When considering contract negotiations, you may have a number of questions:
- How do I know if my managed care contracts need to be negotiated?
- If I do need to negotiate, how do I go about it?
- What should my strategy be?
The following summary will help you determine if contract negotiations are warranted, how to develop a negotiating strategy, and then how to implement it.
ASSESSMENT
The assessment should be completed by evaluating and analyzing the following topics:
- Your Organization’s Market
- Your Organization’s Performance
- Your Payers Contracts
- Your Payer’s Performance
STRATEGY
Based on your assessment, if you determine there is a need for contract negotiations, the following summary points can be used to develop your negotiating strategy:
- Assess each payer’s reimbursement rates to determine the highest and lowest payers.
- Determine the rate increases required to achieve parity within your managed care contracting portfolio (market analysis).
- Establish minimum and target increases over a two-year period. Longer periods should have escalators negotiated into the contract.
Pre-Negotiation Considerations (Rationale) to Determine the Expected Rate Increase
- Do you perform unique procedures or services?
- Are you highly trained?
- Is there a shortage in your market?
- What are benefits to the patients you treat; in your opinion, what is the level of patient satisfaction?
- What do you do clinically that reduces healthcare costs for the payer?
NEGOTIATIONS
The following topics (but not limited to) should be considered:
- Identify the key stakeholders in the negotiation and develop a resource and communication plan.
- Determine the negotiating team (e.g., physician, office manager, etc.)
- Utilize stakeholders for support in strategy development, input in decision-making and notification of progress.
- Define an approval and escalation process for the negotiations.
In contract negotiations, each situation will be unique. These summary steps will serve as a guide in preparing your organization and executing on its payer contracting strategy.