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Identifying Your Payer Mix To Make Business Decisions


Knowing and understanding your payer mix is critical in your business operations, and overall inflow.

I was working on a new program yesterday, and in order to implement any new program, you need to have a baseline of information in order to track your ROI of resources.  I was not expecting to find out what I did. My new program has taken on a whole different life. 

I made a list of all of our payers and sorted them by pay per visit, with the highest paid listed first.  Then, I looked at a specific high pay amount and drew a line under that to identify those payers we should be focusing on marketing to.  I followed this by drawing a line underneath the payers that fall below our cost per hour of doing business.  This is critical to have if you don't know it yet.  The remainder is something that I will look at after I address the first two groups.

Let me start with the bad news.  I found that approximately 40 percent of our payer mix falls under the cost per hour of doing business.  What does this mean?  This is telling me that although we don't have any control over what insurance patients have, that 40 percent of our population have plans that pay us very poorly.  This is frightening to say the least!  Obviously, we will not turn these patients away, but it's critical to review how your staff is coding.  Oftentimes, healthcare staff does not understand their value and worth, and try to "give the patient a break" and not code the work that was performed in the appointment. So, reviewing coding can immediately increase your revenue with these types of plans.

The next group that has our highest paying payers landed under 5 percent of our total payer mix.  There is a lot of potential to increase these payers.  These are your non-traditional payers (i.e., auto med pay, liens, a few federal level payers).  So, the plan here is to identify the referral sources and work on open communications with those sources letting them know we are very open to allowing new patients with these types of plans. 

The third group are those payers that fall in between.  These are the higher paying PPOs, Medicare, Worker's Compensation, and some Medicare Replacement plans.  The Worker's Compensation payers have a lot of opportunity to increase the patient population.  Not a lot of people understand the whole lifecycle of a Worker's Compensation patient.  I often hear grumblings about the amount of work that has to be completed. 

However, with some education and training, we may be able to tap into this source in ways that most providers don't.  Your first step would be to identify your states Worker's Compensation website.  Ours (in California) have a one-hour training video and quiz to take that offer a different perspective I was not even aware of prior to this training.  Some of the verbiage on these sites is painful to read and confusing to say the least.  Be sure that your front or back office staff are asking the case managers who the payers is they have listed.  If you are not contracted with said payer, you won't be paid.  So even though you are contracted with Liberty Mutual, if Medrisk is the payer and you don't have a contract with Medrisk, you won't be paid. 

Regardless of where your payer mix lands, I think its critical for you to know who those payers are, what you hourly cost of doing business is, and put a plan of action into place to correct any behavior that may be hindering your overall inflow.

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