managing payer relationships Archives

When business problems trigger emotions, facts and data are paramount

It's a fact of medical practice management life that unilateral decisions by other organizations can show up out of the blue and negatively affect the practice business, such as when a payer changes reimbursement terms or stops paying for a code that was previously reimbursed. In situations like these, practices have no obvious short-term option but to accept the decree or perhaps vow (through gritted teeth) to drop the payer at the next opportunity. These episodes can be understandably frustrating, even downright infuriating. Sometimes, though, the emotions triggered have the potential to turn a third party's adverse decision into an even more harmful one you make yourself, if you're not careful to take a breath and evaluate all the data you can get your hands on before responding. A recent case in point: a client of ours found that Medicare had suddenly decided that a particular CPT code for administration of a biologic drug was inappropriate and could no longer be billed for that purpose; the substitute code pays only about 20% of the one the practice (and others across the country) had been using for several years. At the same time, a national health plan that is the practice's top payer announced that it will continue to pay the higher-value code, but will only permit one use per patient per day. This is a problem for the practice because the medication in question often has to be administered twice during a single treatment, and each administration requires that the medication be individually mixed and prepped. The practice has found this therapy to be increasingly important and beneficial to a growing proportion of its patients. More staff time has been allocated to it as demand for it has climbed steadily over the past few years. Because of this, these unhappy reimbursement surprises sparked a strong reaction from the physician owner and his practice manager. With respect to their national payer, they were all-but-ready to drop the plan entirely."If we can't bill twice when we administer two shots," the manager was immediately certain, "we'll lose money! We're going to have to

By Morgan|2022-01-01T22:51:55-08:00October 29th, 2016|

Copays are declining, but that’s not good news

A recent Peterson-Kaiser Health System Tracker study revealed an interesting finding: average copayments are declining. Their study, which analyzed claims data from Truven MarketScan, found that average copay amounts paid by patients decreased by 26% from 2004 to 2014. Seems like a positive trend for patients and practices ... except that it's not. It's part of a shift that's actually making out-of-pocket costs harder for patients to prepare for and understand. That makes them harder for practices to collect. The Peterson-Kaiser analysis found that while copays declined by 26%, coinsurance increased by much more, 107%.* Payers may be emphasizing coinsurance because it is assumed, like deductibles, to be a more powerful tool to discourage unnecessary utilization of services. But for patients who need care, coinsurance can be another cause of 'surprise' obligations, since it's not always easy to calculate the amounts due. Patients may also easily confuse copays -- which are standard amounts for services like office visits, prescriptions, or the ER -- with coinsurance, which can only be calculated after determining what services are needed. This difference can lead to reluctance to pay, or fear of being incorrectly charged, especially when the amounts are significant. Here's a chart from the Peterson-Kaiser report: Coincidentally, but not surprisingly, the report also found that total cost-sharing continued to rise steadily and steeply. The analysis found that total out-of-pocket costs rose 77% from 2004-2014 -- much faster than wages. Besides the 107% coinsurance increase, deductibles increased 256%(!). For practices, this means that effective patient collections continues to be crucial to profitability. Not only are patients accounting for an ever more significant proportion of earned revenue, their payment responsibility will almost certainly continue to be confusing. It's crucial to help patients understand and prepare for the amounts they will be expected to pay. Be sure you also offer options like credit-card-on-file, mobile payments, payment portal, and payment plans to encourage their compliance. *I also wonder how much of the decline in copayments is due to patients using more preventive services, which carry no copay by law under the ACA. This could bring the average

By Morgan|2022-01-01T22:51:55-08:00July 10th, 2016|

Small can be strong when negotiating with a payer

Many physicians we work with face the tough decision of whether to keep their practices independent or join a larger organization. Oftentimes, physicians and practice managers believe they must consider such a move to "gain a larger footprint" for negotiations with payers. The advantages of larger groups in payer contract negotiations versus small and solo practices are generally accepted. But should we assume larger groups automatically have an edge? Negotiating power can come from different factors. The most basic is having something the other side wants (or, ideally, needs). But it can also come from not wanting what the other side offers too much (i.e., being able to walk away). It can come from having something to offer that is better than alternatives. It can also come from the ability to be flexible. Bigger groups may give payers a convenient way to negotiate rates for a larger geographic area in one deal -- a plus the payer will appreciate. The group may be empowered to push for a higher rate for all providers in it -- and it might work. And the payer may feel it must deal with this large group, without the option to walk away, because it needs the coverage it provides. But the group will also likely be less willing to walk away in the face of a deal it perceives to be poor, because the negotiators have to represent the interests of everyone. The fact that neither side can easily walk away takes away some of the leverage that more size might otherwise provide. On the other hand, if a smaller practice has special qualities that a payer might value -- say, specialty coverage in an under-served area, or newer services that are rare in their market -- the payer might be willing to pay more, at least for certain codes, for that small practice. But that could be less likely if that small team is part of a larger group negotiating rates across multiple markets. Similarly, if a small group of physicians scores well on a health plan's internal quality measures, or if patients

By Morgan|2016-03-04T11:32:52-08:00April 16th, 2015|

Remember, EFT is best

Mary Pat Whaley at Manage My Practice has posted great information about payers 'encouraging' practices to accept payment by virtual credit card, instead of by check or EFT. This method of payment is not a good deal for practices. Merchant fees are deducted from credit card payments -- meaning a further reduction in the reimbursement received from health plans that use this credit card method. Additionally, it adds costs because the virtual cards have to be manually keyed (increasing potential for errors and hassles -- and usually meaning a higher merchant fee than a swiped transaction as well). If the credit cards are set aside to be keyed in batches (as it seems they would inevitably be in many busy practices), that introduces another delay in receiving payment that would already be in the bank if transmitted by EFT. And, as the AMA pointed out in its letter to the CMS objecting to the use of virtual cards for VA reimbursement, credit card remittance advices are not standardized as payer EFT remittances are -- another source of inefficiency and cost. EFT is still the best way for practices to receive payments quickly, without any extra fee deductions, and without requiring additional, costly staff handling. (Minimizing staff handling also reduces embezzlement risk.) All payers are required to meet federal standards for EFT in 2014 -- and that means that you can request EFT from any payer you work with. As you know, we always recommend that practices use EFT with every payer: no checks in the office means less chance of one 'disappearing,' less aggravation taking them to the bank, etc. Virtual credit card payments are just one more inferior alternative to EFT. As Mary Pat noted in her post, it's important to check any new contract you sign to be sure you're not inadvertently agreeing to credit card reimbursement. (And, as we're always reminding you, this is another reason for a tickler to review your contracts annually, to be sure they don't already contain language that allows changing reimbursement mechanisms. And watch those amendments and other mailings from plans, too!)

By Morgan|2022-01-01T22:52:12-08:00November 11th, 2013|

Medicare Advantage plans dropping doctors: what does it mean?

News reports have been trickling in over the past couple of weeks -- growing in number -- about Medicare Advantage (MA) plans dropping doctors. First, we heard about UnitedHealthcare in CT dropping doctors -- then news came out about the same carrier dropping patients in NY, FL, RI, NJ, and, just yesterday, OH. Sam Unterricht, MD, the head of the State Medical Society of New York, said in a Fox Business interview a few days ago that other plans like Empire Blue Cross and Emblem were following UHC's lead in his state -- and that he expects this MA plan activity to spread nationwide. What's driving this (by all accounts, extremely sudden) behavior on the part of MA plans? The Tampa Bay Times reports that UHC attributes it to quality ratings ("[providers that] demonstrate the highest quality at the greatest value will be rewarded for their efforts.") But, the effort to trim MA costs as part of the funding plan for the ACA probably plays a role. Unterricth said that one of the plan representatives he spoke with said that an anticipated 8% reduction in reimbursements to MA plans from Medicare as part of the ACA was at least partly behind all the physician cuts. The timing -- coming on the heels of news of thousands of patients dropped from individual health plans -- does suggest a connection to ACA-mandated changes in 2014. Certainly, UHC's statement that quality ratings drove the decisions isn't incompatible with Unterricht's view that ACA cuts to MA reimbursement were behind them. After all, if reimbursements to MA plans from the CMS are going to decline, then quality related bonuses are going to be that much more important to plans going forward. It makes sense that they would try to goose their rankings to make up lost ground on reimbursements through bonuses. What does this mean for practices that serve MA patients? Some practices in some markets might have argued that MA is a pain: it's like the restricted, non-negotiable reimbursement of Medicare combined with the hassles of dealing with a private payer. But, we suspect

By Morgan|2022-01-01T22:52:13-08:00November 5th, 2013|

13 for 2013 Tip #9: Analyze payer performance

When is the last time you analyzed your practice's payers? Too often, physicians and practice managers feel powerless against health plans -- and don't even question whether to continue to accept a particular plan. Yet, even if your practice is located in a market in which you've found it increasingly difficult to negotiate higher reimbursement, that doesn't mean you must simply accept all other aspects of every payer relationship without question. Even when reimbursement amounts are similar across payers, differences in payer behavior -- what we refer to as 'hassle factors' -- can actually mean that some payer relationships are unprofitable. What are some of the hassle factors that add hidden costs and reduce payer profitability? They include: Consistently slower reimbursement than other plans Repeated requests for referral or authorization Frequent complaints from patients Poor support when help is needed to resolve problems Are multiple hassle factors a reason to drop a plan on their own? Not necessarily -- if you're reliant on a plan for a significant share of your revenue, or it reimburses better than others for important codes, putting up with the hassle may be necessary. (However, in that case, you will also want to do what you can to address some of the ongoing hassles with the payer.) I shared some further tips on analyzing your payers' hassle quotients in this article for Kareo -- and if you need further help evaluating and segmenting your payers, we hope you'll get in touch to learn more about our capabilities in this area.

By Judy Capko|2022-01-01T22:52:35-08:00January 31st, 2013|

13 for 2013 Tip #7: Reach out to local employers

Many medical practices we work with focus their marketing efforts (if they do marketing at all!) on physicians who refer to them and direct communication with their existing patients. Yet there is another marketing channel that can be extremely effective for physicians that is often overlooked: your area's major employers. It's common to assume that simply participating in an employer's health plan is sufficient to reach the potential patients that work there. But, if you're in a competitive area, you might need to differentiate yourself against dozens of other physicians -- personal outreach to employees is a way to help them choose you. Moreover, you can't necessarily count on the health plan to promote itself effectively to your patient base. Many employers will also consider wellness programs in the coming year, because the Affordable Care Act promises to provide financial incentives for qualifying programs by 2014. Practices that create wellness programs for local employers can simultaneously market themselves to employers and prospective patients, provide valuable wellness information and training to their community, and position themselves as key wellness program providers as attention and support for this type of effort grows. (What kinds of programs might qualify? Some possibilities include non-discriminatory diagnostic or health improvement programs like tools for coping with and preventing repetitive strain injuries; healthy weight management; voluntary health screenings.)

By Morgan|2022-01-01T22:52:36-08:00January 24th, 2013|