Consideration of which insurance payers to participate with requires informed decision-making as a first step. Reserving time and effort to contract and enroll with only those payers who provide competitive and equitable reimbursements, represent a substantial size of the patient population served, and offer financial incentives for the containment of cost and the delivery of quality, value-based care is paramount in the health care marketplace of today.
Identify problem payers.
Identify payers that represent the highest percentage of volume of the practice’s patient population. Calculate the review per visit by determining the total dollars received for the previous 12 months and divide by the total number of visits by each insurance company. This calculation will help determine which insurance payers should be focused on and which are the biggest financial burdens. Generally speaking, this exercise will result in four or five major insurance payers that provide the highest degree of revenue to the medical practice.1
Run reports to assess the top CPT codes billed by the medical practice and compare reimbursements for those codes across all insurance payers. This analysis will identify those insurance payers that reimburse poorly for services/codes frequently used. While some insurance payer contracts may provide higher reimbursements for certain codes, if the medical practice rarely bills for those codes, the insurance payer contract will fail to drive revenue based on the most billed services performed in the practice.1
Review insurance payer contract language.
First and foremost, read your contract before signing. Consider having a health care attorney review for your best interest. Many insurance payer contracts have ‘evergreen’ clauses that will allow the agreement to automatically renew annually if the contract is not terminated within a specified notice time frame prior to the end of the current term. Ensure language exists in the insurance payer contract that affords the physician/medical practice the right to terminate the contract within 90 days’ notice, without cause.
Be aware of ‘silent Preferred Provider Organizations’ (PPOs), which are organizations that access a discounted rate for services without direct authorization from the physician/medical practice. Because most PPO contracts prohibit practices from balance billing the patient, the discounted reimbursement rate is the only revenue the practice will receive.
Review the insurance payer contract for language on retroactive denials for refunds on claims several years old that prohibits the insurance payer from withdrawing payments more than 120 days after receiving a clean claim. In addition, review the contract for language pertaining to the guidelines that are used to process claims, the timeliness requirement of filing claims, definitions of medical necessity and covered services, and fee schedules used.1
The trend in the health care marketplace to move from fee for service to quality and value-based outcome reimbursements has precipitated various insurance payer contract models that incentivize physicians and medical practice to achieve specific cost and clinical performance measure outcomes. Many contracts contain provisions for gain share, risk or risk-withhold based on per member, per month cost of care and achieving thresholds and benchmark performance in select quality measures. These reimbursement models and clinical performance measures, along with the associated benchmarks and thresholds for performance should be clearly delineated in the contract or the contract addendum.
Negotiating a contract with an insurance payer.
While insurance payer group contracts through a physician organization or similar organization typically yield higher reimbursements and more favorable terms for member-providers, independent practices can successfully negotiate contracts with insurance payers. Involving the practice manager, medical director, lead biller/coder and a health care attorney in the negotiations will assist in mitigating improper interpretations and unclear definitions in the insurance payer contract.1
Ultimately, the decision of which insurance payers to participate with can be achieved with relative confidence by keeping these primary considerations in mind.