Ensuring favorable contracts in your anesthesia practice can mean the difference between profitability or just breaking even. Entering into negotiations on your own can be a daunting task. Armed with insightful data, you can leverage your value and come to beneficial contract agreements – for all parties involved.
Anesthesia providers must negotiate contracts with both payors and facilities. Regardless of who you are negotiating with, preparation is essentially the same. You want to come to the table prepared with metrics that give you a competitive edge. However, there are a few specific elements that you should watch out for depending on the type of contract you are negotiating.
Negotiating Anesthesia Contract Templates: Payor Contracts
Payor contracts represent a significant amount of your practice revenue. There is a general sentiment across the industry that negotiating with payors is frustrating and often unproductive, but it doesn’t have to be this way. By coming to the table armed with the right data and a clear understanding of your value – you can negotiate favorable reimbursements rates.
You will need to complete contract negotiations with every payor you want to work with. Each contract will include its own fee schedule and other provisions. Here are some specific things you should focus on in your payor contracts:
- Pay attention to the details in conversion factors and fee schedules:
Conversion factors and fee schedules are typically the first things under scrutiny when it comes to contracts; however, the sheer number and variety of codes can make this process excruciating.
Avoid using the Medicare fee schedule and conversion factors as your base when negotiating with private payors or you will be making significantly less than the market. You should work with your billing provider to determine the appropriate fee schedule based on your region and prevailing market trends.
It’s important to pay attention to any “averages” used to describe a fee schedule that covers multiple codes. This is another place that payors can play deceptive games by cherry-picking the codes they use to calculate a misleading “average.” If you deep dive into the fee schedule, you may find that commonly used CPT code reimbursements are significantly below the average while codes rarely used are several multiples higher. This skews the numbers and needs to be addressed.
Once the fee schedule is agreed upon, insist on using the American Society of Anesthesiologist’s Relative Value Guide (RVG) as the basis to determine anesthesia base and modifier values. All of these elements should be explicitly detailed in the anesthesia service contract.
Pro-tip: Make sure your conversion factor is within market rates. Although most of your billing is based on the conversion factor, failing to ensure competitive rates on your non-anesthesia codes will also have an impact on your take-home.
- Equality in look-back and termination provisions:
While you may deal with a payor who insists on a “non-negotiable” fee schedule, there are some additional contract provisions you can use to protect yourself.
It’s standard for payor contracts to include language and provisions that contract termination without cause is based on a 30- or 90-day notice. You should negotiate the same provision for yourself. This puts both parties on the same playing field. While it does mean the payor can pull the contract, it provides you with additional leverage if they are unwilling to negotiate or renegotiate on some of your other terms.
In addition, payor contracts include a clause that allows the provider or payor to amend submitted claims or payments retroactively. Negotiate equality on this provision, at a standard 60- or 90-day rate, so both sides can make amendments. You should also include a rule that allows you to contest the payor requested modifications if needed.
Pro-tip: Make sure you have equal rules for every major provision included in your contract. Securing equality provides additional leverage that you can use for favorable negotiations.
Private vs. Government Reimbursement Rates
One of the most important metrics is your payor mix. Anesthesia providers are significantly more impacted than any other specialty by the vast disparity between private and government reimbursement rates. While most specialties collect 1.5-2.5X more from private payors vs. government, for anesthesia the difference is closer to 6X-8X.
While there isn’t much you can do about government reimbursement rates – other than ensuring that your billing company is maximizing billing and collections appropriately – you can influence your private payor contracts.
Need Help Navigating the Contract Landscape?
Ensuring favorable contracts in your anesthesia practice can mean the difference between profitability or just breaking even. We understand that going into negotiations on your own can be a daunting task. That’s why we recommend finding an anesthesia billing partner, like Fusion Anesthesia, who can supply you with metrics and provide you with a competitive edge. Armed with insightful data, you can leverage your value and come to beneficial contract agreements – for all parties involved.