Taking Control

April 1, 2003
Pamela Moore, PhD

In today's tough reimbursement environment, practices need to take control of the process, and no longer just accept whatever contracts come their way.


Longview Surgical Group has only eight physicians, but it's a giant when it comes to payer contracting: The practice made retroactive denials an anathema in Washington State.

Their story starts in a way that is probably not hard for many medical practices to imagine. The group would get surgical authorizations, only to have payers later say they made a mistake - their list of beneficiaries was out-of-date when they approved the service, for example. The payer would proceed to take the reimbursement out of future payments to the practice - giving themselves a self-refund, in effect. That left the surgical practice out thousands of dollars with no recourse.

"We were asking [for authorization] in good faith. ... We felt like it was an undue hardship on us," says practice administrator Denise Smith, RN, CMPE. She decided they weren't going to take it anymore.

"We contacted our state legislators. We contacted the insurance commissioner. We just kind of hit it full force and said, 'You can't believe it, but this is what the payers are doing to us.' Of course it sounded unfair to everyone. ... Eventually there was language that came out of Washington State from the OIG [Office of Inspector General] saying that wasn't the way it was going to be anymore." Now, if a practice gets written approval, the insurance company has to follow through and pay up.

"Our little office here ... had a pretty big impact on the state in terms of getting that language out," Smith says.

In today's tough reimbursement environment, it seems that more and more practices will have to take action if they are to get ahead, and no longer just accept whatever contracts come their way.

"Today, with the common industry practices of downcoding and bundling claims, physicians are lucky if they get paid at all for providing certain services," observes J. Edward Hill, MD, chair of the AMA Board of Trustees. "It isn't just about reimbursement rates anymore. ... Physicians must understand how their practice will be economically impacted before signing a contract with a health plan."

Contract control

Longview Surgical Group realized that it was about more than just eliminating retroactive denials - it was about getting organized, looking at the whole contracting process. About three years ago, the practice instituted a powerful payer task force committee.

"We felt like the process we were using for contracts was not a good one," Smith recalls. "Most [payers] were contracting with individual physicians ... instead of group contracts. It just made it more confusing ... and left a lot of room for things falling through the cracks. We didn't have any schedules at that time as to when contracts renewed - whenever they sent something in the mail, we would deal with it."

The payer task force committee - officially made up of three physicians, Smith, her assistant, Kimberly Everett, and Carol Shea, the operations supervisor - brought structure. The group studied how to negotiate contracts and what language to look for, eventually creating its own boilerplate contract.

Everett is in charge of contract review, comparing any contract to the boilerplate and kicking differences back to the committee. She is able to handle most simple changes via e-mail. The business office audits all payers, making sure they are reimbursing the practice according to the agreed-upon fee schedule. "It really saved us a ton of time. It eliminated a lot of meetings and haggling," Smith says. "Now our payer contracts are really on autopilot."

In addition, one person on the committee is in charge of reading all the payer newsletters. Otherwise, "you can spend months and months negotiating a contract with somebody and then they'll just slip a little note into their newsletter saying, 'As of such-and-such a date we are going to change the conversion factor,' " notes Smith. Another committee member composes a monthly electronic payer task force newsletter for in-office use, listing all contracts, their conversion factor, when renewal is due, and what percent of the practice's business it represents.

Keep fees current, quality high

Dealing with contracts and tracking allowables is only part of the equation. A practice also has to make sure its own fee schedule, or charges, are in good shape.

One way to start is to find out how your charges compare to our second annual Fee Schedule Survey results. See, for example, "Average Charge for 99213 By Region" on page 35. For more complete results, visit the Tools area of www.PhysiciansPractice.com.

But active practices also go a step further. For example, Salem Clinic, in Salem, Ore., "analyzes the fee schedule several times a year to make sure that we are not leaving money on the table," says administrator Barbara Gunder.

It's unusual, but wise, to review a fee schedule so frequently. Gunder says she makes comprehensive changes in January, "but things change during the course of the year because you negotiate contracts at various times of the year. It's not just the January renewals," she says.

Gunder makes sure she is not charging any payer less than it is willing to pay. "We do what we call a Payment Comparative Report and look at what every single carrier is paying and what we are writing off. If there are any [payers] that are paying 100 percent, then I look to see why that is the case," she says. If the payer is reimbursing at 100 percent, it's a sign that the practice's fees may be lower than the allowable, and it is actually charging less than it could collect.

The fee adjustments are usually small - the largest jump Gunder would ever expect to see is 11 percent in a year. "If you've done your work every year, tracking reimbursements with your contracted rates, you generally aren't going to go up more than that."

Gunder admits that Salem Clinic enjoys bargaining clout thanks to its size - it's the largest, privately owned multispecialty group in Salem - but it also relies on hard evidence of the good care it provides.

The American Medical Group Association awarded Salem Clinic a prize for its diabetes quality improvement initiative, which includes a database that measures multiple clinical parameters for each diabetic patient. "Every time a diabetic comes in, their clinical information is updated in the database, and the physician gets that information the next time the patient comes in," Gunder explains. "We've had diabetes health fairs, diabetic foot care clinics ... there has been a whole gamut of things." She is certain that the practice's quality in efforts in this and other disease categories improves its contracting strength as well.

But even the little guys have some leverage. "Being a small group, not having much clout, I don't know whether we've had much impact on the actual fee schedules," says Longview's Smith. "However, being savvy about what's going on the market and managing our contracts so tightly, we're more in a position to know what's going on. We're less likely to be duped by someone."

So whether it's lobbying against unfair payer practices, keeping close tabs on contracts, or working to prove quality of care, your practice, too, can gain advantage when it comes to getting paid a fair fee.

Pamela L. Moore, PhD, is senior editor of Physicians Practice. She can be reached at pmoore@physicianspractice.com.  This article originally appeared in the April 2003 issue of Physicians Practice - the Business Journal for Physicians.