Can You Negotiate Higher Reimbursement?

Over a decade has elapsed since fee increases could be relied upon to boost income in medical practices. With the advent of the Resource Based Relative Value Scale (RBRVS) and the nationwide adoption of a Medicare fee schedule, the practice's capacity to elevate earnings through service charge adjustments was notably curtailed. The era of fluid increases based on insurance plans has transformed into a landscape of fixed fee schedules. These schedules often need to be more consistent with the RBRVS framework, some even loosely tethered to outdated payment levels set years ago. Amid these challenges, physicians questioning this methodology are typically met with the "take it or leave it" ultimatum.

Yet, amidst the stark backdrop of this new reality, certain practices are unearthing the possibility of negotiating for equitable reimbursement. This doesn't suggest that payers willingly agree to substantial hikes at the mere request. Instead, the key lies in arming oneself with the correct data and a diplomatic approach to potentially rectifying existing inequities within these fee schedules.

The Power of Data and Reason

A foundation built upon solid data and sound rationale is imperative when negotiating improved reimbursement rates. The good news is much of the data you require is readily accessible, primarily if your practice operates on a computer-based billing system.

Step 1: Unveil Your Common CPT Codes

In your journey, start by identifying your most frequently used CPT codes. Primary care practices often revolve around office visits, hospital services, and preventive medicine. Focus on codes accounting for at least 75 percent of your total charges. Alongside each code, record its frequency over 12 months. Remember to include laboratory charges and procedures to gauge variations in reimbursement across different services.

Step 2: Spotlight Your Leading Payers

Turn your attention to your top payers, typically the three or four sources constituting most of your reimbursements. Since Medicare and Medicaid operate on fixed fee schedules, prioritize the negotiation efforts on these critical payers.

Step 3: Unravel Reimbursement Details

Examine the Explanation of Benefits statements from your chosen payers. Note the allowance for each code on your list, specifically focusing on the "allowed" amount. This contrasts the "paid" amount, which factors in patient co-payments and deductibles.

Furthermore, decipher each payer's reimbursement rates as percentages of Medicare's rates. This comparison provides a clear view of the disparities. Access Medicare's current rates and relative value units (RVUs) pertinent to your geographic location through the "Medicare Physician Fee Schedule Look-Up" tool.

Step 4: Evaluate Your Current Fees

Map out your current fees for each CPT code, juxtaposing them against Medicare's rates. Suppose you discover specific codes are reimbursed fully by an insurance company. In that case, it may signal that your fees underestimate your value. This insight can prompt fee adjustments, perhaps standardizing them at a percentage of Medicare, say 125 percent. Tiered fee schedules can also prove effective, offering different rates for different services.

Step 5: Synthesize and Analyze

They are assembling this treasure trove of data into a coherent spreadsheet to aid in spotting patterns and targets. Codes with higher volume and value naturally yield greater returns, so focus your negotiation efforts there. Discrepancies in payment percentages between codes can also highlight negotiation opportunities. Additionally, consider the disparities between rates for specialists and primary care physicians, making a case for equitable rates.

The Path Forward

Armed with insights, you're ready to transform the data into action:

Negotiate with Precision: Engage payers armed with your compelling data analysis. Initiate discussions with the provider relations representative, escalating to higher management if needed.

Consider Alternatives: Depending on your market, you might contemplate dropping plans with meager payments or limiting the acceptance of new patients under specific plans.

Strategic Transition: Gradually shift focus away from low-reimbursement plans by not accepting new patients covered by them.

Preparing for Evolving Landscapes

The battle to contain expenses is fundamental in an era of soaring healthcare costs. To stay ahead, physicians must take proactive steps to enhance revenue. As reimbursement adjustments lag behind other sectors, it becomes essential to negotiate with payers. Armed with compelling data, practices can articulate well-founded arguments, potentially paving the way for improved payer responses. As the medical landscape continues to evolve, standing firm and advocating for fair reimbursement becomes an even more vital aspect of preserving a healthy practice.