Physicians: Get Involved in Managed Care Contract Negotiations

The Doctor's Office , May 14, 2009

Managed care contract negotiations tend to focus on financial and legal issues, but overlooking the effect of medical management on payer contracts could jeopardize your financial viability. To ensure that managed care contracts line up with your organization's financial goals, give one of your physicians a seat on your contracting team.

"I very much encourage doctors to participate in negotiations," says Randi Kopf, RN, MS, JD, principal of Kopf HealthLaw, LLC, in Rockville, MD.

Although practices send administrators, coders, and managed care directors for outside training in negotiating contracts, the majority of physicians don't involve themselves in contracting even though payer representatives know physicians have the final say.

In a tough economic environment, "what physicians bring to the table is the ability to look a payer in the eye and say, 'Enough is enough,' " says Reed Tinsley, CPA, CVA, CFP, principal of Reed Tinsley & Associates in Houston. Physician owners can articulate better than anyone in the practice that the organization's viability is threatened by a payer's existing reimbursement structure.

However, not everyone agrees that physicians need to participate actively in negotiations. Because they're the decision-makers, physicians are sometimes better conciliators than negotiators, says John M. Edelston, president of HealthPro Associates, Inc., in Westlake Village, CA. "You want to be able to say, 'I don't know if I agree with that. I need to go back to my physicians,' " Edelston explains. "When a physician is involved, you can undermine the group's ability to negotiate the best deal you can."

"You have to have an agreement before you go into negotiations that you have clearly defined roles," adds Susan Stone, MBA, president of Managed Care Analysis in Redwood Shores, CA. A medical director's advice on medical trends can be invaluable, "but you don't want to undermine the chief negotiator, and that's the person who talks about rates," Stone says.

This article was adapted from the May 2009 issue of The Doctor's Office, a HealthLeaders Media publication.

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