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Physician Reimbursement Changes: 5 Ways to Gain Control


Five ways your medical practice can better control its payer contracts and boost reimbursement.

It may feel like your practice is fighting a losing battle with reimbursement. After all, continual rate declines amidst increasing overhead and regulatory burdens are enough to dishearten even the most optimistic physicians and administrators.

Still, there's reason to believe that slightly brighter skies may be ahead. Contrary to the trend we've seen since Physicians Practice first began surveying practices to determine average commercial reimbursement rates more than a decade ago, the 2014 survey findings indicate small payment increases for new and established patient visits.

But don't start celebrating just yet. Experts caution that despite the survey findings, traditional fee-for-service reimbursement is likely to continue falling over the next few years.

So what's the good news? Many changes are occurring on the reimbursement front, and though change can be uncomfortable, it can also bring new opportunities. For your practice, that means the difference between a cloudy forecast and a bright one could come down to whether you are prepared to successfully take advantage of the changes.

To help your practice along the right path, we asked the experts to weigh in. Here's how your practice can make the most of its current payer contracts and capitalize on the changing reimbursement environment.

Access complete results from the 2014 Fee Schedule Survey.


As the healthcare landscape shifts due to health reform, more payers are modifying their contracts with practices - and managers need to pay attention. The more informed you are about upcoming contract changes, such as a payment adjustment or a move to a different Medicare base year, the more prepared you will be to deal with them, says Susanne Madden, president and CEO of practice-management consulting firm The Verden Group. In addition, you will have more time to attempt to fight changes, if necessary, before they go into effect. "It's not a matter of just occasionally something might crop up in your specialty that's a bit of a pain, but now [you should] expect and anticipate that everything you know is changing," says Madden.

Keep in mind that payers can sometimes add amendments to contracts without requiring your signature, so it's even more critical to closely monitor any notifications you receive. "They're only going to go to the expense to mail you something if regulation dictates that they need to, so if something comes in the mail from a payer, read it, reread it, and if you don't fully understand it, call the payer and find out exactly what it means and what the ramification is for you," says Madden. Also, sign up for payer e-newsletters. Though reading through them is a "pain," they could include important policy change information, she says.

Lastly, keep a close eye on your explanation of benefits statements and your electronic remittance advice reports, says Madden. "If there's any movement, don't put it down to, 'Oh, well maybe that's just that patient's plan,' or, 'Maybe something went to the deductible.' Make sure and actually follow up with the payer and find out if something has fundamentally changed."


The shift to value-based payment is not the only area physicians need to watch when it comes to reimbursement. Here are three other areas to closely monitor:

• Contract changes. Payers are modifying their contracts more often. Pay close attention to any notifications you receive.• Payment problems. The cost for services you provide may be changing, and you may be offering more services than you have in the past. Make sure payer contracts still align with your cost to do business.• New plans. Your payers may be offering new plans through the health insurance exchanges. Determine whether inclusion or exclusion from these plans will benefit your practice.

In addition to watching out for contract changes, review all of your payer contracts at least annually to ensure that the terms still work for your practice, says Mary Witt, senior vice president of healthcare consulting company The Camden Group. For instance, you may have added a new service recently that wasn't included in the original contract, or the cost of a service may have suddenly skyrocketed and the payment you are receiving no longer matches up. When you do come across these issues, reach out to your payer and try to work out a suitable solution, says Witt.

In addition to the annual review, double check the accuracy of your payments regularly. That way if a payer makes a mistake or if a system glitch negatively affects your payments, you can rectify the issue as quickly as possible. Witt recommends loading your fee schedules into your practice management system so that you can confirm automatically whether the payments align.

" ... You could be leaving significant dollars on the table [if the payer is making a mistake]," says Witt. "It could be a few cents, but it could be a 10 [percent], 15 percent difference, which over time could be a pretty large dollar amount."


When assessing your payer contracts, consider how plans purchased through the health insurance exchanges could affect your reimbursement. If you have been excluded from one of your payers' exchange plans (according to Madden, payers typically include only about 20 percent to 30 percent of their entire provider network) consider whether inclusion could boost your reimbursement. While payment rates in exchange plans are typically 20 percent lower than rates in HMO plans, there are some circumstances in which your practice might find inclusion beneficial; for example, if many of your established patients are now insured through that plan, says Madden. If you do want to get added to a plan, Madden suggests contacting your payer to explore the options.

When weighing whether you want to participate in an exchange plan, also consider the high deductibles included in many offerings, as that could slow your practice down, says Owen Dahl, of Owen Dahl Consulting. For instance, your staff members may need to spend more time attempting to collect patient payments and educating them about how their plan works.

If your practice has been included in an exchange plan and it wants to be removed from the plan, review your contract with that payer as soon as possible, says Madden. You might be able to opt out of the plan at your contract anniversary or renewal date.

For more on how health insurance exchanges could affect your practice, visit bit.ly/exchange-guidance.


The shift toward value-based payment, in which payers provide higher reimbursement to practices that meet quality and cost targets, is another area to watch. According to our survey, value-based contracts continue to gain momentum. Nearly 25 percent of respondents said they expect a portion of their 2015 revenue to come from non-fee-for-service contracts.

While the extent of the shift to value-based reimbursement varies throughout the country - it's occurring much more slowly in small, rural communities - all practices should be preparing, says Witt. "It doesn't mean that you have to convert everything [to focus on value], but what I worry about is that practices will do nothing and then the payment mechanism changes and they're behind the eight ball because they're not ready for it ..."

Proactively approaching value-based payment can also help you prepare for Medicare's value-based payment modifier. The modifier, which kicked in for physicians in groups of 100 or more in January, will tie Medicare payments to quality and cost performance. Next year, physicians in group practices of 10 or more will be subject to the modifier. In 2017, the modifier will kick in for most physicians, and it will be based on their quality reporting and performance this year. "The whole value-based payment modifier is built on some balance of cost and quality," says Dahl. "I think we have a learning curve here and we have to spend time in our practices making sure we know what that really means and how that impacts our practice."

For more on the payment modifier, as well as other value-based payment models, visit bit.ly/value-modifier.


A proactive approach to value may also help you succeed in payer negotiations, says Dahl. If you can prove to payers that you are providing high quality, low-cost care, they may be more willing to offer higher reimbursement rates or incentives. Here are a few ways to prove to payers that your practice is taking value seriously:

• Establish a quality improvement program with a designated physician and staff leader, says Dahl.

• Identify gaps in your quality performance, such as reviewing performance data provided by payers. Then, work to improve in those areas, says Madden.

• Look at the most common quality and cost metrics the payers in your market are using. Then, measure your practice against those metrics, says Witt.

• Ensure that your physicians are consistently following evidence-based or clinical treatment guidelines, says Dahl.

• Pursue recognition as a Patient-Centered Medical Home or a Patient-Centered Specialty Practice, as more payers are offering related reimbursement increases or monthly care coordination payments, says Madden.

• Implement a patient satisfaction improvement program by surveying patients regularly and working to improve performance.

"... We need to be customer-service oriented and train our employees so that we're getting patients in a timely manner, we're treating them with respect, [and] we're doing all of those sorts of things," says Dahl. "Value is not only the clinical outcome; value is the total experience that the patient has."

Aubrey Westgate is senior editor for Physicians Practice. She can be reached at aubrey.westgate@ubm.com.

This article originally appeared in the February 2015 issue of Physicians Practice.

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