January 19, 2022

Reviewing Carrier Contract Rates

Medicare rates are adjusted as per law each year. If the rates are adjusted downwards to comply with spending limits, Congress passes laws to temporarily address any adverse impact on physicians.  In 2022, there is no rate increase to providers even though inflation and labor cost have increased significantly. However, insurance premium rates are revised upwards each year, including Medicare Part B premiums.

It is important that Physicians review reimbursement rates and renegotiate rates with commercial payors. It is not sustainable when reimbursement rates are not adjusted to reflect inflation and other added costs. If no action is taken, Physicians are stuck with old rates as several insurers will not take any action themselves to revise contract rates.

Though providers have no real say with government and dominant commercial insurer rates, two actions can still be done to balance practice sustainability - payor revenue mix and practice costs.

The payor revenue mix can be balanced by limiting the volume of underpaying carriers or going out-of-network with them - if practice strength/demographics will allow such a move. On the practice cost side, as smartphones are ubiquitous, several manual tasks can be automated to alleviate costs.

Annual contract review is an exercise every practice must do to stay sustainable. No action will eventually result in the practice losing out to practices that do this exercise diligently.

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