I have done the contract negotiations for my practice for 20+ years. In those dark ages, before Internet and AAP resources, there was no primer for doing this. One of my partners recently asked how she could get up to speed on this, looking to the point where I might retire – which is not anytime soon. So I started thinking about a few essential points to have in contracts. You may not be able to get all of them, but they are all worth fighting for.
- Do a payer analysis so you know ahead of time what % of your practice income comes from each payer and what each payer is paying you for the major E/M codes. This means learn spreadsheet 101 software. Sometimes you need to be prepared to tell a company their offer is not acceptable and walk away. You need to know ahead of time what this may cost you. You also need to know whether you are the only pediatrician for 30 miles or whether there are 3 other practices within 5 miles who would be happy to snap up your cast offs.
- Become familiar with RVU valuations. AAP book Coding for Pediatrics issued yearly is an excellent resource for this.
- Ask for fee schedules based on a percentage of a given years Medicare, rather than just “we will pay you $x for code y. If you are lucky enough to get them to agree to basing the fee schedule on the current year, be aware that Congress is still playing with something called the SGR, which, if not fixed, may cut payments from Medicare by 30%. Fee schedules based on prior years Medicare are fixed in stone at this point.
- Know your area. There are parts of the country where simply getting 100% of Medicare is considered good. There are other parts of the country with rates as high as double that.
- Try to get a concession that they will follow CPT coding guidelines. I have been unable to get this in any contracts. But by bringing it up, it opens the door to specific discussions of paying for –25 modifiers for well and sick care on the same day, and bringing up what services are or are not bundled into well care, such as vision, hearing and developmental evaluations and after hours care.
- If in office lab is a big part of what you do, insure that what you are paid doesn’t lose money. You can always threaten to send every kid who needs a specific test to the hospital if they don’t at least meet your cost.
- VACCINES: know you costs, know your overhead and make sure that you are paid appropriately. These are almost always carved out of every contract and can cost you tons of money. Inscos often try to pay less than your acquisition cost for vaccines. Try to get payment based on the CDC price list. http://www.cdc.gov/vaccines/programs/vfc/cdc-vac-price-list.htm. Also check out the AAP information on the Business Case for Vaccine pricing. This one piece of the contract can make or break you.
- Try to avoid forever renewing contracts. A good price today is going to look pretty poor in 5 years when it hasn’t changed. 2 years is a reasonable amount of time so you are not forever negotiating.
- It takes 6 months to negotiate a contract and they are almost always completed after the actual termination date. Stall is the name of the game for inscos.
- When you agree on a contract, make sure the contract they send you to sign is actually the one you agreed to. All the companies have boiler plate contracts. I have had a company agree to give me specific terms, but the contract sent to me was 3 or 4 drafts prior to what we agreed upon. I was told this was an “oversight”.
- Once you agree on the big things, like payment for E/M codes, don’t forget the little things. Will they pay for after hours care and in office labs are the main things here. If they don’t pay for a specific service, do they consider it “bundled” which means you can not charge the patient, or do they consider it “not covered” which means you can bill the patient.
- Not that I don’t trust people, but once you sign a contract, look at the EOBs that come in and make sure that they are really paying you what they said they would pay you. You’d be surprised how often the insco computers load the “wrong” fee schedule by “accident”.
- You may not win even if you think you won. A comeback offer from an insco may take the form, “We will give you 10% more on E/M codes, but pay you 5% less on vaccines.” You have to be able to know that this 2nd offer may actually pay you less than the first. It can only help you in negotiating when you come back to them with something to the effect of how disappointed you are that they think you are so naïve, so how about a real offer, not a trick offer. Know what they mean by “E/M codes”. In my experience, they mean only Office Visit and Preventive Care codes. And even though all the other common codes for hospital care, newborn care, in office counseling, etc. are in the E/M section of the CPT book, they usually are not included in the insco definition of E/M.
- Know a ballpark minimum offer that you simply can not go below. If you don’t get it, WALK AWAY. This is the hardest thing to do. But if you are losing money on a payment schedule, you can’t make that up by doing more volume.
- Start your 1st negotiation with a payer who is rather MINOR in your income. This way you can learn, get your feet wet, and mistakes (which I still make) are not so costly. Save the big payer negotiations for after you have gotten some experience.
This is a starting place. I’m sure others on this listserve will be happy to offer more critical points that I have over looked. And some of these items can be rather daunting. It can take a while to get proficient at Excel. If you have a spreadsheet wiz in the office, it might be reasonable to delegate this part of the task. And getting the Medicare fee payments for the common codes that you do may be somewhat hard if you are not good at Excel. The AAP and Chip Hart on this listserve have good sources of information about common CPT codes and their valuation.