What to Look Out for with Payer Contracts, Part 2 of 4: Preparing for a Negotiation

In our previous post, we delved into how to evaluate an payer contract opportunity. Now, we’ll show you how to prepare for the actual negotiation.

Before you enter into a payer contract with anyone, you must first consider the source. Will it be the actual payer or a middleman, such as an agent or re-pricer? Will it be a Preferred Provider Organization or a provider network? Knowing the source can help you avoid potential administrative pitfalls or a reduction of your services fees down the road.

How can you tell if a contract is really in your best interest? A great place to start is by looking at where you are now with your existing numbers. Calculate your average revenue and costs per visit. Then you’ll be able to see if their proposed fee schedule meets your practice’s needs, requires negotiating for more money or walking away from the deal.

You can be even more discerning with an existing payer. Take a good, hard look at how much of your existing business is covered by them on a per visit basis. What kind of a track record do they have with your practice? Are they notorious for delayed claims, payment denials, or timely filing battles?

There’s one more thing you’ll want to watch out for – opportunities. What’s the upside of the equation? Will they give you access to more physicians, patients, or a health system?

After you’ve objectively looked at all of these factors, you’ll be able to make a much more informed decision about any payer’s contract offer. You’ll know how much you need to run your business. So the wrong contract won’t run you out of business.

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