Every month, there is a good chance that a practice brings in new patients. Once the visit is completed, the billing code is entered to the insurance company: 99201.
How much this practice is paid for this service is entirely dependent on the type of practice it is. If it belongs to a large healthcare system, with multiple hospitals and practices, it will average around $74 per instance of 99201. If it is an independent practice? It's only going to be, on average, $58.40 per instance.
This disparity — and this specific example — is detailed in the 2016 Physicians Practice Fee Schedule Survey, which surveys physicians on the amount they are reimbursed from insurers for common services. It's not just new patient visits that show the gap between what payers reimburse independent and employed practices, it's established visits too. When it comes to CPT code 99211 for established visits, independent practices on average receive $43.10 per instance and employed practices receive $58.70 per instance.
"It's not [a surprise] … the hospitals typically have negotiated contracts with the insurance companies. There is no hospital that's on a standard contract. There is no standardization in the hospital world. Each system really negotiates with insurance companies. If you're an independent physician, you are basically signing onto these contracts at street rates," says Susanne Madden, president and CEO of the Verden Group, a consulting firm. "Whatever the offered fee schedule is, you usually accept and sign. As a small practice, you don't have a lot of negotiating power and leverage."
Brennan Cantrell, commercial health insurance strategist at the American Academy of Family Physicians (AAFP), saw this discrepancy firsthand. He says he used to work for an independent practice that was bought by a hospital system. "When we were bought … our reimbursement went up 10 percent across the board," Cantrell says. "Even more for some codes."
Quite simply, size matters. Amy Mullins, a family physician by trade and AAFP's medical director of quality improvement, says that in some markets insurers have to choose between one or two big hospitals. The hospitals in these markets have all the leverage because the insurers have to play ball. Otherwise, if they weren't contracted with those hospitals, their members wouldn't have a hospital to go to and would likely switch to another insurance company, she says. The small, independent practices don't exactly have that kind of pull.
Education is the Key
The good news is it's not completely hopeless for independent practices, experts say. There are certain strategies they can employ to level the playing field. Patti Cloud-Moulds, owner of Turnaround Medical AR Recovery, a consulting firm, says a simple way independent physicians can get more bang for their buck is to just be more conscientious of how they code.