If at First You Don't Succeed
By Amy Lynn Sorrel Texas Medicine March 2017

Passion and Persistence Pay Off for Physicians at the Negotiating Table

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Tex Med. 2017;113(3):43-48.

By Amy Lynn Sorrel 

Like many physicians, Doug Curran, MD, assumed for many years the contracts health plans slid across the proverbial negotiating table were take-it-or-leave-it offers. It's no wonder when managed care representatives' typical responses to any physician pushback are an automatic "No, we can't make any changes" or "This is our standard contract." 

But when the payment offers pitched to the Athens family physician and chair of the Texas Medical Association Board of Trustees kept sinking to levels that would barely keep his practice afloat, he decided he wouldn't take "no" for an answer.

"As they ratcheted down our payment, we came back pretty quickly saying, 'If you want us to continue to work with you, you need to work with us, and we need adequate payment for our services,'" Dr. Curran said. 

Having gotten to know his plan representatives over the years, he tenaciously called until he climbed up the chain of command to get the right dealmakers back to the table, where Dr. Curran stood his ground, and actually gained ground, after getting insurers to hear his side of the story.

"Doctors tend to give up because they feel alone in the deal, or they got turned down a few times and can't make it happen. And we are busy seeing patients, putting out fires, and looking over our shoulder, so who wants to spend time negotiating?" he asked. "We just want to take care of our patients. But we forget that if we want to take care of our patients, we have to be sure that we can. And the more proactive you are, the less likely you are to get into a take-it-or-leave-it situation." 

New TMA data show physicians' passion and persistence are paying off as they attempt to negotiate the terms of their health plan contracts. And when they do, physicians often are successful at getting some of the changes they ask for, according to TMA's 2016 Survey of Texas Physicians. (See "At the Negotiating Table.") 

This is the first of TMA's biennial surveys to delve into physician negotiation success rates with each of the five major health plans in Texas. 

The research shows over the past two years a majority of Texas doctors, 52 percent, attempted to hammer out payment and other contract terms with the plans. On average, about 40 percent of those physicians were successful in their negotiations.

For the most part, those physicians who shied away from dealmaking did so because they assumed their contracts were nonnegotiable, or they had been unsuccessful in the past. 

Former TMA payer relations expert Bradley Reiner says over the past decade or so, insurers have become slightly less reluctant to make changes. More importantly, physicians are getting more business savvy. His firm specializes in payment and practice management issues. 

From contracting, billing, and coding to hiring the right consultants and office managers, "TMA has done a great job over the years of encouraging physicians to learn more about the business side of their practices. They are really understanding the dynamics of what makes a practice successful and recognizing, even small groups, that they have leverage if they use that to their advantage for the purpose of negotiating," Mr. Reiner said. Many doctors, he says, "will hear 'no' and walk away. But I've learned over the past 15 years, 'no' never means no. 'No' means maybe. It just depends how persistent you are." 

Austin attorney Michael Stern agrees the trend is likely due, in part, to physicians' business savoir-faire, as well as other market forces pushing both parties to the brink. The managed care contract expert offers discounted services to TMA members.  

"Rates are sometimes so low that doctors may be feeling the pinch to either negotiate up or not take the contract. And it may be managed care companies are feeling the pinch, too, because doctors are opting out of not just Medicare and Medicaid, but managed care, when they realize some of these payers and contracts are not worth dealing with," he said.

TMA data show 20 percent of physicians terminated their health plan contracts over the past two years, most commonly because of payment problems like rate cuts and inadequate payments.

Working Just to Get a Contract

TMA Council on Legislation Chair Ray Callas, MD, suspects with the advent of the Affordable Care Act, health plans may be feeling pressure after coming under increasing fire for shrinking their networks to inadequate levels to save on costs. The Beaumont anesthesiologist is among those hospital-based, or indirect-access, physicians TMA's survey found were most likely to attempt to negotiate health plan contract terms, compared with other specialties.

It took Dr. Callas two years of unanswered phone calls to get in network with one of Texas' major payers.

"I finally got a bur in my saddle because we don't like having to collect money from our patients when we are out of network, and [health plans'] maximum allowable rates (how much of patients' costs insurers decide to cover) are so low," he said. "Health plans are never going to throw out their best offer first, so we kept saying, 'No, no, and hell no.' It takes a lot of time and commitment and rigor. But that's what our patients deserve and what's needed to hold insurance companies accountable so access is not compromised. We have to be persistent for our patients." 

Everybody Has Leverage

Physicians and legal experts dispel the myth that size matters, saying every practice, large or small, has something to leverage. The key, says Dr. Curran, is doctors knowing their practices and local markets. Physicians must be knowledgeable, for instance, about what it costs to run their practices and make ends meet, data Dr. Curran took with him straight to the negotiating table. (See "Contract Negotiation Help From TMA.")

"If you are genuine with insurance companies about why a particular payment won't work, why it isn't fair, and what you can live on, they are much more receptive to that. You can't negotiate from a position of just saying, 'I want to be paid more,'" he said. 

Dr. Curran also took advantage of the fact that his practice is in a small community where insurers do not have a lot of primary care options, adding that big systems don't always win out. 

"Insurance companies are sensitive to the fact that if you are part of a large system, they are probably not going to be doing much negotiation without the system participating. And they are not real fond of all-or-none or our-way-or-the-highway scenarios," he said. "So in the private practice of medicine, you can negotiate a little better. Insurance companies want options, and it's up to us [physicians] to show them the value of keeping doctors in private practice."  

Mr. Reiner helps physicians conduct a thorough assessment of their practices and identify their uniqueness in a particular market. He then puts the information together in a formal letter to insurers introducing the practice. 

Health plans may have a general understanding of the market, "but they don't really know this neurosurgeon or that cardiologist and what he or she really does," Mr. Reiner said, adding that cost effectiveness is a "very critical" component. "After all, it's a bottom-line dollar issue for the payers."

In any size community, physicians can only boost their clout by building relationships with their managed care representatives, outside of just contracting. 

"Negotiations are not going to be successful in an adversarial relationship," Mr. Reiner emphasized.

Heather Bettridge, associate vice president of TMA Practice Management Services, says physicians need to arm themselves with critical information before the negotiation process. They should have access to their contracts and an accurate, up-to-date payer contract matrix, which lists pertinent information for each payer, including contact information, payment terms, and agreement provisions. 

"Without the matrix, it will be difficult to determine if the terms are reasonable and if your practice is being paid appropriately," Ms. Bettridge said. 

To improve their chances of successful negotiations, she suggests physicians: 

  • Schedule reminders for all expiring contracts to allow sufficient time for the negotiation process;
  • Review explanations of benefits to ensure consistent payment in line with the contract;
  • Prepare to speak about market issues affecting the practice;
  • Know their competitors' offerings;
  • Make note of Medicare's fee schedule for common services and procedures performed in the practice; and 
  • Be reasonable — not excessive — with requests, and be willing to compromise. 

Do's and Don'ts

Physicians need to know what — and what not — to ask for, adds Mr. Stern.

Payment is usually at the top of physicians' list. "But payment is actually the easiest thing because it's just dollars and cents, and nobody puts out their best offer first. So you can usually assume when managed care companies throw out their initial fee schedule, there's room to maneuver," he said. 

Dr. Callas also worked with his attorney to make sure payment terms are not set in stone for perpetuity when practice costs are constantly evolving. Instead, he negotiated incremental increases every so often.

But physicians' due diligence should not stop at payment. As far as other legal terms go, Mr. Stern gives practices a full written analysis of the contract to review and to identify what they consider to be the most significant changes they desire. 

He cautions, for instance, against asking for modifications that would affect what he described as managed care companies' daily business practices. Examples might be terms that would require a plan to alter its software programs, such as requesting 90 days to submit bills when a program is hardwired for 30 days. 

On the other hand, legal provisions for liability, arbitration, termination, or noncompliance penalties are usually open for negotiation, and Mr. Stern strongly recommends physicians pay close attention to those terms in a contract. 

He points to egregious provisions, for instance, that could require a doctor to pay for a health plan's lawyers, judgment, and court costs if a doctor and a managed care company get roped into a lawsuit together. "Those are often not covered by [medical liability insurance] policies and may actually come out of the doctor's own pocket," Mr. Stern warned. And if physicians ever want to get out of a contract, "it needs to be quick and seamless. I have seen terms that require 180 days' notice or even a year, and the doctor has to continue to see [the health plan's] patients in the interim. Those are things that are not appropriate. A 30-day notice should be sufficient." 

Mr. Reiner also cautions too many requests for changes in contract language can unnecessarily delay negotiations. To avoid such pitfalls, he suggests physicians weigh "the risk of those things actually happening, and sometimes the risk is not worth the time and effort to try to change the language. Or a lot of times it can backfire, and you don't get the change you wanted and you've wasted six to eight weeks." 

Beyond payment and legal terms, Dr. Curran also likes to make sure his patients aren't hassled when it comes to access to care, ensuring local hospital, imaging, and other critical services are available in the plan network, "so they are not having to drive 100 miles to have something done."

Passion and Persistence

Whatever the terms, physicians and legal experts say doctors themselves must have a hand somewhere in the contract negotiation process. According to TMA's survey, 52 percent of physicians were not involved, while 44 percent participated in some way, whether as primary decisionmaker or among a group of decisionmakers. 

Dr. Curran's forte is wheeling and dealing at the negotiating table. His practice partner, on the other hand, prefers to dig into the contracts, researching and reviewing them with another staff member, picking out critical changes insurers may have thrown in, and identifying what works and what doesn't. 

"It's imperative, but I'm glad my partner likes to do that. But you give me the details, and I'll take that vision and go make it work," Dr. Curran said. 

If nothing else, he recommends physicians hire someone to help them through the process. 

"But you can't make things happen without the physician. You have to take ownership of what's going on in the practice and what you're willing and able to do and not do, and make sure you are communicating that to as high a level as you can in the insurance company or employer group," Dr. Curran said. "Any doctor not reading his or her contract is making a huge mistake. You have to go over them with your billing folks, with your staff, or get professional help because there are nuances insurance companies will throw in that can put a wrench in your practice."

Dr. Callas also likes to be front and center in contract negotiations and agrees it's worth the money to get counsel to walk physicians through the minefield of contract language. But the buck doesn't stop there. 

"Attorneys can help you decipher what you are signing before you sign it. But they are not the experts in health care. Physicians are," Dr. Callas said, reiterating that physicians know what it takes to maintain their practices and access to care. 

Mr. Stern says physicians have to decide where their strengths lie and where their time is best spent. But it is neither uncommon nor inappropriate for physicians to send an office manager or other staff member into negotiations after discussing desired contract terms. 

If after much back and forth discussion, communications with a health plan stall, Mr. Reiner doesn't settle there. Physicians, he says, are his best deal-clincher. 

Mr. Reiner typically sets up a conference call or meeting with the insurer, "and when I've tapped out information about the practice and the unique services they provide, it's the physician who's passionate about what he or she does. When payers hear that passion, it goes a long way in eliciting movement on the contract." 

Of course, it's important to recognize when you've reached that point when insurers just won't budge, he notes. "But if you truly believe that your practice deserves an increase, and you have something unique on the table that gives you leverage and that you are passionate about, I see you being successful."

Amy Lynn Sorrel is former associate editor of Texas Medicine.


Contract Negotiation Help From TMA

TMA's Take Back the Power: Payer Contract Negotiations seminar will teach you to unleash your negotiation power with health plans, resulting in better contracts and more money for your bottom line. Many physicians feel they can't negotiate from a place of strength or simply don't know where to begin. The lessons in this seminar will help empower you to take control. Register online, or call (887) 880-1335. 

Seminar Topics  

  • The nuts and bolts of payer contracts; 
  • Understanding common contract elements; 
  • Where to start with negotiations and how to prepare; and 
  • What to ask for and how to do it. 

Seminar Dates and Locations  

  • Houston: March 28 and April 5
  • Dallas: April 18 
  • Tyler: April 19 
  • Fort Worth: April 20 
  • Austin: June 20 
  • San Antonio: June 21 
  • Corpus Christi: June 22 
  • Live webcast: June 20 


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Last Updated On

March 01, 2017

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