Don’t forget importance of quality & outcomes in managed care negotiations

To me the most powerful form of leverage in any managed care negotiation is utilization and outcomes data (i.e. quality). Practices and their physician owners who are progressive enough to obtain, assemble, and analyze outcomes data will have a significant amount of leverage against managed care plans. Why? Managed care plans usually pay most all doctors at the same rate schedule. If a practice can present data showing it is a lower cost provider than the other doctors of the same medical specialty on the panel, the managed care plan will usually consider giving the doctors some kind of an increase in reimbursement. If the managed care plan does not, it shows the employer community that is does not care about quality and reducing medical costs. Obviously they do not want something like this to be exposed.

The following are a few samples of some of the most common quality indicators:

 Cost per patient for a particular series of diagnosis codes
 Surgeries performed as a percent of patient encounters
 Usage of ancillary services
 Lengths of stay in the hospital
 Specialist referrals as a percent of patient encounters or by diagnosis codes (for primary care doctors)
 Number of repeat visits due to surgical complications

Keep in mind quality can also be defined by clinical outcomes as well as by hard figures. One example is asthma and allergy: What are the number of days missed from work for those patients the practice is treating? For Glaucoma specialists: How well was eyesight restored after glaucoma surgeries or are there complications?

It is important to remember that managed care plans do not on their own go out to doctors on their own volition and give them an increase in reimbursement rates. Doctors must be the ones to ask for such an increase. Medicine needs to become more efficient, but this is a process that is not going to happen overnight. However, it is the practices that do become efficient and cost effective that will most likely end up the true winners in the managed care reimbursement playing field.