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Thread: renegotiating fees

  1. #1

    Default renegotiating fees

    AAPC: Back to School
    Can anyone help with how and when to renegotiate payer fees? I have never had to renegotiate before and am new to the whole process. Where would I begin and how do I know its time to for the negotiation process to begin?
    Finance Analyst

  2. #2
    Join Date
    Apr 2007
    Ft. Myers, FL

    Default Re-Negotiating Fee Schedules

    This is a tricky question, as fee schedules are unique to specialties and geograhic areas. Many factors play into payer fee schedules. While I am lucky enough to work in an area that has not been hit with HMO's and capitation, I think it would be more difficult to negotiate those types of fee schedules. It is also difficult to negotiate fee schedules that are already negotiated through a third party such as an organization your physicians may belong to that communicates with certain payers for better reimbursement to all physicians in that particular group. If neither of these apply, and your contracts are direct with the payers, then I recommend first doing an analysis of your practice, indicating the payer census and their current fee schedules.... I work in family practice and our fee schedules are usually based on either Medicare allowable or RBVS's (ex., a particular payer may reimburse 140% of current year's Medicare allowable). You should concentrate first on the most popular payers in your practice, taking into consideration AR percentages as well. (If a fee schedule is low, but takes little staff time to follow up on outstanding claims, then you should take this into consideration, on the other hand, if a fee schedule is on the higher scale but you have to fight for every dollar to be paid, then it you may need to consider this as a reduction from the actual reimbursement percentage - not to mention that it makes your AR look terrible.) Locate problem payers and determine if you really need to participate with them in order for your practice to thrive. After gathering all of this information, sit down with your physician(s) and decide if reimbursement is adequate. I did negotiate two payer fee schedules last year and was able to obtain significant increases. However, my physician agreed that if we did not obtain increases, then we were going to terminate our participating agreements with them. We were prepared to be turned down by the payers, but we also knew that our practice played an important part in enrollment of their insureds. Initially, I contacted our local provider services representatives and one was able to get us the increase we requested. The second basically told me that her hands were tied, and an increase was not an option. Therefore, I sent my termination letter via certified mail and less than 10 days later, I received a phone call from the regional director of provider relations. She offered a slight increase, which I immediately declined as still being too low, she did rebut with a higher fee schedule which made both parties agreeable. We did however have high scores in our physician recognition reviews and their were few local par. providers in our specialty - so we felt like we had some power to negotiate. The best advice I can give is to make sure the provider network in your area is not overflowing with providers in your specialty. The payers won't think twice about losing you if they have an ample amount of providers. However, it is always worth a try. If you do end up terminating your contracts due to inadequate reimbursement, explain this in a sensitive manner to your patients. They may voice their opinions to their employers and/or their insurers. Also have your physician(s) talk to their colleagues. (Payers tell them not to discuss fee schedules with others for a reason.) If they all stand together, then the payers will have no option but to offer higher reimbursement. Sorry that I have gone on and on, but I am very passionate about this topic, as we all know physicians are being reimbursed less and less each year, yet insured premiums increase. It's terrible for the physicians and the paitents. Someone has to be benefiting from this. Good Luck, and Go Get Em!

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