Deal or No Deal: Negotiating Contracts
By Sean Price Texas Medicine June 2021

BCBS_ERS

Negotiating a health plan contract is one of the most important business moves an independent physician can make.

Many assume there’s no way to negotiate from a place of strength, says Heather Bettridge, associate vice president of Texas Medical Association Practice Management Services. But TMA survey data from June 2018 shows that on average, 43% of responding physicians secured changes to contract terms, payments, or both.

Physicians who negotiate well can win changes that help ensure their economic success. Here are some tips Ms. Bettridge shared in an interview with Texas Medicine.

What are the first steps to effective negotiation?

First, make sure you want to contract with this health plan. Consider the following:

• Do you have copies of all your contracts and fee schedules?

• Do the proposed fee schedules cover your costs?

• Do you understand how the fee schedules are structured and what that means for your practice?

• Are the administrative requirements manageable or overly burdensome?

• Do certain health plans account for a large percentage of your payer mix?

• Are all documents referenced in the contract available to you for you review?

• Can the terms of the contract and its equally binding referenced documents be amended without your notice or approval?

• How will you be notified of any proposed amendments to the contract?

Before negotiations even start, be sure to consistently monitor all payments and adjustments by loading payer fee schedules into your practice management system. This will allow staff to easily identify accurate and inaccurate payments. Track any errors you find. Identifying repetitive errors may work to your advantage during negotiations.

What gives a practice leverage in negotiations?

All practices have something to leverage during negotiations.  But physicians must identify their practice’s strengths and understand the market it serves. This means researching and evaluating your competition, pinpointing what makes your practice different from others, determining whether the market is saturated, and if there are any other local challenges, such as a lack of qualified staff in the region. Armed with this information, physicians can better negotiate to avoid low fee schedules and unfavorable terms. It may also help you decide to walk away from an unsatisfactory contract. Going into negotiations just saying you want to be paid more will not be effective.

How can physicians best prepare for negotiations?

• Review contracted fee schedules well in advance of the expiration date.

• Put reminders on your calendar for upcoming, expiring contracts to provide ample time for negotiation.

• Payments received at 100% of the practice fee schedule should alert your billing staff that the practice’s standard fee schedule for certain services may need adjustment. Remember: You could be losing money by submitting charges below your contractually obligated rate.

• Get to know the plan representatives and communicate frequently. This reduces the chances of starting negotiations with an adversarial relationship.

• Familiarize yourself with other payers’ fee schedules (like Medicare and large commercial payers) for your most commonly reported billing codes.

• Be reasonable with your requests and be willing to compromise. 

Aside from the fee schedule, what is negotiable?

Too many contract change requests can unnecessarily delay negotiations. Also, some negotiating points may not be worth the time and effort. Nevertheless, many are. Here are some important ones to consider. Watch for:

• Indemnification and arbitration clauses that may be one-sided. With indemnification clauses, both parties – not just one – should agree to not hold the other party responsible for legal or financial liabilities. Arbitration clauses frequently benefit the payer. For instance, they may let the payer choose the arbitrator or the locations where arbitration can take place.

• Evergreen clauses, which allow payers to automatically renew each year.

• Burdensome timeframes, such as requiring all claims to be filed with 30 days of the date of services – a deadline many surgical specialists could not meet.

• Restrictive credentialing and licensure requirements. For example, make sure the entire practice’s contract won’t be terminated if one physician in the practice loses his or her license, is charged with a crime, or fails to maintain board certification.

• Obscure legal provisions, termination, or noncompliance penalties.

• Extensive contract termination timelines. The physician should be able to terminate a contract within a reasonable time, like 30 to 90 days. Some contracts require a year or 18 months.

Should practices outsource their contract negotiations?

They can, but outsourcing negotiations costs money, and physician offices can perform this function internally. On the other hand, don’t be afraid to get professional guidance. Attorneys can help decipher what the physician is signing and help identify unfavorable clauses and terms.

 

NOTICE: This information is provided as a commentary on legal issues and is not intended to provide advice on any specific legal matter. This information should NOT be considered legal advice and receipt of it does not create an attorney-client relationship. This is not a substitute for the advice of your own attorney. The Office of the General Counsel of the Texas Medical Association provides this information with the express understanding that (1) no attorney-client relationship exists, (2) neither TMA nor its attorneys are engaged in providing legal advice, and (3) the information is of a general character. Although TMA has attempted to present materials that are accurate and useful, some material may be outdated, and TMA shall not be liable to anyone for any inaccuracy, error, or omission, regardless of cause, or for any damages resulting therefrom. You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought. Any legal forms are only provided for the use of physicians in consultation with their attorneys.

Tex Med. 2021;117(6):26-27
June 2021 Texas Medicine Contents 
Texas Medicine  Main Page  

Last Updated On

June 02, 2021

Originally Published On

May 31, 2021

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Sean Price

Reporter

(512) 370-1392

Sean Price is a reporter for Texas Medicine and Texas Medicine Today. He grew up in Fort Worth and graduated from the University of Texas at Austin. He's worked as an award-winning writer and editor for a variety of national magazine, book, and website publishers in New York and Washington. He's also helped produce Texas-based marketing campaigns designed to promote public health. Sean lives in Austin and enjoys hiking, photography, and spending time with his wife and two sons.

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