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You’ve heard it before and you’ll hear it again. Despite the fervent hopes of the health care community, managed care is here to stay.
"Managed care is not going away, despite the horrible press it gets," says William J. DeMarco, president of DeMarco & Associates, a Rockford, IL, health care consulting firm. "The truth of the matter is that few insurance companies are surviving unless they take some kind of managed benefit approach."
In fact, DeMarco predicts that managed care will loom even larger on the horizon as the economy slows. "There will be more workers who are looking for guaranteed benefits with predictable costs. Employers are going to look for more HMO options. The people who want more benefits are usually not the healthy people," DeMarco points out.
With some projecting that the Medicare Trust Fund will go bankrupt sooner than most people thought, there is going to be more focus on managed Medicare, DeMarco says. "We’ll see a resurgence of managing care, more than just managing claims. The focus is going to be on quality as well as cost," he says.
Although many HMOs are reporting significant premium increases, don’t count on any of that money coming to you, warns John Knapp, JD, a health law attorney with Cozen and O’Connor in Philadelphia
"The early evidence is that the HMOs are going to retain most of their premium increases to offset internal costs and improve their profit margin. Doctors should not expect to see significant fee increases, even though managed care organizations are receiving increased premium dollars," he adds.
Most doctors have realized that managed care isn’t going away, comments Randall Killian, MS, MBA, executive vice president of the National Association of Managed Care Physicians in Glen Allen, VA. "What I’ve seen this last year, as opposed to previous years, is a greater acceptance of managed care. Most doctors have realized they have to deal with it," Killian says.
The only way a physician can survive is to get serious about managed care and create a partnership with the MCOs, DeMarco asserts. Being able to resolve issues without acrimony is an important part of it, he adds.
DeMarco warns physicians not to let their negative attitudes about managed care affect the staff, who may in turn treat managed care patients like second-class citizens. "Physicians should remember that if they tell patients their insurance company won’t cover a certain procedures because they’re cheap, the insurer may come back and say they won’t cover it because the doctor overcharges. It’s hard to get the trust back when insurers call you a heavy biller," DeMarco says.
The best way to deal with managed care is to be a careful negotiator and make sure the contracts you sign are to your benefit to begin with, DeMarco says. "Physicians have been forced by managed care to accept the managed care payer’s fee schedule rather than staying with their own." DeMarco says.
Physicians should negotiate a little harder to come up with a good deal from managed care payers, DeMarco says. He tells of clients who have one fee schedule and they negotiate up to 10% off when contracting with managed care plans. "They can actually predict whether they make money or not. And they get rid of the managed care contracts that are not producing for them," he says.
After you sign the contract, you should keep a close eye on your billing and your receivables, he warns. "Some physicians complain that managed care is awful because they don’t get paid enough when, in fact, I’ve seen practice after practice where they are billing less than the amount they originally agreed on," DeMarco says.
DeMarco worked with one physician group that had agreed to take 10% off its regular fees and loaded the information into the computer so that 10% off the customary fees was automatically deducted. The insurance company also automatically subtracted 10%, which meant that for almost three years the physician group gave the MCO a 20% discount without anyone noticing.
Here are some other tips for dealing with managed care companies:
• Make sure you can get out of the contract.
The agreement you have with a managed care company is sure to have several paragraphs describing how they can fire you but you should also make sure there’s a clause that describes how you can sever your relationship with an HMO.
DeMarco tells of one 50-member independent practice association that had been paid under a capitation contract with no escape clause. When they wanted to renegotiate, the insurance company paid all the claims during the negotiation period and then told the doctors that they would have to pay $400,000 to get out of the deal.
• Make sure the contract will be to your benefit.
"It gets to be a real headache for a lot of people. To make the decision to unwind a managed care relationship, you have to look at how it will affect your patients and how to deal with the loss of income and patient market share temporarily," DeMarco says.
Be especially wary of contracts that base reimbursement on the Resource Based Relative Value Scale (RBRVS), DeMarco says. For instance, if your contract is based on RBRVS fee schedules, make sure it is a standard Medicare fee system for your area. Insurers may base their fee schedules on the RBRVS for a totally different state.
• Learn to say "no" to managed care.
You have to know what the fee schedule is and what kinds of conversion factors the HMOs will use. If you can’t make money with a contract, you should not go into negotiations.
If a company has not delivered on its promises or if it asks you to discount with the hope that you’ll get more patients, you should say no to the contract, DeMarco says. "Physicians are not always willing to say no and create conflicts but physicians who have gotten out of some of their managed care agreements have been able to increase their revenue because they eliminated bad payers," he adds.
• Don’t count on your attorney to tell you if the contract is in your best interest.
Your lawyer can tell you if it’s a legal contract but if you are asking the lawyer if your practice will make any money on the contract, you’re asking the wrong person, DeMarco says. "Lawyers practice law and focus in on that. They can’t tell a physician if a contract is a good business decision. That’s why physicians need to have their practice parameters in place before they walk into negotiations," DeMarco says.