4 Tips to Achieving Successfully Negotiated Payer Contracts

Negotiation. It’s tough to do successfully, especially when it’s not something you were trained for.

As a physical therapist you’re trained to treat people and help them live better and healthier lives, not make financial negotiations. But the fact is you can’t continue to do what you’re trained to do without having to negotiate terms of payment first. This negotiation doesn’t mean simply agreeing to whatever the payer says– it’s making sure you get what your time, service and skills are truly worth– and that’s the hard part right there.

Fortunately there are ways to negotiate terms to your benefit. Following these tips and armed with the right facts and figures, successful negotiation can be achieved.

1. Analyze current payer performance and fee schedules

The first thing you need to do in order to negotiate successfully is to analyze your current payers’ performance and fee schedules. Identify the payers with whom you do the most business along with the most common CPT codes you use. Get the number of times you bill each code with each payer, and multiply each number by the proposed payment amounts. Then add up all the totals per payer and divide by the total number of codes billed. This should give you the weighted average for each payer, and a good indication of which contracts are most valuable to you.

Apart from this you could also compare the rates of individual CPT codes and approach payers who pay the least amount about increasing to at least reach the average reimbursement rate for these codes.

2. Collect the necessary data

In order to convince payers that you’re worth more than what they’re currently offering, you have to have the data to prove it. This data includes your current revenue and expenses, patient outcomes and specific data that objectively shows how your practice:

  • Gives better care and value to patients
  • Helps payers in terms of cost-savings and care quality
  • Improves therapy effectiveness and efficiency, and
  • How it exceeds or is unique from other practices.

You can gain this information through regular patient satisfaction surveys, and getting feedback from referring physicians and administrators.

3. Opt for small consistent adjustments rather than big sporadic ones

Ideally there’s an optimum rate you want to achieve, but if you can’t get that rate right away you can always settle for a smaller rate now and negotiate an increase later on. In order to succeed in this type of negotiation however, it’s better to agree on small but consistent increases every year or every other year rather than large sporadic ones. Payers are much more inclined to agree on 2-3% increases annually rather than a one time rate increase of 10% or more, and with this arrangement you’d still be able to achieve your ideal rates and maybe even more down the line.

4. Develop a good working relationship with your payers

You’re more likely to achieve great results by working together with payers rather than against them. This is why it is so important to develop a good and lasting working relationship with them. Having a good relationship with payers helps you understand their position better and vice-versa, which will help you reach mutually favorable terms. This also makes it easier for you to make requests, and easier for payers to agree to them.

These are just a few of the ways you can achieve successful, advantageous negotiated payer contracts. What other ways have you found to be helpful during payer contract negotiations? Tell us about it in the comments section below.

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