Tamiya Williams, MHA, CMPE Apr 4, 2023 9:09:38 AM 7 min read

Re-Negotiating Payor Contracts in Urology

Reimbursement rates are continuing to trend downwards, impacting the profitability of many healthcare practices. And urology is no exception. As this pattern continues, it will be critical for urologists to be proactive in managing and re-negotiating their managed care payor contracts. This process, however, isn’t as easy as it once was. The industry landscape has changed, and with it, so too has the negotiation process. 

There was a time when practice administrators could simply pick up the phone and call the local provider representative for a payor to ask for an increase in reimbursement rates, but those days are long gone. In the past, insurance payors had local provider network representatives in each state who acted as a liaison between the providers and the health plan, focusing specifically on building the network, contracting, and negotiations. In order to be successful in their roles, provider network representatives had to be familiar with practices in their territory. Today, the payor network representatives who are responsible for contract negotiations are assigned to cover multiple regions and are therefore unfamiliar with the local practices. Also important to note, while there used to be many insurers with market share spanning urology practices’ geographical footprints, there may now only be a few strong insurers and a sampling of other, less strong options.  

Given these factors, the process for payor contract negotiations has gone from taking weeks to taking months. This makes it incredibly important for urology groups to do their due diligence before contacting payors to re-negotiate reimbursement rates. There are several steps that every urology practice should take prior to entering into negotiations with a payor to optimize results, which we’ll outline below. 

1.    Review the Payor Contract
The first step to take before entering into contract negotiations with an insurance company is to review current payor contracts. In this review, note any terms outlined in the payor contract that are more favorable to the payor and place hardship on the practice, such as excessive prior authorization demands or shortened timely filing periods. It is important to understand the terms of your current agreements and be aware of what the practice is getting reimbursed by each payor. 

2.    Perform a Payor Analysis
To conduct a payor analysis, identify your top 10 most billed CPT codes. Once the top codes have been identified, determine how much the group is getting reimbursed by each payor. You should also benchmark the reimbursement rates for each payor against Medicare rates. Additionally, knowing your volume of patients per insurer (market share) will be important to properly identify which payor(s) will have the greatest return on investment for the group if contracts were to be successfully re-negotiated for higher reimbursement.

3.    Tell the Story of Your Practice 
Now that you have performed an analysis of current payor contracts and reimbursement rates, you should tell the insurance payors who you are by sharing your story. Highlight special awards, designations, and quality ratings so that your practice stands out from other groups in the area. Know who the local competition is so you can identify differentiating factors, and highlight any subspecialties or special procedures performed by your practice. All of these details can help you gain leverage when trying to negotiate higher reimbursement rates. 

4.    Define Goals for the Negotiation 
Last but not least, you must have a set goal prior to entering into re-negotiations with payors. Luckily, your existing payor analysis should make it easier to determine what rates to ask for and set your goal. You will also need to decide how you will answer certain questions prior to entering the re-negotiations. For example, are you willing to accept or be a part of value-based or incentive contracts if offered by the payor? Are you willing to terminate the payor contract if the re-negotiation process does not move in a favorable direction? Thinking through these factors in advance can help you make a sound decision, all while keeping in mind the potential impact on your patient population and the practice’s profitability. 

Payor contract re-negotiations are a necessary step for urologists when it comes to sustaining profitability. Contract re-negotiations should not be taken lightly, and it is important to remember that the process will take time, resources and patience. By following the steps provided, completing your due diligence and gathering all the necessary data before entering re-negotiations, you can improve your chances of a favorable outcome. If your internal team is not skilled in the area of negotiations, it may be necessary to engage outside help with the process. Contact the MMG team to speak with our experts.