Addressing Decline in Managed Care Payer Reimbursement

Managed Care Contracting

Here is a recent email exchange between practice administrators regarding managed care:

First administrator:

I was in the dumps already since Aetna and BC/BS of Texas alerted us least week of fee changes.  Today I get a letter from United that they will also change effective 5/15.  I know for sure that two of these will be significant reductions.  All of them are on the CMS RVU bandwagon which means, that all of them will change with Medicare every year from here on out.  And what's the likelihood that will ever be in our favor? I need some encouraging words. 

Second administrator:

I too am feeling the pressure of "take it or leave it contracts."  I just met with our BCBS rep and that's substantially what they said they do statewide. I think I'm going to move to another industry where an owner can charge what he pleases and not have his living in jeopardy by the Feds or much less the commercial payors.

Managed Care Contract Negotiation

We all know the major impact payer fee reductions have on practice cash flow. This is why all medical practices need to develop a managed care strategy right now to address the issue of declining reimbursement.

The first step in any strategy is a thorough analysis of your current managed care relationships:

• Who are your profitable payers?
• Who are the unprofitable?
• Why is the practice still dealing with unprofitable contracts?

Keep in mind that just because you are busy seeing patients doesn’t mean you are making any money.

The second step is to get out there and attempt to negotiate with your major managed care payers, no matter what size of a practice you are. This is the only way to find out the payers’ attitude towards your own medical practice and what it will take to succeed in a managed care environment. You will use this information to develop a future managed care strategy for the practice.

Managed care reimbursement is not going to get any better any time soon. Payers will continue to force their own economics down your collective throats. Now is the time to do something about it. What is it going to be??

Negotiating Managed Care Contracts in Large Cities

Administrator response:

With all due respect- I don't see how this helps in a large metropolitan city with thousands of doctors. the ins comp can easily dump plenty of doctors. docs have no leverage whatsoever, esp if they are solo or small

I disagree with a comment that solo practices can't win in the managed care game. This usually comes from people who

• Don't even try to negotiate,
• Have not taken the time to find out if the  practice has leverage, or
• Tried to develop a managed care strategy.

You've got to get out there, try to negotiate, and even if you fail, learn from the negotiations to strategize how you can win in the future.