Negotiating Payer Contracts

Whether you’re a practice manager, administrator, or physician, this page was created to help you understand the payer contracting process and how to properly negotiate with payers.

Learn how to determine which plans need to be negotiated.

  1. Performing a fee schedule analysis will help you determine which plans need to be (re)negotiated.
    • Create a spreadsheet listing your top 20 CPT® codes and the number of times they were billed for that payer
    • Multiply the use of each code by the proposed payment of the payer
    • Add together all of these products, and divide by the total frequency of all codes to determine the weighted average payment for that payer
  2. This spreadsheet will show you where your payers fall in line with Medicare reimbursement and allow you to decide which payers need to be renegotiated
  3. By repeating this process for each payer, you can compare the overall weighted averages of all of your healthcare plans

Learn how to calculate and compare your break-even point with the weighted average reimbursement for each contract.

  1. Break-even point calculation
    • Add your overhead expenses and your physician compensation
    • Divide this sum by the total frequency of all codes for all payers
    • The results give you the weighted average of your costs, which is your break-even point
  2. You can easily compare it with the weighted average reimbursement for each contract

Learn how to determine your negotiation position.

  1. Determine your negotiation position
    • Set an optimum or starting point (i.e. the terms you consider ideal)
    • Set the minimum point that must be met for you to sign
    • Determine the percentage of the business that the payer represents

Four steps to improve your contract negotiation strategy.

  1. Review contracts for renewal dates—most plans only allow negotiations between 30 and 90 days prior to renewal
  2. Contact the plan representative—set up a meeting to discuss your contract
  3. Meeting suggestions
    • Be organized
    • Have a complete understanding of the finances of the practice
    • Present your request for changes—asking for your optimum objective
      • Include why the current reimbursement value is not appropriate
      • Include the data that substantiate the need for a new reimbursement rate
    • Be prepared to share your practice data with payers
      • Data may also make it easier for them to share competing information for providers who are more efficient or have lower costs
    • Remember you are negotiating a relationship not a transaction
  4. Fees are not the only thing to negotiate
    • You may also negotiate:
      • Authorization process for treatment
      • Period specified for submitting claims
      • Period allowed to appeal a denied claim
      • Requirements regarding use of oral or injectable drugs
      • Time specified for timely payment and interest paid for late payment
      • Process for adding new service lines or adding new physicians to the plan
      • Period required for providing notice of modification proposals
      • Cancellation clause, including the advance notice required
Payer analysis tool thumbnail

Negotiating managed 
care contracts

An overview of the many concepts to consider when (re)negotiating a managed care contract.

Download now

Try our Payer Analysis Tool

Request for a change in contracted reimbursement rate.

Follow these simple steps to use the Payer Analysis Tool:

  1. Complete the Medicare entry by entering the percentage of Medicare patients in your practice.
  2. Enter details for each additional payer you may have for your practice, up to 5 additional payers, and the payer mix percentages, which should total 100%.
  • Favorable
  • Average
  • Not Favorable

Your Weighted ASP is automatically calculated.

PayerPayer Mix
Percentage		Contract Rate
J Code		Payer Portion
(Optional)		Patient Portion
(Optional)		 ASP +
Relation
Medicare
-
-
-
-
-
-
Weighted
Weighted ASP-

Important Safety Information

LEVULAN® KERASTICK® (aminolevulinic acid HCl) for topical solution, 20%, plus blue light illumination using the BLU-U® Blue Light Photodynamic Therapy Illuminator is indicated for the treatment of minimally to moderately thick actinic keratoses of the face or scalp, or actinic keratosis of the upper extremities.

Contraindicated in patients with cutaneous photosensitivity at wavelengths of 400–450 nm, porphyria, or known allergies to porphyrins, and in patients with known sensitivity to any of the components of the LEVULAN KERASTICK topical solution.

Application of LEVULAN KERASTICK topical solution should involve lesions on the face or scalp, or upper extremities. Multiple lesions can be treated within a treatment region, but multiple treatment regions should not be treated simultaneously.

Do not apply to the eyes or to mucus membranes. Irritation may be experienced if LEVULAN KERASTICK topical solution is applied to eyes or mucous membranes. Treatment of upper extremities is approved after an incubation time of 3 hours under occlusion. Excessive irritation may be experienced if this product is applied under occlusion longer than 3 hours.

Transient amnestic episodes have been reported during postmarketing use of LEVULAN KERASTICK in combination with BLU-U Blue Light Photodynamic Therapy Illuminator. Inform patients and their caregivers that LEVULAN KERASTICK in combination with PDT may cause transient amnestic episodes. Advise them to contact the healthcare provider if the patient develops amnesia after treatment.

After LEVULAN KERASTICK topical solution has been applied, the treatment site will become photosensitive and patients should avoid exposure of the photosensitive treatment sites to sunlight or bright indoor light (e.g., examination lamps, operating room lamps, tanning beds, or lights at close proximity) for 40 hours. To avoid unintended photosensitivity, LEVULAN KERASTICK topical solution should be applied by a qualified health professional to no more than 5 mm of perilesional skin surrounding each target actinic keratosis lesion.

Advise patients to wear a wide-brimmed hat or similar head covering of light-opaque material or a long-sleeved shirt and/or gloves to shade the treated actinic keratoses from sunlight or other bright light sources until at least 40 hours after the application of LEVULAN KERASTICK topical solution. Sunscreens will not protect against photosensitivity reactions caused by visible light. The patient should be advised to reduce light exposure if the sensations of stinging and/or burning are experienced.

LEVULAN KERASTICK topical solution has not been tested on patients with inherited or acquired coagulation defects.

It is possible that concomitant use of other known photosensitizing agents such as St. John’s wort, griseofulvin, thiazide diuretics, sulfonylureas, phenothiazines, sulfonamides and tetracyclines might increase the photosensitivity reaction of actinic keratoses treated with the LEVULAN KERASTICK topical solution.

During light treatment, both patients and medical personnel should be provided with blue blocking protective eyewear as specified in the BLU-U Blue Light Photodynamic Therapy Illuminator Operating Instructions.

The most common local adverse reactions (incidence ≥ 10%) were erythema, edema, stinging/burning, scaling/crusting, itching, erosion, hypo/hyperpigmentation, oozing/vesiculation/crusting, scaling and dryness.

In clinical trials, severe stinging and/or burning was reported by at least 50% of face and scalp patients and 9% of upper extremity patients at some time during treatment. However, less than 3% of subjects receiving treatment for face or scalp lesions discontinued light treatment because of stinging/burning. No subjects discontinued light treatment in the trial for upper extremity lesions.

Please refer to the full Prescribing Information for complete discussion of the risks associated with LEVULAN KERASTICK (aminolevulinic acid HCl) for topical solution, 20%.

References:

  1. Symphony Health. Actinic Keratosis Total Patient Share. June 2018.
  2. LEVULAN KERASTICK. Package insert. Sun Pharma; 2020.
  3. Nestor MS, Gold MH, Kauvar AN, et al. The use of photodynamic therapy in dermatology: results of a consensus conference. J Drugs Dermatol. 2006;5(2):140-154.
  4. MacCormack MA. Photodynamic therapy. Adv Dermatol. 2006;22:219-258. doi:10.1016/j.yadr.2006.09.008.
  5. U.S. Department of Health and Human Services. FDA approval letter. March 2018.
  6. Model 4170 System Specifications. BLU-U® Optical Specifications Document. Wilmington, MA: DUSA Pharmaceuticals, 2006.
  7. AMELUZ®. Package insert. Biofrontera Pharma GmbH; 2016.
  8. Data on file, Sun Pharma.
  9. Fuchs A, Marmur E. The kinetics of skin cancer: progression of actinic keratosis to squamous cell carcinoma. Dermatol Surg. 2007;33(9):1099-1101. doi:10.1111/j.1524-4725.2007.33224.x.
  10. Criscione VD, Weinstock MA, Naylor MF, Luque C, Eide MJ, Bingham SF; Department of Veterans Affairs Topical Tretinoin Chemoprevention Trial Group. Actinic keratoses: natural history and risk of malignant transformation in the Veterans Affairs Topical Tretinoin Chemoprevention Trial. Cancer. 2009;115(11):2523-2530. doi:10.1002/cncr.24284.
  11. Pyne JH, Myint E, Barr EM, Clark SP, Hou R. Basal cell carcinoma: variation in invasion depth by subtype, sex, and anatomic site in 4,565 cases. Dermatol Pract Concept. 2018;8(4):314-319. doi.10.5826/dpc.0804a13.
  12. Lee CN, Hsu R, Chen H, Wong TW. Daylight photodynamic therapy: an update. Molecules. 2020;25(21):5195. doi:10.3390/molecules25215195.
  13. Patel G, Armstrong AW, Eisen DB. Efficacy of photodynamic therapy vs other interventions in randomized clinical trials for the treatment of actinic keratoses: a systemic review and meta-analysis. JAMA Dermatol. 2014;150(12):1281-1288. doi.10.1001/jamadermatol.2014.1253.
  14. Taub AF. Photodynamic therapy in dermatology: history and horizons. J Drugs Dermatol. 2004;3(suppl 1):S8-S25.
  15. Kochevar I, Taylor C. Photophysics, photochemistry, and photobiology. In: Freedberg IM, Eisen AZ, Wolff K, Austen KF, Goldsmith LA, Katz S, eds. Fitzpatrick’s Dermatology in General Medicine. 6th ed. McGraw-Hill Professional; 2003:1417-1426.
  16. Shergill B, Zokaie S, Carr AJ. Non-adherence to topical treatments for actinic keratosis. Patient Prefer Adherence. 2014;17(8):35-41. doi.10.2147/PPA.S47126.