You should not allow fee schedules to go unchanged year after year. It’s easier to ask for smaller increases more frequently as opposed to a larger increase all at once.
Our payer Contract Renegotiation Notices are automatically created for you annually, based on anniversary date and days’ notice required.
If the payer balks at the 1st renegotiation request, our Contract Renegotiation Appeal letter is armed and ready. You may want to consider the following information and tweak your letter(s).
To most providers, the most important part of any contract is the fee schedule. If the fee schedule is unacceptable, the clauses and language contained in the rest of the contract is irrelevant.
Our success in the challenging third-party payer climate is based upon understanding and respecting the payer perspective and committing to a positive ongoing relationship.
The success of renegotiation rests on the ability to provide cost-effective, evidenced-based services and convince payers of their value!
The bottom line is that in negotiations, “knowledge is power” and planning is essential.
Negotiating with payers often means being more aggressive than you might be comfortable with.
Warning shots fired in the form of a termination notice may be needed to begin the process. Why? Friendly requests for term renegotiations can be fruitless if the payer believes you will not terminate the contract.
The Contract Renegotiation Notice (CRN) we have provided you is of a friendly nature. If you want to fire that warning shot (threat of termination), you might consider adding the following to your CRN letter:
“According to the terms of our agreement, I can serve you notice at this time. Please know that the purpose is to renegotiate and not terminate, but if we don’t come to terms in 30 days, please understand that this is my termination notice.”
Payers may say they don’t renegotiate under threat of termination, but there’s no sanction without the threat and the payer can simply disregard your notice to renegotiate.
Our Contract Renegotiation Appeal letter – you may want to fire that warning shot (threat of termination) in your appeal letter.
Ask yourself this very real question: are you willing to walk out on the contract and terminate if the network or payer won’t work with your terms? Be firm on the terms you want. It’s up to you to decide what to accept.
The inability to define your leverage will lead to failed negotiations. Payers are not going to bring up missed points of leverage with you.
- What separates you from your competition?
- What do you do clinically better than your competitors?
- What benefits do you bring to the hospitals you cover?
- 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?
- What about you makes you “special” within the payer’s provider network?
- The practice may provide expensive, unique equipment that will not be available to patients if the practice does not participate with the payer.
The goal is to tell a story about the practice and communicate why a raise in rates should be granted. If no increase is granted, you should consider terminating the contract. You should request a meeting with the payer so they will know how important it is that they approve the requested increase.
You can expect most payers’ initial response to inform you of a moratorium on negotiation or a we’re already paying market value message. Don’t accept that. Tell them that’s not in the contract.
If the payer is not willing to publish the fees it pays other practices, its claims about market value to other practices will be unsubstantiated and meaningless to your negotiation.
If true, it should be emphasized that no fee increases have been received for several years.
A solo practice should point out that if the payer does not attract an adequate number of individual physicians, it has jeopardized the ability of patients to have a personal physician.
Your job is to convince the payer that you offer superior service, above and beyond what other competitors offer.
If the practice anticipates that the payer will not cooperate in improving contract terms, the practice may preemptively make this known to referring physicians, facilities where the practice provides coverage, to employers and to patients. These groups may intervene on behalf of the practice.