the larger volume approaches you to re-
quest a better rate based on the fact that
a competitor with less volume is getting
a better rate. Many commercial payers
have the ability to track their competi-
tor’s rates based on secondary claim fil-
ing information. As secondary coverage,
the carrier often receives a copy of the
primary coverage EOB indicating what
the primary coverage approved the
Here are a few reminders when negotiat-
ing a payer agreement:
•;Rates;are;not;everything. There are
many facets to a payer agreement, from
the number of days you have to submit
a claim, to how new procedures will be
reimbursed. Make sure you review the
Sometimes payers are more open to increasing rates in subsequent years versus fees remaining at a fixed amount
year after year.
percentage;contracts. When Medicare
decreases from one year to the next,
any commercial contracts with “
current” Medicare rates will also decrease.
•;Avoid;a;rate;based;on;a;specific;pay-er’s;fee;schedule. These rates can typically be changed any time by the payer
without regard to you as the medical
provider of services, and rates typically deflate over time. Make sure you
review these contracts and renegotiate
•;An;“ideal”;contract;is;based;on;a;per-cent;of;gross;charge. As rare as they
are, some do still exist.
be. This is simply the dollar amount to
be multiplied by the RVUs assigned to
the procedure as published in the Federal Register every year.
Negotiating and improving the yield on
payer contracts may very well be the single most “controllable” financial element
of your entity. The results of engaging in
effective negotiation can be extraordinary and very rewarding!
John Stiles joined HealthPro Medical Billing in 1981
and is co-owner with Don Rodden. He takes an active
role in the day-to-day business by developing and
standardizing operational metrics, directing
HealthPro’s compliance program. Stiles is an active
member in the RBMA, HBMA, and MGMA.