Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued a price transparency mandate to hospitals across the nation. This new regulation requires that hospitals make their charge masters publicly available. In theory, this information will allow patients to gain a better understanding of their costs – before care is consumed. It remains to be seen if the reality will match the intention.  

Price transparency has been in the healthcare headlines for years; however, one of the biggest hurdles to real transparency is the variance of managed care contracts – especially for independent medical practices.  Independent medical practices are at a disadvantage when it comes to negotiating with payers; they do not have the same leverage of practices associated with hospitals, health systems, or other large networks. And, payers have used this to their advantage.  

Before entering into payer negotiations, you must arm yourself with knowledge.  

Analyze your Current Contracts 

At least annually, you should analyze all of your managed care contracts. Create a checklist that includes the following points and then answer the questions as they apply to each of your contracts. 

  • Contract length  
  • Days to submit claims 
  • Days to pay claims 
  • Percentage of claims denied 
  • Reimbursement rates for specific services 

Find Areas of Opportunity 

After completing your analysis and getting an “apples-to-apples” comparison of each contract, look for areas that can be improved. Boosting reimbursement rates, while important, is not the only item to consider. For example, look at how long it takes a payer to reimburse your practice – it should be 30 days or less. Also, if a payer has an unreasonably high percentage of denied claims, find out why and what you can do to ensure claims are approved on the first submission.    

Understand the Market 

Know who the biggest players are in your market – both from a payer and a provider perspective. The larger the market share a payer has, the more power they have to squeeze rates and narrow networks. In terms of other providers, try to find out which payers they contract with, their volume, and their level of care quality. This information can help you better position your practice during contract negotiations and know which payers will be more likely to give you the most favorable terms.  

Unfortunately, there is no magic formula to ensure your practice is getting the best reimbursement rates possible. Regularly reviewing your contracts and analyzing the market conditions will allow you to have a better understanding of your position with each payer. This is the key to making sure you get the most favorable reimbursement rates and contract terms.   

Contact us to learn more about how Practice Partners can help you analyze your managed care contracts to improve your practice’s bottom line.