Tips for Negotiating Credentialing Contracts

Once you complete the lengthy provider enrollment and provider credentialing process and are awarded a credential by a health insurance company, they will present you with a credentialing contract or managed care contract to sign. This contract will officially verify you as a preferred provider within that insurance company’s provider network. Becoming a preferred provider can have significant benefits for your practice, as patients who carry that insurance are more likely to discover you and seek your care services.

However, there are some aspects of signing a provider credentialing contract that may be less than ideal for your practice. Most notably, credentialing status means that payment rates are not decided by you, but by the amount of reimbursement that the insurance company agrees to provide for each CPT code corresponding to the patient care services you offer at your facility.

To that end, reimbursement rates can and should be negotiated by you in order to maximize revenue. Here is how you can work through a successful contract negotiation process with healthcare providers and insurers.

Negotiating Tip #1: Get the Ball Rolling

It may seem intimidating to confront a major health insurance company at the negotiating table. However, with enough research and preparation, you have the support of a reasonable and data-driven argument.

Choosing not to negotiate better reimbursement rates out of fear can have severe impacts on the long-term success of your healthcare organization. As a healthcare provider, you may believe your time is better spent on delivering the best patient care than on contract negotiations with your insurance network. While it goes without saying that quality care is a top priority, the financial health of your practice is critical, too.

In fact, your ability to deliver the best patient care can be compromised down the line if you neglect to pursue the best reimbursement rates with your insurance carriers.

If you don’t negotiate with insurance panels and have your fee schedule adjusted to match rising costs and inflation as a licensed physician or practitioner, your business will suffer as the years go on. It will be more difficult to offer competitive staff salaries, maintain your equipment, and pay your facility’s overhead, leaving your private practice and patients to suffer the consequences. Negotiation is an important step in affordable quality healthcare delivery to your patients.

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Negotiating Tip #2: Gather Your Data 

Insurance companies and the representatives of their contracting departments are highly unlikely to offer increases to your reimbursement rates out of the blue. They’re also unlikely to agree to increased rates just because you ask for them. Instead, you need to present evidence and quality metrics that show why an increase in your reimbursement rates is necessary during the contracting process.

The way you discover this evidence is by assembling all of your payment data.

Rank Your CPT Codes

The best place to start is by figuring out what your most commonly billed CPT codes are. In other words, what patient care services and treatments do you most often deliver as health care professionals? Organize your top CPT codes in a spreadsheet and record how many times you billed each code within the last 12 months.

Because you’re not likely to receive a blanket increase in reimbursement rates, it’s important that you identify a few CPT codes that most impact your business. These codes vary by practice.

A pediatrician, for example, may find that out of the many dozens of codes he or she uses within a year, the ones they most value are:

  • 99401: preventive medicine counseling provided to an individual for 15 minutes
  • 99402: preventive medicine counseling provided to an individual for 30 minutes
  • 96110: developmental screening, per instrument, scoring, and documentation
  • 96127: brief emotional and behavioral assessment

Armed with that knowledge, they would then go on to compare and contrast how each of their health plans reimburses for those codes.

Discover Your Highest-Paying Insurance Companies

Now that you know which codes are most vital to the success of your practice, you should determine which payers offer the best rates for those services, and which payers are lagging behind.

Multiply the reimbursement rate for each of your most valued CPT codes by the number of times each you billed that code to each payer. For example, you may discover that Company A reimburses $80 for code 99999, while Company B reimburses you only $50 for the same code.

However, you may also find that patients who carry Company A’s insurance received code 99999 services only 10 times in the last year, while Company B was billed 25 times.

In this scenario, Company A only provided $800 ($80 x 10) in yearly value for code 99999, while Company B provided $1,250 ($50 x 25) in yearly value. Despite having a lower reimbursement rate, your contract with Company B can be seen as more valuable overall.

While you may still seek to negotiate a higher rate with Company B, now you know for sure that you shouldn’t walk away from the professional relationship if they don’t meet your full demands.

Generate a Benchmark Rate

It’s helpful to have a benchmark rate to compare with each contract. This makes negotiations easier because it helps you highlight the differences in payments, while keeping everything in simple terms and not having to keep track of many big numbers. A common benchmark rate used in credentialing contract negotiations is Medicare’s reimbursement rates.

If you research Medicare’s reimbursement rates for all of the CPT codes you use, you can then calculate each of your payer’s reimbursement rates as a percentage of Medicare’s rate.

For example, you may discover that most of your payers pay 150 percent of Medicare’s rate for code 92222. However, Company C only pays 90 percent of Medicare’s rate for code 92222. You then have a clear and convincing argument at the negotiation table with Company C.

Negotiating Tip #3: Consider More Than Just Reimbursement Rates

Reimbursement rates are the aspect of your managed care plan that most immediately affects your practice’s bottom line. That being said, the contract includes many other clauses that have both short-term and long-term effects on business.

A few other terms of your credentialing contract that you should consider negotiating are:

  • Amount of time you have to submit a claim
  • Amount of time you have to appeal denied claims
  • Authorization processes for the implementation of certain treatments
  • Regulations and requirements around the use of certain drugs
  • Period of time in which the payer must provide reimbursement
  • Interest rates for late payments
  • Process for new physicians joining your plan
  • Amount of time in which either party must give notice before canceling the contract

Negotiating Tip #4: Monitor Your Contracts

When a contract is negotiated and signed, it may seem like the job is done. However, managing a professional relationship of this kind is not something that can be attended to just once every few years.  State and federal law can change throughout the years and the insurance company may adapt its policies.

In fact, many contracts include clauses that stipulate that the payer is entitled to make changes to the contract language. They often don’t need your permission to make changes to your contract terms, and in some cases, they don’t even need to notify you when changes have been made. This can affect nearly any term of the agreement in the contract, such as:

  • Reimbursement rates
  • Credentialing requirements
  • Reasons why the payer can deny reimbursement
  • Your ability to make a claim over missed or inaccurate payments
  • Contract cancellation policies

These clauses, commonly referred to as unilateral amendments, can profoundly impact your business.

Negotiating Tip #5: Get Professional Support

With so much effort needed to negotiate every credentialing contract, it can feel overwhelming. Your main focus should be on delivering excellent patient care, but the business side of things keeps getting in the way.

Luckily, you don’t have to negotiate contracts alone. With PayrHealth, you can have a team of strategists fighting on your behalf. PayrHealth is the solution to healthcare contract management.

They see you through every step of the process, helping you:

  • Sign better contracts
  • Generate more revenue with higher reimbursement rates
  • Monitor your contracts and stay aware of any changes
  • Earn more from your investment in professional relationships
  • Expand your team and grow your practice

Contact Us Today

With over 25 years of experience in all 50 states, PayrHealth has negotiated more than 50,000 healthcare contracts. We can help you avoid financial risk and compete with other providers to continue offering quality services to your patients. If you’d like to be part of the next contract that gets expert support, contact PayrHealth today for more information about managed care contracting.

Sources: 

  1. Clinic Service. Tips for Doctors on How to Negotiate Reimbursement Rates with Health Care Plans. https://clinicservice.com/tips-doctors-how-negotiate-reimbursement-rates-health-care-plans/  
  2. AAFP. Can You Negotiate Better Reimbursement? https://www.aafp.org/fpm/2004/1000/p31.html 
  3. SPPM. Tips For Credentialing and Contract Negotiations. https://www.sppm.org/tips-for-credentialing-and-contract-negotiations/  
  4. American Academy of Pediatrics. Coding for Pediatric Preventive Care 2020. https://www.aap.org/en-us/documents/coding_preventive_care.pdf  
  5. ASOA. Think You’ve Negotiated A Favorable Managed Care Provider Agreement? https://www.asoa.org/sites/all/files/Feature%20Bonus.pdf 

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