Manage Payer Mix

February 1, 2005

We are struggling to manage our payer mix. We accept them all, including Medicaid and Medicare, without regard for their ability to pay. Any advice on target percentages in a payer mix to keep the practice healthy?

Question: We are struggling to manage our payer mix. We accept them all, including Medicaid and Medicare, without regard for their ability to pay. Any advice on target percentages in a payer mix to keep the practice healthy?

Answer: There is no single ideal payer mix, partly because you only can dictate so much. For example, if the population you serve is mostly covered by Medicaid, you can't just drop it without doing a complete overhaul of the practice.

What you want to strive for is a balance - that is, don't count too much on any one payer - and feasibility - you need to stay in business.

The most practical way to maintain a balance of payers is through scheduling. You don't want to close your doors to Payer X; just maintain a balance month to month. If a patient using Payer X calls for an appointment, schedule them three months out. Be sure to check your contracts for open practice clauses. Some simply require physicians to let the payer know if they intend to stop accepting new patients.

With a population heavy in Medicaid and Medicare, you should be very careful to stay on top of advance beneficiary notices (ABNs) and avoid downcoding. You'll also want to take a hard look at your commercial contracts - are any of them paying less than Medicare? (This is becoming more and more common.) Are any so difficult to collect from as to make it not worth your while? Look for commercial payers you can drop to raise the overall revenue without becoming totally dependent on any one.