Advice for Increasing Your Practice's Reimbursement Rates

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Categories: Medical Billing Advice & Insurance Payers
June 28, 2023

When looking at a medical practice or healthcare clinic's financial statements, the importance of the revenue generated from an insurer's reimbursement rates quickly becomes apparent.

It is the pursuit of better reimbursement rates that often motivate healthcare providers to change insurance panels. Here is some general advice on this complex and sometimes emotionally-charged subject.

The financial health of many healthcare practitioners is heavily influenced by the reimbursement rate that they receive from a health insurance panel. For some medical providers, these rates can quickly determine whether they are financially successful, or are forced to close their doors.

It is for this reason that many practices will carefully negotiate these reimbursement rates. Otherwise, low reimbursement rates can make even the best healthcare professionals struggle to keep their practices operating.

However, before healthcare practices and clinics contact their insurance payers, they should make sure that their revenue cycle is organized and optimized. Before practices start negotiating with insurance companies, they should:

  • Use Correct Coding - Accurate and correct coding is essential for getting reimbursed at the highest possible rate. Make sure that your billing staff is properly trained in coding and that they are using the latest coding guidelines.
  • Get Claims Processed Quickly - The longer a claim takes to process, the less likely it is to be paid at the full rate. Make sure that your billing staff is submitting claims on time and that they are following up on any claims that have not been paid.
  • Avoid Denied Claims - Denials can result in lost revenue. Make sure that your billing staff is familiar with the reasons for denials and that they are taking steps to prevent denials.
  • Track Their Reimbursement Rates - It is important to track your reimbursement rates over time to see if they are increasing or decreasing. If your reimbursement rates are decreasing, you may need to take steps to increase them.

Negotiations are easier if these internal factors are in order. Now, more resources and attention can be directed on getting better rates.

Accepting the Standard Reimbursement Rate:

Some healthcare centers will accept whatever rate is offered by the insurance plan. This is particularly true if it is a newer medical facility or practice. The main goal in this situation is to quickly get the practice up and running. Making sure that the practice and clinicians are credentialed as soon as possible is helpful in this situation. This means having new patients receive treatment and services at a potentially lower rate.

Patients sometimes struggle with figuring out the difference between coinsurance, copayments, HMOs and PPOs. To make matters more frustrating, patients likely do not want to hear that their medical provider is out-of-network and their healthcare plan will not cover the procedure.

Patients may want a physician who is in-network due to the fact that their out-of-pocket cost is lower. They may also feel more comfortable with the fact that an in-network provider who is part of an insurance company's online provider directory.

In some instances, simply accepting what rate the insurance plan offers makes sense. Healthcare providers need to see and treat patients if they expect to stay in business. Access to a variety of insurance panels is helpful for generating traffic. However, at some point, there a conversation should happen around the possibility of renegotiating contractual reimbursement rates. This is true whether it is a solo practice, small group or larger facility.

Know Your UCR:

Healthcare providers should know their UCR (usual customary rate) or what is also known as the usual, customary and reasonable fee rate for their geographic area. According to, the UCR is the amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.

Healthcare practitioners should bill the contractual rate that they have negotiating with each insurance company. However, once a medical provider is on multiple insurance panels, they should take the highest negotiated contractual rate. This highest negotiated rate should be used as their standard rate.

Keeping their contractual rate in mind, when setting the rates for a medical practice, a convenient standard to follow are Medicare's reimbursement rates. For behavioral health, setting a practice's individual rate at 1 to2 percent above Medicare's reimbursement rate, or physician fee schedule, is usually a good place to start.

The Need for Quantitative Data:

Anecdotal examples and emotionally-charged arguments will not usually change insurance administrators' minds. But, measurable data about the performance and volume of insurance claims can make an impact. Medical professionals need to understand how their practice fits within the larger network. Once they understand their overall position, they potentially are in a better position to negotiate higher insurance reimbursement rates.

Insurance is a business and health plans are responsible to both employer groups as well as patients who pay insurance premiums. Health insurance companies need to create and offer a network of healthcare providers for these employer groups and patients. Overpaying on rates is not a way to keep these groups happy.

A practice or clinic needs to demonstrate the value that they bring to these insurance networks. In order to do this medical providers need to show how they contribute to the insurance network. These could include measurable factors like cost savings or a high volume of claims.

If a healthcare provider can cleanly demonstrate why their practice deserves a rate increase, they will have a greater chance of success. In order to do this, their practice needs to have quantifiable numbers, data and arguments that support a reimbursement rate increase. They should focus on tangible attributes such as location, ability, skill and clinical outcomes.

Medical providers should identify the key advantages that would make their practice or clinic more desirable to a health plan. Examples of a few of these advantages include:

  • Over time, a steady growth in the number of clinicians in the practice.
  • A constantly high volume of insurance claims for the health insurance plan.
  • A scarcity of a provider’s healthcare specialty in their region or area (a niche specialty).
  • Cost savings for the health plan due to excellent clinical outcomes.
  • Providing services in different languages or during nights and weekends.

There is no guarantee for an increase in reimbursement rates. However, if a proper strategy is laid out that is well supported by measurable data, a rate increase is possible for clinicians and their organizations. Organization, planning and persistence are what will pay off in the end.

Who We Are:

RevUp Billing prides themselves on delivering experienced and professional billing and credentialing services. Their billing and credentialing specialists offer revenue cycle management (RCM) solutions that streamline a medical practice's billing, coding and claims processing tasks. They also offer reliable billing and software services to I-DD Waiver provider agencies.

If you have additional questions about insurance reimbursement rates, payment adjustments or other general medical billing questions - contact us.

RevUp Billing provides trusted and experienced billing services for healthcare practitioners. Like, subscribe and follow RevUp Billing on Facebook, Instagram, LinkedIn & Twitter.

Updated from original article published on December 20, 2019

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