There is undoubtedly an increased interest in improving PPO reimbursements through negotiating. Many different publications and advisors pop up with information on how to successfully negotiate and improve your PPO financial health, however the simple method of asking for an increase just doesn’t work anymore. Although negotiating with your PPO contracts seem like a straightforward process, new PPO leasing has made it much harder for practitioners to get ahead due to lower leasing options coming into play and not understanding what leverage they have for a decent fee increase.
It’s always a good idea to begin with updating UCR fees. We often speak with practices who have not evaluated UCR fees for 5+ years. This is a procedure that should be implemented yearly. As stated in our last newsletter, you should never bill the insurance companies your contracted fee. Always bill your UCR. Insurance carriers do monitor the average fees being submitted per region and design standard increases accordingly. Keeping your UCR fees extremely low or billing your contracted fees will reduce the likelihood of natural adjustments with major companies. Our last post that includes information about UCR fees can be found here.
Although the standard requests for increases used to work, nowadays this method is not as relevant. What many don’t realize is that knowing how to gain leverage comes from understanding how companies work with one another (via leasing). Today a practice could waste over six months just to see one or two companies offer a very small percentage increase, requiring them to keep the same fees for another three years. Even then, some companies can still downgrade to a lower fee schedule due to natural leasing.
PPO optimization is not as simple as providing practice data and requesting an increase. This may work if you are looking for a minimal percentage. Things have changed within the insurance industry to the point that the best increases and possibly the only increases in fees you will see is through advanced leverage and optimization of PPO fees. This requires a very thorough knowledge of hundreds of potential leasing arrangements and structures, including the order of precedence that will naturally take place and identifying contracts you carry that “set the bar low”.
The industry has become overly complex, which allows the carrier to maintain much more control over what they pay you and whether they can justify an increase. We encourage all practices to speak with a professional prior to beginning negotiations, signing any new contracts, or terminating existing contracts. A change to one insurance contract creates a ripple effect that can reduce fees for other contracts simultaneously or add participation with carriers you were not intending to add. Education and understanding of the insurance industry as a whole are key to obtaining the highest fee increases possible.