Tips to make every payer negotiation a success
Physicians looking to negotiate reimbursement rates with payers often find themselves dealing with take-it-or-leave-it offers, leaving them feeling frustrated and powerless.
When asked how challenging payer negotiations are as part of the Medical Economics Payer Scorecard, 64% of respondents rated it a four or five on a five-point scale, where five is “very challenging.” But an attitude of indifference from payers should not be taken as a final answer to negotiation attempts, experts say. Instead, think of it as the opening round in what can often be a long process to get the attention of the right person in the insurance company.
“It’s an endurance test,” says Marcia Brauchler, MPH, FACMPE, president of Physician’s Ally, a Littleton, Colorado-based consulting firm. “I think payers put up hurdles to intentionally wear down a busy practice administrator or physician who still sees patients. Probably 95% of practices go away when they are told ‘no.’”
Payers looking to standardize operations may not be interested in negotiating fee-for-service contracts, but there is interest in value-based care deals and in protecting their position in the marketplace.
“The payers don’t want the small or independent practice to join larger groups with more leverage,” says Nathaniel Arana, owner of healthcare consulting firm NGA Healthcare in Tucson, Arizona. “For the first time, they are saying, ‘Maybe we need to look to work with smaller groups more to limit the amount of consolidation.’”
In some markets, large physician groups are starting to wield as much negotiating power as the payers because of their market dominance, hurting payer profits, he adds.
Every market is different, and the extent of competition on both the payer and the provider side will affect payers’ interest in negotiating, particularly with smaller practices. Experts say successfully negotiating in any market requires a thorough understanding of what value the practice offers the payer, a dogged determination to find the right decision-maker at the payer and the ability to sell the practice’s attributes to that person.
Start with preparation
The first step to a successful negotiation is for practices to figure out what value they bring to the payer.
“It’s not about size, it’s all about the value proposition,” says Anthony D’Eredita, executive vice president of consulting for Advisory Board, a healthcare research firm. “If you deliver value, then size enhances that. But if a practice can create [something the payer values that is] unique to the market, they can negotiate well.”