Feature Article

Playing Hardball with the Managed Care Companies for Higher Allowances

You are a hospital based group who has made a reasonable case for being paid more than the current agreement stipulates.  You based your justification on how much other payers compensate in your area and what this payer allows in other markets.  It all makes sense.  But they aren’t listening and its time to get serious.  Before you send your contract termination letter, you best have a strategy or you could be a victim in this high stakes war. 

The first thing you must do is get the hospital on your side.  They don’t like managed care companies any more than you do.  But they like unhappy patients and cases being sent somewhere else even less.  Managed care companies know and will use this as leverage to convince the hospital you are just being greedy.   They will warn about the volume of complaining phone calls and the company’s need to send patients to another institution.  You need to get to the hospital first with the following messages:

• Radiology Associates is a partner with the hospital-throughout all negotiations we will not betray the hospital
• Some payers play dirty-before believing any statement by the payer, confirm it with us as factual
• Radiology Associates is only seeking to be paid the market rate for our services-we are not being greedy
• The shortage of quality radiologists is a challenge for groups and can become a burden for the hospital
• No hospital patient will be turned over to a collection agency for the difference between the billed and allowed amount under the current agreement
• No patient with financial hardship will be harmed by the termination of our agreement
• No decisive steps will be taken without the hospital knowing in advance

Once you clear this hurdle, you need to have a strategy to address the collateral damage of this battle-the patients.  Keep in mind that Blue Shield and, soon to be implemented, United Healthcare will send any funds due your practice directly to the patient if you are not under contract causing you to chase the entire billed amount and not just the balance.  To address this and the prospective bad public relations you need do the following:

• Have a scripted response for patients complaining over the phone or via correspondence to assure the uniformity of the message
• Tell callers that it was the managed care company who betrayed them-Radiology Associates was there for them in their time of need with world class medical services
• The managed care company that decided to have the patient come out of pocket to pay more instead of their paying the fair rate for professional services
• There is nothing gained by patients calling the hospital-the most compelling complaints are best directed to the employers and to the beneficiary services line at the managed care company and here is their number  (xxx) xx-xxxx
• It is at that point you bring your plan for dealing with the patients to the managed care plan along with the notice that the hospital is behind you.  They need to know that this battle for fairness will be costly to them.  Hopefully, their acquiescence is the result.  If not, tell the hospital, send the termination letter, and let the battle begin.

• Is My Self Managed Billing Office Overstaffed, Overpaid and Underperforming

  I know that I tend to see more cases on one end of the scale than the other because of my profession, but my sense is that if you are even asking the question, then the answer is probably “yes”.  I would go so far as to say that most radiology group managing partners would admit to themselves that their office is overstaffed, but the cure is worse than the pain.  Remember that Medicare allowances (and likely managed care allowances) are scheduled to decrease 5% per year for the next 5 years.  Let’s just see if that position is sustained as income gets tighter.
  
  A reasonable benchmark to determine if you are overstaffed is the ratio of FTE billing staff to FTE physicians.  That ratio should be about one to one including all management for a small practice.  If the group has over 10 members, the ratio drops to .8 billing FTE’s per reading FTE and to .7 if over 20.
  
  How did you end up being overstaffed weighed against these ratios?  Any sequence of events that lead to this status was most likely due less to lack of management discipline as it was to failing to keep up with technological and outsourcing opportunities.  That’s good news for you because these solutions are well tested and provide benefits that exceed just that of trimming your staff.  You will need outside help to implement these improvements, but the benefits easily make it worth the investment.

  The other reason you may be overstaffed is because your Business Manager grew with the job, had no formal business training, “loves” her staff, and nobody has challenged her requests for additional staff.  Telltale signs of offices like these are Manager references to “floaters”, “part timers”, “seasonal staff”, “trainers”, “every staff member knows every job in the office”, and most everyone having a “title”.  Unfortunately, these offices have the most overpaid staff.  Reengineering these offices is very difficult.  Most practices in this situation are best served by hiring a billing agency which affords both the technical advantages and the proper staff yielding nothing short of a windfall of revenue for the practice prompting the partners to ask, “Why didn’t we do this years ago?”

  In addition to the aforementioned, another indicator of an office staff being overpaid is lack of attrition.  If you get every prospective employee you want, you are overpaying.  If your staff employed between one and ten years does not turn over in number every five years, you are overpaying.  Unless your practice has grown substantially, most everyone working for you over 10 years, with the possible exception of the manager, is overpaid.  Yes, I know turnover is expensive, but overpaying is a negative annuity with the only benefit being not dealing with turnover.  95% of the work your billing staff does is just not that challenging.  Speed, accuracy, and overall competency are achieved in two to three years.  After that, you are just paying more for the same productivity and the avoiding the hassle of turnover-not a good return on investment.

  So compare your self managed billing staff count to the above benchmarks.  If you are overstaffed and/or overpaying, consider whether that bothers you.  If it does, don’t let it eat at you.  Make a plan to “stop the bleeding” today.