Provider Contracting

Negotiate Better Terms in a Provider Contract

Devonn Simmons
April 28, 2021
11:00 am

The first step in any successful provider contract negotiation occurs long before you reach out to the payer with demands. Before engaging in formal negotiations, you should arm yourself with as much knowledge as possible. Familiarize yourself with your current contract, and research the legalese to become more comfortable speaking the payer’s language. Then, engage in each of the following best practices.

Gather Internal Data

Once you have mastery over the contract’s components, it’s time to gather internal data. Because most providers are contracted with multiple payers, start by reviewing your top 5 or top 10 payers. Determine your most frequently billed services and compare the payment amounts you receive from each of your top payers. With this data, you can analyze the financial performance of each provider contract. Then you can set target goals for the negotiation. You can also analyze your past claims to determine which payers reimburse you the least for certain health care services. With that data, you can argue in future negotiations that the payer should offer a reimbursement rate that is more in line with the rest of the marketplace.

Survey Patient Satisfaction

Another critical data point to collect is the rate and quality of patient satisfaction. Because this data has some subjective elements, you may need to rely on patient surveys. Still, positive patient surveys can demonstrate your facility’s efficiency and effectiveness. You can also survey other physicians who refer patients to your facility, as well as any hospital administrators you work with. Systematically studying the people in your business landscape can provide a clear picture of your value.

Conduct Market Research

Think about your facility in the context of your surrounding area. Find out information on these critical questions:

Is there a niche service that your facility specializes in?
How many other facilities in your area offer the same services as you?
Do you have a good reputation among top referring physicians in your area?
How does your facility compare in size to those around you?
For how many residents are you the closest medical facility?

Suppose you can demonstrate that your facility is an integral part of your community, a unique healthcare offering, and a top option for patients. In that case, you will have more leverage in contract negotiations.

Prepare Specific Demands

When you finally sit down to engage in proper negotiations with your payer’s representatives, you should have ample data to back up your demands. Keep in mind that your requests should be specific and evidence-based. It’s much easier for the payer to deny a general plea for better contract terms than, for example, a data-supported demand for a 5% increase to your ultrasound therapy reimbursement rate.