Want to contract with managed care payers in a more productive fashion? Try these tips and tools to minimize frustration and maximize reimbursement. Collected from your peers and the professionals at the California Medical Association, these pointers will increase your negotiating power and improve your results.

Danielle Onstot, MD, FAAP, is frustrated. The Oxnard-based pediatrician wants to play the managed care game, but keeps finding that the rules seem to favor the other side. She'd rather be playing with her patients. At least the children she takes care of know how to play fair.

"I'd much rather see patients than deal with contracts, but if I don't look at the contracts, the health plans will take advantage of me," Dr. Onstot says. "It's tough to take the time to look at the business side of medicine when I want to be changing lives by practicing it. But if I ignore the business side, I won't be able to afford to continue to practice."

Dr. Onstot is new to dealing directly with plans as a solo practitioner, but she's already learned some valuable lessons. To the point: She strongly encourages doctors to know what they are paid by whom and for what.

For example, one recent contract cover letter she reviewed claimed "fair and reasonable reimbursement." But when Dr. Onstot crunched the numbers, she determined that the deal actually offered a significant pay cut--something in the neighborhood of 40 percent. "I recommend making a spreadsheet with your charges, your costs for supplies, and Medicare and health plan reimbursement," she advises. "I was blown away when I first did so and saw the huge, sometimes almost threefold difference in reimbursement. If I don't say anything, those low payers will get away with paying me one third of what my best payers pay."

But simply making a better proposal in return may not be enough. When Dr. Onstot responded to the 40 percent pay cut, she was offered better reimbursement, but not the kind she really needed. "I requested reimbursement on specific CPT codes that were missing from the pages of reimbursement rates the plan e-mailed to me," she says. "The plan also wanted to pay me less for point-of-service and exclusive-provider-organization patients than PPO patients. I told them in my response that I treat all patients the same regardless of insurance status, so I shouldn't be reimbursed less for POS and EPO patients." In addition, vaccine reimbursement is a huge issue for pediatricians, because there are all kinds of new products that can be very expensive. The fee schedule she received from the health plan did not include many of them.

Complex changes in coding can also vex physicians as they attempt to negotiate fair managed care contracts. For example, the CPT code for circumcision now includes the type of regional anesthesia recommended by the American Academy of Pediatrics, where previously pediatricians billed for the circumcision and the anesthesia administration separately. "I need to negotiate for increased reimbursement for the circumcision code because it is now two codes combined," Dr. Onstot notes.

Even the most basic elements of health plan contracting, such as communications, have proven difficult. "I wish I could say that my first attempt at negotiation with a health plan was successful," Dr. Onstot says. "I e-mailed the plan and sent a letter containing my response to their second offer by certified mail, but they never received it, even though I received the confirmation of receipt. Incidentally, the plan also lost my termination letter that I sent by certified mail--after faxing me a response to my letter."

Dr. Onstot's experiences are not uncommon, of course. Even doctors in large groups with staffers dedicated to contracting have learned similar lessons the hard way, too, and they've generally come away ready to share their knowledge. Indeed, Dr. Onstot lauds the California Medical Association for its guidance and services during her negotiation experiences. "Staff from the CMA reviewed my letters and gave me sample letters to notify patients when I did terminate a contract," she says. "People there will step in to help you."

There is, in fact, lots of help available for navigating the changing managed care landscape, and your colleagues and your county and state associations are among the best sources. Here's a sampling of their advice--wisdom hard earned--on what works, what doesn't and what you shouldn't even consider.

1. Know your numbers.
Physicians must be familiar with the going rate for their particular services and must read each contract carefully to determine its scope of services and how each service will be paid under the proposed rates, says Hector Flores, MD, co-director of the family practice residency program at White Memorial Medical Center in Los Angeles. Some rates may seem high at first glance, but you may be taking on too much financial risk in return, he says. Conversely, the rates in some contracts may seem low, but those contracts may minimize your risk and may also come with value-added benefits, such as in-kind or end-of-year payments.

"Do not be afraid to demand what you're worth," Dr. Flores says. "Do your homework to know what you deserve." He cautions doctors to ask others in similar fields for ballpark figures when doing that homework, because legally doctors can't share exact rates without risking an antitrust violation.

2. Be aware of the legal risks.
James Hay, MD, a family practitioner with the Encinitas-based North Coast Family Medical Group and speaker of the CMA House of Delegates, says seeking competent legal advice is perhaps the most important thing physicians can do to make contracting go smoothly. And, he adds, the legal imperative to keep service rates confidential to minimize antitrust risks also extends to keeping contract terms quiet. "Unless they're your partners or members of the same group, never talk to peers about the specifics of a contract, because that is an antitrust violation," he says.

3. Do not freak out.
Sometimes health plans--or the IPAs between physicians and plans--will intentionally try to intimidate doctors and sometimes just the thought of intense negotiations will rattle them. But physicians should never sign contracts under pressure or in a panic, Dr. Flores emphasizes. "Everything is negotiable before you sign the contract," he says. "Be prepared ahead of time and know that time is on your side."

4. Remember that you have power.
"It's important for physicians to understand that they are in more of a position to negotiate than they may think they are," says Aileen Wetzel, associate director of the CMA Center for Economic Services in Sacramento and a 20-year veteran of helping doctors deal with health plans. "The only thing health plans have to sell is their provider networks. Physicians are the ones who control whether they'll be part of those networks."