Best Practices

Help Set Your Payer Contracting Strategy

By Maureen Waddle

When visiting practices across the country, I commonly see an accept-all-offers approach to payer contracting. This is especially true in the building phase of a practice. Over time, disciplined practices develop a process to continuously evaluate payer contracts to ensure maximum reimbursement. While there are many tools and resources that can help practices evaluate payer contracts, analyze payer reimbursement and establish a systematic method for prioritizing which contracts to negotiate, too frequently physicians do not participate in developing an overall strategy to negotiate better payer contracts.

That's a mistake.

Physicians who do not participate in developing a fundamental payer-positioning strategy with a message of differentiation leave practice representatives woefully ill-equipped to negotiate the best possible rates. Ultimately, this leads the practice back to accepting any payer agreement offer. Instead, physicians should include a payer-positioning strategy as part of their annual planning session and set goals that enhance the practice position in the eyes of payers.

Visualize a Partnership

Historically, there has been a rather antagonistic relationship between providers and payers (traditionally health insurance companies, but now also including medical groups, IPAs and hospital-driven accountable care organizations). Because of this expansion, practices need to fine tune their approach to negotiating with multiple payer groups.

Too commonly, providers come to the negotiating table with only one demand: better reimbursement. However, negotiations might be more successful if practices enter negotiations with a physician-supported foundation that views payers as a partner in patient care. After all, it may be through the payer that the patients reach the practice.

Discussions will also improve if a practice makes a conscientious effort to identify and understand the needs of the payer and look at negotiations from the payer's perspective. By making it a goal to foster good relationships with payers, practices will have the opportunity to specifically ask what the payer group needs from the practice. The goal, of course, is to marry everyone's needs to a realistic reimbursement model. If practice negotiators enter the discussions with a sound, physician-approved relationship philosophy, it will be easier to reach mutually beneficial solutions.

See Their Needs

As physicians evaluate the strengths and weaknesses of their practice each year, it is important to look at the practice from the perspective of the payer. Though each payer will have unique needs, most will have a standard set of criteria to evaluate providers. These criteria are listed below with some questions for consideration:

• Geographic coverage: If you only have one location, is it in a convenient location for the payer's members? If you are not interested in having multiple locations, can you join a network to meet the needs of the payer?

• Convenience: Do you have extended office hours? Is your location easy to find? Is parking free and safe?

• Patient satisfaction: Do you have results of regularly conducted patient satisfaction surveys? Are survey results compared to a national database? Are survey results presented in a format that is clearly understood by payers?

• Practice reputation: Is your practice aware of any negative doctor ratings on the Internet that are easily accessed by payers? Are you prepared to answer questions about them?

• Cost containment: Have you implemented cost-containment measures within your practice? Do you have evidence of protocols to meet the community standards of care for various conditions? Do you provide urgent/emergent care in a cost-effective manner?

• Outcomes: Do you measure and report outcomes that are relevant to payer needs (e.g., few returns to the OR, few surgical complications)?

• Communication: Do you embrace technology which makes communication between the practice and the payer cost effective?

• Services: Are you able to provide all eyecare services required by the payer (e.g., pediatric care, or subspecialty care)? Do you have additional services that may help the payer attract members (e.g., LASIK)?

Positioning Strategy

When owners help set a positioning strategy that treats all parties as partners, practice representatives will be better prepared to differentiate the practice while targeting specific payer needs. By proffering a well-thought-out team approach, payers may prove more flexible when the negotiations turn to reimbursement rates. OM

Maureen Waddle is a senior consultant with BSM Consulting, an internationally recognized health care consulting firm. For more information and resources, visit www.bsmcafe.com.