With rising costs of labor, malpractice insurance, and medical supplies, private practices need to identify areas where income can be increased to ensure the financial stability of their business while providing high-quality care for those who need it. While you can’t always increase revenue through increasing service costs, you may be able to find more money through negotiating or re-negotiating payor contracts with your biggest insurers.
PayrHealth’s solutions to payor portfolio management and revenue cycle management are two comprehensive tools to outsource and team up with a group of healthcare experts to avoid the hassle of negotiating these contracts yourself, which we’ll get into here to help you better understand the process.
Build a Database of Common CPT Codes
The first step to a successful negotiation is to identify your most frequently utilized codes — aim for the most popular codes that generate around 75% of your revenue from payors. In a spreadsheet or other data organizer, list how many times each code was used in the previous 12 months and how much you currently charge for the service. You’ll also want to find the current year Medicare reimbursement rate for these codes, which you’ll use to identify how much your various payors are offering and whether you can leverage anomalies to increase your revenue for your most-used codes.
Identify Your Largest Payors
If you serve patients under Medicare, you won’t be able to negotiate better rates through the government. However, private insurers like Aetna, BCBS, and UHC can be open to re-negotiating reimbursement rates to help you stay competitive in a tight industry. Before getting overwhelmed that you’ll have to repeat this process over and over with each insurer you accept, know that this process is meant to identify only the largest payors, rather than all of them. You want to use your limited time wisely to get the biggest bang for your buck.
Use your payors’ explanation of benefits statements to mark down how much they allow for each code. You can then use a simple formula to compare your reimbursement rate to the current Medicare rate to leverage during a potential negotiation.
Analyze The Data
Once you’ve gathered your payors’ rates and have compared them to Medicare’s rates, analyze the codes to see which ones could help you generate more revenue with even a slight increase in reimbursement. You may have guessed that you should analyze both how frequently the code is used as well as how much you’re paid for it; you’d be surprised how a small bump in an inexpensive but frequently used service can make a big difference in your revenue.
Codes that are near or below Medicare rates can be ripe for re-negotiation with your payor(s). You or your administrator can get in contact with them, show the data you’ve compiled, and ask for a better rate in the next annual contract.
Comprehensive Payor Portfolio Management with PayrHealth
Not every practice coordinator or physician has the time, patience, or specific skills to undergo a successful contract negotiation process. Insurers are notoriously difficult to nail down, even with a compelling argument, and the back-and-forth nature of contract negotiation often slips people’s minds or becomes too tedious to continue. That’s why PayrHealth offers complete and proactive negotiation services to automate this process for your practice, ensuring you get the best rates and terms with all your payors, based on your region and the state of the healthcare industry. Learn more about payor portfolio management by getting in touch with our team today.