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Ask-A-Consultant: Fee Schedule Negotiation

Q:

When I first signed managed care contracts several years ago, I was able to negotiate reimbursement for my top volume procedures. My office manager now tells me that she is not able to negotiate reimbursement as each plan has a “standard” fee schedule for all physicians. Is this the case and can I do anything to increase my contracted fees?

A:

Depending on your location, your office manager is most likely correct. While in the network development phase, many managed care plans would negotiate fees for specific physicians and/or practices in order to quickly build a network capable of serving their beneficiaries. As managed care plans develop sufficient provider networks in their targeted geographic areas, they implement standardized contracts and fee schedules and are much less likely to negotiate fees and contract terms. Because they have a large number of physicians willing to accept their fee schedule, they do not feel it necessary to reimburse a small number of physicians at a different rate. In addition to the financial reasons, this strategy simplifies administration of contracting and claims payment. Your situation is a good example of the benefit of negotiating fees early in developing managed care markets and including provisions to limit the plan’s ability to arbitrarily reduce fees in the future.

Of course, you should always attempt to negotiate your contracts. If you or your practice represents the only source of care in your specialty in a specific area or at a contracted facility, you may have increased bargaining power. In addition, many large groups (PHOs, IPAs) have been successful in negotiating contracts with improved terms due to the number of physicians represented by the group. If you are a member of an IPA or PHO, group contracting may be a valuable strategy to adopt.

 

Holly H. Howell
Associate

MMA does not provide legal, accounting, or tax advice.  If you need assistance in these areas, we recommend that you consult a qualified professional.  In addition, please note that a client relationship with MMA is not established by the submission of a question to this forum or by the publishing of MMA's response.



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