Preparing To Negotiate With Payers

Abstract

Periodically, a practice needs to evaluate contracts with payers and renegotiate the contracts that are performing poorly. Using a relative value unit (RVU) cost analysis, one can determine what the costs are per unit of service. Before you can attempt to negotiate, you must know your practice expenses, demographics, and clinical outcomes. It is important to consider the following about your practice: specialty services or procedures, location of the practice, accessibility, convenience of parking, and patient satisfaction data. Will the loss of your group's participation create a marketing problem for the plan or payer? What percent of your income is from this payer? Can you walk away from this contract? Using RVU cost analysis, you are able to review procedure expenses and profitability, internal and external fee schedules based on practice expenses, and a contract negotiation starting point based on RVU cost and use.