While negotiating contracts with insurance payers can be frustrating, physicians in small or midsize practices are in a prime situation for such negotiations.
According to Nathaniel Arana, founder and CEO of consulting company NGA Healthcare, this is because insurance payers are now recognizing the most lucrative parts of their network, which are either small or midsize practices. When undervaluing such practices, insurance payers leave them no choice but to join larger groups, which possess greater leverage for negotiating higher reimbursement rates.
Arana cautions physicians that, when brought to the negotiating table, insurance payers can be somewhat crafty in their proposals, potentially leading physicians to unknowingly sign a contract that could be harmful to their practice’s revenue. For example, when hired by a neurology group to negotiate with their largest payer, Arana perused the payer’s proposed contract that they declared would be “10% higher than current rates.” He found that, while the contract did reflect a rise in aggregate of all CPT codes, the payer lowered the rates of the practice’s most typically employed codes by approximately 15%. Had the practice signed this nuanced contract, it would have witnessed a 15% decrease in revenue.
Therefore, hiring an expert negotiator can prove to be quite beneficial for a medical practice. Arana notes, however, that physicians should be sure to do their due diligence on a consulting company before hiring them to handle negotiations. Conversing with previous clients, particularly those with similar profiles to one’s own practice, can be helpful when considering the viability of a consulting company. Arana also suggests that physicians request to view a spreadsheet from the consulting company showing a client’s rate path, providing a concrete example of increases that they obtained for clients.
In general, having a third party to assist in negotiations helps to make the process more seamless. According to Arana, a reputable consulting company is worth paying for, as it will provide the knowledge, expertise, and networking capabilities to obtain more optimal rates than a physician could on their own. If a physician prefers not to hire a consulting company, they should compose a formal proposal for the insurance payer justifying an increase. Upon receiving a contract, physicians must be sure to have a qualified individual review it, as they will be better equipped to spot nuances that make the contract a poor fit for the practice. A viable contract must be specific to the codes that a practice employs, as it could affect thousands of dollars in revenue.