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Health plans are demanding steeper discounts than ever. But you may have more negotiating room than you realize.

Only a few years ago, physicians were complaining bitterly about Medicare fees. Now, in some parts of the country, Medicare is the best payer. The discounts being demanded by HMOs and PPOs are approaching the fire-sale level, especially in markets where there's an oversupply of physicians. Even where commercial third parties still pay more than Medicare, the gap is narrowing.

"Managed-care organizations are trimming the horse's shoe until the hoof bleeds," contends Miami OBG Paul A. Gluck, president of the Dade County Medical Association. MCOs in southern …