Negotiating PPO Reimbursements

In case you weren’t able to attend our recent Scottsdale, AZ seminar, here are some recommendations from practice management consultant, Bill Rossi.  There can be a lot of money to be made if you handle this correctly:

  1. Do your homework. To get a sense of your fee reductions, prepare a spreadsheet with vertical columns going left to right listing first your top procedures by frequency.  The second column will be your full fee for each procedure.  The remaining columns would be for each PPO plan and their reduced reimbursement for each procedure.  Add the totals at the bottom of each column to see how much of a percentage discount you’re taking in the aggregate from each PPO.

If you haven’t done so recently, raise your fees.  This will give you more ammunition to argue the PPO reimbursements are too low.If you are aware of other doctors’ reimbursement levels, use it to your advantage against the insurance companies.  For instance, an office employee who used to work in another office may tell you that the other doctor’s reimbursements are higher than yours.  This is not privileged information.

  1. Call and negotiate. The doctor should be the one making the call, not an office manager and not an out-of-state management consultant.  You will be the most effective, as you are the only one who can make a credible threat of dropping that plan.

If you call saying you want to renegotiate, you may be given the run-around.  So, if necessary, tell whomever answers the phone that you’re a new doctor thinking about signing up with their network.  When you get through to the network manager, explain who you really are.Do not be demanding and argumentative.  Approach this in the likeable style of detective Columbo and consider the following kinds of lines: “Maybe I’m missing something, but I have to ask, is it true you are paying others more for the exact same procedures?” and “Delta is paying $800 for a crown and Aetna is paying $750.  That’s more than what you’re paying.  Can’t you do any better?  Can’t you help me with this?”Use specific fees to make your case, and then ask them to review all of your reimbursements.  Then, pin them down.  Take their name, when you should expect to hear from them and how you can follow up with them in the future.Finally, review the results to verify that they didn’t raise some reimbursements but lower others.

  1. Odds of success. In Bill’s experience, you might be successful one-third to one-half of the time – even with Delta.  It is well worth the effort.  If for example, Aetna represents 15% of your practice and you can get a 10% raise, then on $100,000 of monthly production, you will earn an additional $1,500 of free money each month going forward.  Get into the habit of doing this with each of your plans each year.

In the next Newsletter, we will summarize Bill’s recommendations for dropping a lousy PPO and limiting the fallout.