4 Steps to Effective Payer Fee Negotiations

tab32
December 21, 2023 | 3 min read

Is your fee schedule supporting your financial health and helping you stay competitive? 

As your dental practice or DSO grows, you must regularly negotiate or renegotiate payer fees. Even minor fee adjustments can add up to significant revenue increases as you scale. Effective payer fee negotiation is essential for successful dental revenue cycle management (RCM). 

Here’s a 4-step action plan to set the stage for better payer fee negotiations.

1. Know What You’ve Got 

“Review your payer contracts to determine your ability to negotiate fees annually or at another time. Then, set reminders to start the process at least 30 days prior to the deadline.” ~ Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper.

Gather all payer contracts and check for agreement length and automatic renewal clauses. Note renewal dates to see when to initiate negotiation. Also, look for fee adjustment or renegotiation clauses that explicitly state the frequency and conditions under which negotiations can occur.

Check provisions for indexing or cost-of-living adjustments, which automatically increase fees based on inflation or other economic indicators. Then, review performance metrics or quality measures requirements, if any, to see whether they may impact your negotiation.

2. Understand the Lay of the Land

“Do some market research by anecdotally polling colleagues, checking state price transparency databases, or purchasing commercially available market research on fees in your area.” ~ Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper.

Market research helps you gain a big-picture view and provide context for your negotiation. You may poll your colleagues and get anecdotal input based on their experience. Prepare structured questions to inquire about fee structures for specific services, recent adjustments, and factors influencing pricing decisions.

Alternatively, you can check state-specific price transparency databases or healthcare cost estimator tools provided by regulatory bodies. Search for specific procedures and note the price range, plus variations based on location, facility type, provider experience, quality metrics, and patient satisfaction scores.

You may also purchase commercially available market research on dental fees in your area. Look for reputable providers with a track record of delivering accurate and comprehensive information. Besides current fee structures, consider market trends and forecasts provided by the research to anticipate changes in the dental and healthcare industry.

3. Analyze Where You Stand

“Compare your research to your fee structure to determine procedures for which you are underpaid.” ~ Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper.

Compile research findings to look for patterns, trends, and areas where your fees differ significantly from the average. Then, organize your services and list out fees associated with each category. Identify high-volume procedures that contribute most to your practice's revenue and focus on assessing them for potential underpayment.

Cross-reference research data with your fee structure and see where your fees are significantly lower than others, adjusting for variations like locations, facility types, provider experience, performance metrics, etc. Prioritize procedures with a high impact on revenue and profitability and focus on addressing underpayment for procedures critical to your bottom line.

Pulling financial data and performance metrics for your practice or DSO with multiple locations has never been easier, thanks to tab32’s dental analytics module. The cloud dental software shows you real-time data from every office and allows you to generate reports for in-depth analysis. The data insights will give you a leg up at the negotiation table.

4. Build a Game Plan

“Highlight data you compiled, any specialties you serve (especially if you can demonstrate a lack of similar specialists nearby,) and any growth in the previous year or planned growth for the next year.” ~ Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper.

Compile internal data on procedure volumes, patient outcomes, and each procedure’s financial performance. Also, demonstrate your growth in the previous year, including patient numbers, revenue, and any new services or specialties added. Emphasize unique or specialized services that set your practice apart and how you bring value to your patients.

Position your practice or DSO strategically by showcasing positive patient outcomes and satisfaction scores. Show performance metrics related to quality measures, adherence to best practices, and relevant certifications or accreditations. Also, highlight your practice's ability to adapt and stay competitive with a detailed growth plan for the year ahead.

Finally, craft a negotiation narrative to link data to value, emphasizing how your fees align with care quality and positive patient outcomes. Articulate how you fill market gaps and present growth data to demonstrate market demand for your services. 

Ready to master revenue cycle management? Get The Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper. Download now.

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