You CAN Negotiate a Health Plan Contract

Many physicians assume that attempting to negotiate a health plan contract is hopeless — but that is a myth. Survey data from TMA show that physicians’ negotiation attempts often are successful. Respondents report winning both payment and term changes in their contracts. 

The first step in securing a better contract is deciding if you want to contract with the health plan in the first place, and if so, how badly. To do this, you need to do some homework.

  • Do the fees paid cover your true costs of doing business? (See how to find out if an existing contract is a money maker or a money drain.)
  • Do you understand how the fees are calculated and the implications for the services you offer? (Is the contract paid on a percentage of billed charges, a fee schedule, or a percentage of Medicare? If Medicare, how quickly does the plan update its fee schedules after a Medicare update?)
  • Does the health plan steer patients to you? (Make sure local hospital, imaging, and other critical services will be in your plan network.)
  • Are the plan’s administrative requirements reasonable for your practice? (Remember that factors besides just payment rates affect how physician-friendly or patient-friendly the plan is.)
  • Is the health plan crucial to your payer mix?

In addition, assess your position in the marketplace to identify where your strengths lie: Evaluate your competition, pinpoint what makes your practice unique in your particular market, and be conversant about market issues that affect your practice.

Only after you have a clear picture of how the contract might play out in your practice can you negotiate effectively to get the terms and fees you need to make it worthwhile — or decide to walk away if you can’t.

TMA can help:

  • Read “If at First You Don’t Succeed: Passion and Persistence Pay Off for Physicians at the Negotiating Table” in the March 2017 issue of Texas Medicine for advice from physicians and experts.
  • Visit TMA’s Contracts webpage for tips and information, including a close look at specific contract clauses to watch out for.
  • See TMA’s publication Business Basics for Physicians. This book can help you understand what it costs to run your practice and make ends meet, and also has a section on contracting with payers.
  • Take advantage of a special TMA member rate for a legal contract evaluation. For $150, payer contract expert Michael Z. Stern, JD, will review a new or existing contract for provisions that may affect your medical practice. He’ll provide a written evaluation.

Published March 15, 2017

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Updated: July 2, 2019

Last Updated On

July 02, 2019

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