our editorial staff wanted to hone in on what issues annoy and frustrate doctors and get in the way of what’s truly important: Treating patients and running practices.

And so we asked physicians in a poll: “What ruining medicine for physicians?”

In our list of the nine issues ruining medicine for physicians, the goal is not to dwell on the negative aspects of working as a physician. Instead, we wanted to show our readers that they share common challenges when dealing with the vexing issues facing primary care in today’s complex healthcare environment. Each piece also offers practical solutions that physicians can start using in their practices today.

#6 No negotiating leverage with payers

Negotiating contracts with payers has always been an unpleasant task for doctors. But it has become even more difficult in recent years, thanks to trends such as value-based care and consolidation among commercial payers. 

“The big payers don’t want to negotiate with small practices. They say ‘take it or leave it,’” Rebecca Jaffe, MD, owner of a Wilmington, Del. internal medicine practice, told Medical Economics in 2013. 

David Zetter, CHBC, founder and lead consultant of Zetter HealthCare in Mechanicsburg, Penn., notes that until about a decade ago many payers would give small increases to doctors in their networks without asking for much evidence that the providers were improving outcomes or holding down costs. But no longer.

“Healthcare financing is getting tight and payers want to increase their profits,” Zetter says. “In addition, with everything going to value-based, the payers are getting more sophisticated. They’re demanding more information and evaluating providers on a more rigorous basis.” Evidence of that, he adds, is the trend of payers narrowing their networks to include only those physicians and practices demonstrating the lowest costs and best outcomes.

For doctors, this new reality means they need to become more sophisticated and proactive in their approach to contract negotiations. A good place to start, Zetter says, is by understanding the payer’s perspective. Most contract managers operate with a fixed budget, so increasing one doctor’s reimbursement means reducing payments to another. “There needs to be a win-win situation for it all to come together,” Zetter explains.

With that in mind, Zetter says, physicians need to ask themselves, “What can I do for the payer that’s going to make it [raising reimbursements] a benefit to them? Is the issue that my costs are too high? Am I referring patients to specialists that don’t have good outcomes?”

Zetter also recommends that doctors participating in Medicare’s Quality Payment Program obtain their quality and cost data (available at https://qpp.cms.gov/participation-lookup). That information will help level the playing field when negotiating with commercial payers, most of whom have their own data about the doctors in their networks-but may not be sharing it. 

“If they have a provider with low costs and good outcomes, and yet are underpaying them compared to other providers in the same specialty, they’re getting a good provider on the cheap,” he explains. “So the doctor who’s going to negotiate with them needs to let them see how good a practitioner they are.

“Doing your homework means a better chance of success in getting what you want, versus just saying ‘I want to negotiate a new contract,’ because in most cases now that won’t get you anywhere,” Zetter adds.

Along with preparation, regular communication with payers is helpful for ensuring successful negotiations, says Lucien Roberts III, FACMPE. The administrator of a Richmond, Virginia gastrointestinal practice, Roberts has negotiated contracts with many of the country’s largest commercial payers. He makes a point of contacting representatives of his major payers several times a year. 

“I found it’s a lot more effective to negotiate with someone you have a relationship with than being a stranger coming in with a demand for more pay,” Roberts told Medical Economics in 2015. 

“Even if all they do is say ‘everything’s fine with your practice,’ when it comes time to talk about a new contract you can say ‘look, we’ve been talking for two years and you’ve said things are fine here.’ It takes the element of surprise off the table.”