Accepting a lower price could deflate all your fees
Accepting a lower price could deflate all your fees
Consider all implications before deciding
Even if the managed care contract you are considering affects a relatively small number of patients, it could have a much larger implication for your practice as a whole. Signing a new contract could affect your existing pay rates with almost every insurer in your area. That’s why you should consider the overall potential of contracting with one plan at a reduced rate.
"If by signing up with a managed care plan, you immediately convert your existing business into managed care from a more lucrative reimbursement plan, what have you gained?" asks Jay Williams, principal of Arista Associates, a health care strategy consulting firm based in Northbrook, IL.
That’s why he advises you to read new contract offers carefully to see how they could affect your existing contracts.
For instance, some payers that offer a multitude of products ranging from indemnity to HMOs have a clause in their contract that says the fee schedule is the same for all patients.
This means you will be reimbursed at the HMO rate for all patients covered by that insurer, even if the patients are in a plan that provides indemnity coverage.
"I’ve seen this clause at least 50 times," Williams says.
And, if you do sign on with one plan at a reduced rate, it may affect the rates you receive from other plans, adds Marc Benoff, MBA, director of Dan Grauman Associates, a Bala Cynwyd, PA, management and data consulting firm specializing in the health care industry.
"In theory, the plans don’t know the reimbursement rates that other plans are paying, but in reality, in many markets, everybody knows everything. When contracts are in the same market, if Plan A has a fee schedule that is above Plan B’s, Plan A is likely to cut their rates," he adds.
Many contracts have a clause that allows the insurer to unilaterally cut rates. This could have a dire effect on your bottom line, particularly if the plan from which you initially receive a lower rate brings in marginal business.
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