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No private practice owner should approach payer contract negotiations haphazardly—or worse, not understand specific terms before signing on the dotted line. And for good reason: Continued claim denials and decreasing reimbursements make it tough for many rehab therapy practice owners to get the most out of their private payer contracts. But while the mere thought of going head-to-head with large health plans in your physical therapy provider network is probably enough to form a knot in your stomach, putting forth a genuine effort—and, more importantly, understanding your value—can help ensure you secure terms that are beneficial to both you and your payers. Before sitting down at the negotiation table, consider these tips—as well as some advice from fellow rehab therapists—to make this process a little easier to navigate:
Assess your payers’ fee schedules.
Negotiating higher reimbursement rates can be difficult, especially if you don’t have a handle on your current fee schedules and how they are impacting your bottom line. So, what can you do to optimize your fee schedule situation? According to this resource, you’ll want to identify the payers with whom you conduct the most business. From there, “calculate your revenue per visit by determining the total dollars you received for your work over the previous 12 months and then divide by total number of visits by each insurance company. These calculations will help you determine which insurance contract[s] you need to focus on and which ones are the biggest financial burdens.”
Additionally, you’ll want to understand which routinely-billed CPT codes aren’t providing the most bang for your buck. The same article states that providers should identify—and approach payers about—low-ball reimbursement rates for “[CPT] codes that you use frequently.” These strategies worked wonders for Donna De Leon, a biller at Endeavor Rehab Center, during recent contract negotiations with multiple payers: “We negotiated with three different insurance companies this past year and used average reimbursement per insurance to get a higher rate,” she said.
Use outcomes data to your advantage.
To truly be on the winning side of the negotiation table—and earn what you deserve—you better have the data to support your argument. And the numbers say as much: private practice owners that present objective patient data during payer contract negotiations tend to negotiate better rates—by as much as 3–10%. But, what kind of data should you track—and how can you use it to your advantage? According to this Journal of Oncology Practice article, you should maintain and present “data about the utilization, revenue, and expenses of your practice.” Furthermore, you should track patient outcomes data that objectively demonstrates how your practice:
- Enhances patient care at the individual therapist and overall clinic levels
- Improves therapists’ clinical effectiveness and efficiencies
- Stacks up against other similar-sized clinics in your specialty (e.g., PT or OT) and geographic region
- Demonstrates how the payer has benefited—in terms of cost savings and care quality—year-over-year throughout the course of your relationship
Brian Hartz, owner of Hartz Physical Therapy, took this advice to heart, saying he has showcased specific outcomes data during negotiations to help “explain the differences of our clinic compared to our competitors.”
Establish a solid payer-provider rapport.
As fired up as you may be, you should approach contract negotiations as an opportunity to find common ground. Keep the talks cordial, and establish a good working relationship from the outset. It’s also important to understand the wants and needs of your negotiation partner, who has his or her own business interests at stake. Who knows? Adopting this mindset and attitude could lead to creative solutions—and an opportunity to earn more than you previously thought possible.
Asia Giuffrida, office manager at Gilford Physical Therapy & Spine Center, said establishing a good rapport with her payers—and having a can-do, proactive spirit—helped her improve the terms of her practice’s contracts. Many providers are quick to assume that nothing will come of their requests, but Giuffrida says it doesn’t hurt to speak up. “It seems simple, but I was able to negotiate a 20% increase just by asking,” she explained. “I offered to share the reimbursement rates that other similar companies paid us as a negotiation tool, but I didn't even need to—the rep just said ‘yes’ and sent us a revised contract.”
And once her practice has deeper outcomes data to share, Giuffrida believes she’ll be able to secure even better rates. “[There’s] no doubt outcomes data will help in this situation, but one would certainly need a good pool of data from which to work, and we just barely have about a year of collected data,” Giuffrida said. “So I anticipate it will become a very helpful tool for us this year.”
The vast majority of PTs get into their profession to help patients live better, healthier lives—not to work their negotiation magic. But during payer contract negotiations, achieving positive results—and ensuring you get paid what you deserve—hinges on your ability to confidently advocate for yourself.
What steps has your private practice taken to successfully negotiate payer contracts? What specific strategies work best, and which have fallen flat? Leave your best ideas in the comment section below.