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It Might Be Time for Physicians to Negotiate With Payers


With the right approach, physicians might secure better reimbursements from their payers.

While it's highly unlikely that we are about to return to the days when premier practices could demand premium payments for the care they provided, many payers are open to arrangements that can result in better reimbursement. The key is understanding what will be necessary to achieve this incentive.

A growing number of insurance plans have realized the importance of making physicians partners in controlling the cost of care and also abandoned the concept that cutting fees will somehow contribute to cost savings. Having said that and before you run to the bank, let’s explore what might be available and what you might have to do to qualify.

In both primary and specialty care many incentives are tied to those available through Medicare, so if you make the changes needed to qualify for those Medicare incetives you likely can do the same for commercial payers.

• Primary Care

A growing number of plans provide added payments tied to the use of EHRs, participation in Medicare’s Physician Quality Reporting System (PQRS), e-prescribing, use of generics, and utilization rates for high-end diagnostics (CT, MRI, etc.).

These payments often take the form of added percentages layered on the basic reimbursement rate. If you are currently being paid 110 percent of Medicare in your market, the upside might be as large as 8 percent to 10 percent above that level.

Less common but quickly growing, are incentive payments tied to qualification as a certified Patient-Center Medical Home. These payments might be structured as an amount per patient per month (similar to capitation) or a flat payment per year. For more information on Medical Homes visit the National Committee for Quality Assurance (NCQA).

If you participate in a risk-friendly independent practice association or physician/hospital organization (PHO) you might get bonus payments tied to the overall reduction of the cost of care for a defined population.

• Specialty Care

Most incentives are specialty-specific and tied to high cost procedures or chronic conditions. Medicare has introduced a "bundled payment" initiative that combines the hospital and physician fees and, at times, includes diagnostic, therapy, and rehabilitation services. Payers are beginning to mimic this model. Physicians and hospitals decide how to split the fee but, if total costs are less than the target, most of the difference is available as a bonus.

Incentives tied to chronic conditions often look at the ability to manage patients and avoid complications and admissions.

What should you do to learn about the availability of better payments? First, don’t make major changes to the way you practice before you determine if incentives are available. Most physicians still live in a fee-for-service world and changing care models before incentives are in place might actually reduce reimbursement.

Approach dominant national payers such as United Healthcare, Humana, Aetna, and Anthem about programs that might match your goals. These companies have pilot programs around the country and have publically indicated that this is a direction they endorse.

If the payer offers an opportunity to be a part of an incentive program, take time to determine the cost of compliance. Will you need to add staff to either collect data or manage patients? Can your EHR produce the reports the payer will need to determine compliance? Is your local hospital open to working collaboratively with physicians to address issues such as bundled payments? You might actually end up spending more than you will earn. Not a good business model.

Finally, just because payments aren’t currently available don’t assume they won’t be soon. Stay in touch with you major payers and let them know that you are willing to be part of their clinical initiatives.

My next post will be on the topic of co-management arrangements. If you have any questions that you would like addressed, please let me know.

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