Contract Renegotiation Strategy

PPS offers both hospitals and physicians expert contract negotiation services that are guaranteed to increase revenue for your organization.  This renegotiation process requires significant time on the part of our contracting specialists and usually takes around 120-150 days to complete the process.  The process may be long but the reward for your practice can be very great.  In most cases, we achieve a net increase from most insurers of around 10-12% but it depends on many factors and can be less or more depending on your situation.  Oftentimes, the agreed upon increase will be split up over two years which is the case when you have not renegotiated your contracts in over two years.  There will also be cases where the insurance company allows you to participate in a certain HMO and give you less of an increase on your contracts.  There are a lot of strategies utilized by the insurance companies to save money and make your life hell, but it is our job to decipher through those and give you the bottom line.

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Step 1: Development of Contracting Strategy

• Identification of key payers using a payer mix report and market research.  In addition to renegotiating current insurance contracts, we many times find that there are additional plans that the organization should contract with.  In most cases, we find an additional 4-6 plans that the organization can participate with.  There is a discovery process during the first few weeks which includes an evaluation of the physician environment to identify future contracting opportunities and pitfalls, determine minimum percentage of Medicare desired, identification of cost saving measures for insurance company, identify reasons why the insurance companies want to give you an increase.(ASC utilization, sound billing practices, etc.)

Step 2: Evaluation of current managed care contracts and fee schedule

• This is a critical part of the process as it provides us with the insight needed to further define our renegotiation plan for your office.  During this period we will have a clear picture of your organizations current contracting state and fee schedules.  We prefer to have a utilization report on most frequent CPT codes by payment.  This allows us to deliver precise information about how the contractual changes to your insurance fee schedules impact your bottom line.  During this phase of the renegotiation, we will generate a report that analyzes each contract weighted by the most frequent CPT codes. We then evaluate the current fee schedule as a percentage of current Medicare.

Step 3: Contract Renegotiation and Consulting

• We assess each contract and determine if it meets the contracting requirements of client. We also will ensure that the rate they claimed to give is actually what is present in the contract. Once the renegotiation process is nearing completion we will recommend a percentage of Medicare that should be billed out. This is usually between 150%-200% depending on insurance rates.

Timeline and Costs

The timeline for the completion of Managed Care contract negotiations varies by area and the cooperation of both the insurance companies and respective client. Typically, clients can expect anywhere from ninety days to six months. There is constant communication needed between client and PPS in order for the contract negotiations to be successful. We recommend that each client place someone in charge of the negotiation process.