Providers act boldly to fend off big write-offs
Providers act boldly to fend off big write-offs
Partnerships, selectivity can stave off losses
Outpatient providers are trying to stanch the revenue flow from mounting bad debt and steep payment reductions related to managed care contracting. The effort has led to some creative strategies that can be applied in most regions of the country. Here are some tips offered by experts:
• Form partnerships with well-vested competitors.
Alliances at once remove the threat of competition and allies your organization with a potential source of new investment and working capital, says Linda Gosslin, CPAM, director of patient financial services with University Medical Center-Mesabi in Hibbing, MN. The capital can fund new business ventures and cushion the blow from large amounts of uncompensated care.
• Don’t take any rate less than the Medicare allowable rate.
Health plans often negotiate a lower-than-Medicare rate, which itself can be as much as 50% off a facility’s normal charges. But setting such deep minimum benchmarks can return to haunt you, says Ray Grundman, general manager and chief operating officer with Surgicenter of Greater Milwaukee in Wisconsin.
The following year, the same health plan will likely attempt to renegotiate rates that are even lower, and you’ll never get out of an ever-deepening financial well, Grundman says.
• Consider passing on certain contracts.
Often the wisest move is to back away from a contract when discounts are set too deep to be worth the trouble, says Dan Rode, MBA, a technical director with the Healthcare Financial Management Association, a Chicago-based trade group.
If enough providers in the market do the same, health plans are likely to have to renegotiate better rates or face losing enrollees to competing plans, Rode says.
• Evaluate whether to carve out certain services.
If contracts aren’t flexible enough, you may want to carve out certain services and negotiate special rates for them. Your high-cost procedures, such as cardiac surgeries, are the most likely carveout candidates due to the higher propensity within them for steep contractual allowances, Rode says.
But keep in mind that carveouts often bring with them stiff conditions such as risk corridors and frequency-based payment rates that require monitoring.
Risk corridors set limits on how many procedures can be performed before the carveout becomes void. Carveouts may be more trouble than they’re worth, says Steven M. Markesich, CPAM, business office manager with Deaconess Hospital in Evansville, IN.
• Consider contracting directly with some employers.
The process may increase your administrative cost, but the results will yield you greater negotiating control over rates, especially if you provide a badly needed service, says Grundman.
Occupational medicine is a growing field in smaller cities where workers’ compensation claims are high and there is brisk demand for specialized procedures such as hand surgeries and knee arthroscopies.
"Many of these employers are self-insured and are eager to talk to you if you have something to offer them," Grundman says.
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