Don’t overlook this foundational revenue-setting document
Revenue and reimbursement are the top priority for medical practice leaders this year, according to a Medical Group Management Association Stat poll. However, there is one key reimbursement strategy several of them have overlooked: contract negotiation.
While nearly half of medical groups focused on revenue cycle management (RCM) in 2024, including reducing denials and payment delays, almost 20% of practice leaders also say they never review their payer contracts.
Reimbursement begins with the contract. To be paid appropriately for the services you deliver, you must first ensure your contracts are fair, in line with market benchmarks, and optimized for reasonable reimbursement. Additionally, those contracts must be updated regularly to reflect new market conditions.
Far too often, I see providers take a set-it-and-forget-it approach to their payer contracts, letting contracts ride six or seven years before they even consider reviewing the terms. This is certainly understandable, as the contract process is complex and requires some specialized expertise. However, a strong payer contract is our first line of defense against changing marketing conditions. A well-written contract not only establishes competitive rates, but it also contains language to protect those rates against erosions from unpredictable industry challenges or payer behavior.
Is it time to review your payer contracts? If so, be sure to consider these five insider strategies.
1. Review Payer Data
Providers sometimes assume that payers adhere to a fixed menu of reimbursement rates per service. In fact, numerous factors impact rates, including region, size of your practice, and the mix of other payers in the market. Benchmark data analysis is the only way to know if the rates offered to you are competitive for your market. Specifically, you need a data partner with access to rates from a full range of payers—both in your region and around the country—who can identify the competitive reimbursement rates you should reasonably expect to get. If you are asking a payer for a rate increase, you need to build a case that supports the request. Data allows you to do that.
2. Review Performance Data
In addition to market factors, your own metrics can be used to influence the rates you negotiate with each payer. A high-volume payer, for example, may be entitled to lower rates than a payer that represents a very small percentage of your patient population. Likewise, you have more negotiating leverage if you’re a high-volume provider—an emergency services practice, for example, where patients don’t have a choice and payers need to keep you in-network. Look also at your denial rates with each payer, as well as payer policies that you can link to reduced reimbursement. These are issues that may potentially be resolved with better contract terms.
3. Protect Against Amendments
We’re beginning to see payers issue mid-contract amendments that change rates without provider recourse. Before signing, carefully review contract language to make sure your practice has the ability to reject any future amendments that would change your rates.
4. Leverage Granular Requests
Successful negotiation sometimes comes down to how you package the rate increase. While providers often want to come in with an across-the-board, percentage-based rate increase, you may get further with a more nuanced approach. Instead of asking for an overall rate of 200% of Medicare, perhaps you take 150% of Medicare on most codes but select three high-volume codes to negotiate 250%. The compromise reads as a more reasonable request and feels like a win-win to payers.
5. Use Safeguards for Multi-Year Contracts
Multi-year contracts are popular with payers now, but don’t consider them unless they include rate protections. For one, avoid contracts based on “current year” Medicare fee schedules—if the Centers for Medicare & Medicaid Services (CMS) lowers rates, which they often do, your payment will go down in subsequent years. Instead, you want the contract to be based predictably on a specific year’s rates. Further, the agreement should also include escalators that automatically raise rates each year as protection against future market challenges and inflation.
A Partner at the Table
Because a successful contract is the foundation for appropriate reimbursement, Ventra Health offers payer contracting as a value-added service to all our RCM clients.
The skilled negotiators on our Payer Strategy and Contracting team have decades of experience working with payers in healthcare RCM. We know what to ask for, we know how payers behave, and we leverage our longstanding relationships with payers to reach agreement on your behalf. This is apparent in the 7% average increase we have obtained for current clients when renegotiating agreements on their behalf in 2024.
Ventra takes a data-driven approach, drawing on our enormous national database of rates and terms to make strategic decisions and build support for negotiations. We also use vSight™️, our industry-leading data & analytics platform, to study our clients’ practice performance and learn where updated contract terms could improve reimbursement. Further, we are experts on the No Surprises Act, which gives us a new process and source for data on competitive payer rates.
Payer Contracting and Strategy is part of Ventra’s white-glove promise to continually meet the challenges of provider practices with high-touch, proactive support. Our team stays engaged beyond the contract negotiation period, partnering with your Client Success leader to track contract performance and aggressively work to resolve any payment issues. We’re also constantly monitoring regulatory and policy changes, advocating on your behalf with payers and collaborating with Ventra’s Provider Education team to keep you informed.
Our goal is to ensure our clients never overlook payer contracts in their efforts to improve reimbursement. Our expertise and data-driven process eliminate the complexity for providers and build the foundation for appropriate reimbursement.
