In the durable, medical equipment, prosthetics and orthotics space the success or failure of your business lies in how viable your payer contracts are. Securing multiple contracts with payers, independent physician networks, and associations is only the first step. To ensure long-term financial stability it is critical to improve the performance of payer contracts to improve yield.
Operating costs are up. The cost of DMEPOS products have also risen. Payers may not be fully aware of the depth and breadth of cost increases in the industry. Contractual obligations that do not reduce the margin pressures faced by DMEPOS businesses can be detrimental.
A few DME items cost much more than the reimbursement for them. Most insurance companies prevent providers from billing patients/members. To prevent incurring losses and stop the struggle to keep the lights on every single day, it is essential to renegotiate contracts and fee schedules.
Do your existing contracts date back several years? In the controlled chaos of a busy DMEPOS business it is common for payer contracts to not be given the attention they deserve. As a result most contracts have outdated reimbursement clauses that do not match up to current industry expenses.
Creating an effective payer matrix eliminates underpayments and contractual inconsistencies. Analyze old contracts and update both the terms in the contract and fee schedules. The key to a successful renegotiation process is to collect as much data as possible to support the request for additional reimbursement.
Are you in the process of negotiating a new contract? Architect strong payer contracts right from the first step. Building a new contract based on current market conditions is essential. Given the volatility of the healthcare industry it is also important to make clear financial projections and factors that can influence reimbursement rates in the near-term.
Starting off on the right foot improves revenue and eliminates the need for renegotiating contracts frequently. Most insurance contracts have an initial term of 1-3 years. Payers discourage changes to a contract during the initial term and renegotiating terms may not be possible. While drawing up a new contract it is best practice to ensure it meets market conditions three years down the line.
Contract negotiations majorly focus on the terms in a contracts and fee schedules. While negotiating payer contracts it is important to be clear-eyed on what needs to be negotiated or firmed up on.
Fee schedule negotiations broadly fall under three categories:
SolvEdge partners with DMEPOS businesses to build and renegotiate financially viable payer contracts. We architect a strong payer matrix and fee schedules. Position your DMEPOS practice for sustained success from day zero of partnering with us.