6 Steps to Better Payer Contract Negotiation
The negotiation of payer contracts can be a complex process. Every insurance company has its own way of doing business, and the terms in a contract will vary significantly from one company to another. In addition, the medical community is never static; procedures change, new treatments emerge and patients' needs change over time. The result is that every insurer's contract with a provider must be renegotiated from time to time. If you are like most doctors or other health professionals, however, you probably don't relish the idea of negotiating with insurers who are sometimes adversarial about paying claims for treatment that has already been provided (or who may not have any reason to believe that any service was actually provided). But there are steps you can take before entering into negotiations with an insurance company—both before you submit claim forms and while they are being reviewed by adjusters or other employees within their organization—that will increase your chances of getting paid fairly for services rendered:
Martin Jacob 
Determine if a negotiated solution is needed.
Before you start negotiating, it's important to determine whether or not a negotiated solution is needed. Ask yourself:
- Does this issue have the potential to derail contract negotiations?
- Is there another way of solving this problem without going through a lengthy negotiation process?
- How will my negotiating approach affect the insurance company's bottom line and its ability to pay claims in a timely fashion?
Avoid an adversarial attitude.
The first step to improving your payer contract negotiation is avoiding an adversarial attitude. This can be a difficult task when you’re faced with high healthcare costs and lengthy billing processes, but it’s important to remember that negotiation is a two-way process. Though it may be tempting to get defensive and push back against the payers, this approach only serves to harm your business in the long run. Instead of seeing payers as adversaries, treat them as partners who want what’s best for their patients—and for their bottom line.
To avoid an adversarial relationship with the payer:
- Be prepared: Know how much you spend on each patient relative to other similar practices in your area or (speciality). You should also know what some of your competitors are paying so that you can use this information as leverage during negotiations and prove why they should offer you better prices.
- Be prepared to walk away: If there isn't enough wiggle room within a contract's terms or pricing structure, don't hesitate to walk away if necessary—especially if doing so could save you money and time down the road without hurting patient care or business operations.
Good preparation is essential.
Before you sit down to negotiate, make sure you are prepared.
- Research the company and its history
- Know the policies and procedures of your organization
- Understand the law (both employee and worker’s compensation) as it relates to payer contract negotiation
Selectively Share Information.
Sharing information about your clients, who are the payers for your services, can be tricky. There are so many reasons why you shouldn’t do it. But there are also some pretty good reasons to share—the most important being that if you don’t share this information with other professionals in the industry, they won’t share theirs with you. And let me tell you, if we all keep our mouths shut and don't talk about how much money is changing hands in any given transaction, no one benefits—not even the customers who want to know what they can expect on their next bill out of care or insurance companies trying to figure out how much their premium should be based on actual claims costs as opposed to estimated ones (or worse yet: just guessing).
Rank order issues.
Rank order issues.
Rank order issues may be ranked in terms of importance, cost, time and risk. They may also be ranked by urgency. When rank ordering for a given contract issue, there are two strategies: “best first” and “worst first”.
- The best first strategy is appropriate when the item at issue is the most important to you in the negotiation (e.g., your price). The worst first strategy is a good approach for those situations where you have little leverage with respect to an issue (e.g., your schedule).
Consider making the first offer.
The first step is to consider making the first offer. The reason for this is that it puts you in a position of strength, which can help you get what you want while avoiding unnecessary conflict. However, don't be too aggressive—make your offer based on a fair assessment of the situation and your best understanding of the other party's interests and needs.
Contract negotiation with insurance companies can be difficult, but a well-planned approach can improve your chances of success.
You may think that the insurance company is the only one with any power in contract negotiation, but it's actually a two-way street. You also have leverage and can control how things go by how you conduct yourself during negotiations.
The insurance company is in a very advantageous position because they are able to say yes or no to your proposal. They can also set the tone for what happens going forward by deciding whether or not to negotiate with you at all! If they approach your offer with an open mind and desire for compromise, then there's hope for getting an agreement beneficial to both parties—but if their attitude is closed off and defensive from the beginning, then there's not much chance of success in reaching an agreement unless you're willing to settle for less than you want (which doesn't usually end well).
Conclusion
The key to successfully negotiating a contract with an insurance company is to prepare thoroughly, avoid an adversarial attitude, and be flexible. The best way to do this is by keeping in mind what your ultimate goal is: getting the coverage you need at an affordable rate without sacrificing quality.
