Running a medical practice means making tough decisions to protect your practice’s accountability and financial health. When you’re deciding to keep or drop a payer, those decisions can seem almost impossibly complex. Where do you even begin?
There are factors that will let you know when it’s the time and place to part ways with a payer. We've broken it down and made it easy so you can do the right thing for your practice without second-guessing yourself.
When you’re thinking about dropping a payer, take these questions into account.
What do your receipts indicate?
It’s best to have your practice revenue distributed evenly across all the payers you work with, but sometimes that isn’t the case. By using a receipt-by-payer analysis, you can determine fairly easily how reliant you are on each payer.
Compare the charges you make to each payer with the actual receipts of payment. If there’s a disparity and one payer accounts for a large percentage of charges but a small portion of receipts, it should be the first on your list of potential cuts.
Likewise, if one company makes up a disproportionately large percentage of your income, take note of that too. What will happen to your practice if payments from that company decrease, or if a sudden change takes it away entirely? Use your receipts to trim the unnecessary payers from your life, and develop a strategy to safeguard against future deficits.
Which services are reimbursed?
Sure, it’s great if a payer gives higher reimbursement for certain codes. But if the company hardly ever authorizes that payment, what good does it do for your practice?
Here’s a tried-and-true strategy to determine which insurance companies are paying you for your most popular services. Make a chart with one column for services, and several more columns for payers you work with. Take note, by CPT code, of the top 25 services you regularly perform, and how frequently you do them. Then, under each payer’s column, indicate how much each company pays for that service — and that’s how much they really pay, not just what’s indicated on their fee schedule.
By using the services you render most as your guideline, you’ll be able to see the actual impact each company’s reimbursement is having on your financial health.
How much are you spending on fees?
When you have a good relationship with a payer, you might overlook fees that are costing your practice money. But take a hard look at the real cost of these fees and how it’s hurting your bottom line. Are you paying network fees that overstep your standard limits for payers? Or are other withholdings hitting your practice right in the pocketbook?
Take a look at the fine print on your contracts with payers and check over explanation-of-benefits forms instead of fee schedules. In other words, determine what you’re really paying to work with these companies. And take a look at how long it takes to receive payment at all. If you’re spending time and cash to track down missing payments, you know that payer probably isn’t worth the effort, and it’s time to part ways.
Who will be impacted?
It’s definitely inconvenient for patients when you have to break up with an insurance company. Take stock of how many patients — especially active ones — will be affected when you drop a payer. If it’s a large chunk of your patient population, talk to those patients. Try to get a good understanding of how many may seek a new doctor if you stopped working with their insurance network.
Remember too that your patients aren’t the only ones who will see the impact of this change. Consult your staff when you’re deciding whether or not to stick with a payer. Does this company cause your practice management team a lot of stress, or are they easy to work with every time? Have your team members been hiding frustration with a certain payer for years, but haven’t had the chance to speak up? Make sure your staff is on board for any decision you make, and notify patients as soon as you know what you’re going to do.
With any luck, you’ll be able to root out which payers aren’t a good fit for you pretty quickly and easily. But if you do struggle, remember that careful deliberation is never a bad thing when it comes to your revenue.
A thoughtful strategy will have a positive impact on your practice in the long run, so make it count!