3 Tips for Negotiating Medical Practice Payer Contracts
At its core, a medical practice is much like any other business – it exists to make profit by sustaining viable revenue. However, a medical practice is often faced with unique challenges that aren’t often seen in other businesses. One of these is negotiating medical practice payer contracts. If you’re experiencing declining revenues but can’t seem to uncover the reason, the answer may be contained in the contractual terms of your contract. Here are 3 tips for making sure your payer contracts are contributing to your overall practice growth.
Identify Inconsistencies In Your Payers
You should have access to the payer contracts, and if you don’t, request a copy from the provider relations specialist. Reading the entire contract is a very important step; however, the startling reality is that medical practices do not take the time to read through them thoroughly. In addition, many fail to create what is known as a “payer matrix” for their various payer contracts. A payer matrix is simply an organized list that shows key contract provisions, along with names and contact information of the provider relations representative. A well-constructed payer matrix allows you to see if you’re getting paid as you should, any inconsistencies, and who are the problem payers. With this comprehensive knowledge you can more effectively identify payers that are hurting your bottom line. The practice manager should run a quarterly report on the top CPT codes to determine if payers are paying according to the contract.
Take Advantage of Material Change Notices
Medical practices aren’t the only one’s looking to amend contracts. Payers are also in the business of increasing their revenue, and if they have the chance they’ll request a “material change” notice. A material change notice is a proposed change to a contract that is initiated by the payer. The thought of negotiations can seem frustrating and tedious, but you should view these requests as opportunities to revisit the contract. Instead of letting the topic of discussion be the material change notice the payer wishes to focus on, you can take control of negotiations by letting them know you’d like to change other contract particulars as well.
Give Yourself an Opt-Out Clause
Sometimes things just don’t work out and that’s okay, because there is a better contract out there waiting for you. However, if you’re not careful you can become bogged down in unfavorable payer contracts that can reduce your revenue. It’s vital that you negotiate an opt-out clause whenever possible. Many times this is a 90 day notice to terminate. If you don’t take time to do this, you’re just hoping that everything will turn out okay. But what if it doesn’t? You’re stuck with a bad contract that you can’t easily terminate. In addition, some payers have contracts that automatically renew and try to lock in practices for another term. If you should accidentally overlook this renewal, having an opt-out clause could save you a lot of time and money.
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Signing a contract is easy, but understanding what it says and how it works is a whole other matter. Don’t take risk by “thinking” your payer contracts are favorable – when in reality they may be stunting your practice growth. Contact Concordis Practice Management today to conduct a review of your contracts and to start experiencing accelerated growth.