Insurance companies, what have you done for me lately

Episode 14: Insurance Companies, What Have You Done for Me Lately?

One of the most effective ways to increase income in a medical practice is to review and renegotiate your contracts with the insurance companies in your market. Many clinics we are called into have not reviewed their contracts for 5, 8, or even 10 years. I’m certain that your expenses have been going up over that time period. Your employees probably got raises, and if not, we’ll visit that in a later episode, and if you’re not renegotiating your contracts, you are tacitly agreeing to take home less pay each year. Don’t.

First of all, let’s understand that you are taking care of patients, and working to get paid as much as possible, as fast as possible, for the care you’ve already provided. That is your game. The insurance companies are playing a different game – they’ve been given a fixed pool of money, and they’re trying to buy as much care for as many people as they can with that fixed pool of money. So, their denials and claims edits aren’t because they’re inherently evil, they’re just playing a different game. When you understand that, it all becomes clear.

Now, the first step in the process of updating all of your insurance contracts is to determine who your major payers are – there are usually 12-15 in any major metropolitan market, and you need to see where your current contracts are. In doing this over the years for many clients, we’ve developed a contracting matrix to capture all of the critical contract details, and to keep them organized in one place. This makes it easy to know when you need to revisit them in the future. There is a copy of one available for download at the Medical Money Matters Content Website. We recommend reviewing your contracts once a year and requesting a raise. Your costs are going up all of the time, and the worst they can say is “no.”

Doing this consistently every year will alert the insurance plans that you are serious about your business, you are organized, and that you will be back. In this case, the squeaky wheel gets the grease. Ask for that raise! If you’re not confident doing this yourself, hire it out. There are many consultants and attorneys who specialize in insurance contract renegotiations. A few thousand dollars to one of these specialists should net you many thousands of dollars in return.

In getting your contracts organized and ready for renegotiation, there are several key points you want to read for, which are:

• Effective Date – When does the contract start?

 

• Term – How long is it good for and does it automatically renew? If so, we call it an Evergreen contract.

 

• Specific Product Lines – Most plans have a commercial line of business, and one for Medicare and sometimes even one for Medicaid. Be clear about which one you are you being offered, and in some instances, you’ll have a contract for multiple lines of business.

 

• Termination Clause – this specifies how either party ends the contract. Some of these are tricky. Read carefully. This becomes important as you reach capacity and want to “strategically prune” the insurance plans that your clinic contracts with.

 

• The next important point is the Timely Filing Deadline – Every contract will have one, and this indicates how long you have to submit a claim from the date of service. (The shortest ones we see are 90 days; the longest are 365.) If you surpass this date, THEY WILL NOT PAY YOU. Getting your charges in within a day or two is best practice, and assures that you will not lose money due to timely filing rejections, so long as your billing team is on it.

 

• Conversion Factor – This is the amount they are going to pay you per RVU. Generally, this is somewhere between $40 – $70 depending on the insurance company, your market, and your specialty. You should always read for this! It may also be stated as percent of the current year’s Medicare rate. If so, multiply that percent times the current year’s Medicare conversion factor on the schedule from CMS to arrive at the conversion factor you’re being offered.

 

• Next is the Resource Based Relative Value System (RBRVS) Year – This is critical to understanding how much they’re proposing to pay you. The contract will list which year of the RBRVS is being proposed. As we reviewed in our episode 5 on Reimbursement, each year the Centers for Medicare & Medicaid Services (CMS) publishes a new RBRVS schedule, which lists the Relative Value Units (RVU’s) paid for any given CPT code. These change from one year to the next, so it’s important to know which year’s table they’re proposing. It’s also important to do a weighted analysis using your clinic’s distribution of CPT codes, as sometimes given a shift in RBRVS years, something that looks like a raise on the surface, may actually be a pay cut.

If nothing in that last paragraph made sense to you, then you are likely losing out on thousands of dollars each year. Hire this part out. Again, a small investment can yield huge dividends. Make certain the person you hire can do a weighted analysis and ask them to show you one they have done for a previous client. It should be a huge spreadsheet that lists all of the CPT codes used and current and proposed years. You should also request at the outset that they send you a final report showing the increases they’ve been able to negotiate for you and an estimated value of that increase over the coming year. If they hesitate to do that, find another consultant. Any consultant worth his or her salt will be anxious to tell you EXACTLY how much of an increase they won for you. (And they should be a bit gleeful about it too!)

Our group now has a new software tool out that simplifies this, and makes it easier to renegotiate contracts. It is called the Contract Visualizer and can be found here. We’re excited to share it with the world – it takes all of the huge spreadsheets, and puts them into a simple tool. You can input your current and proposed RBRVS years and your current and proposed Conversion Factors. Lastly, it allows you to upload a simple report from your billing system, and it will give you the financial impact of the new contract. Is it a big raise? Or smaller than you expected? Or perhaps what they’re offering is actually a loss that is packaged to look like a raise on the surface? The insurance companies know EXACTLY what their offering you, as they have all of your utilization data. We’re delighted to offer this tool on a monthly subscription basis to any practice who wants to be smart about their negotiations! Available now at MedicalMoneyMattersPodcast.com.

• The next insurance contracting terms we look for are Gag Clauses – These used to be more prevalent, and we always strike them. This would include any language that precludes you from talking about the plan above and beyond a reasonable confidentiality clause.

 

• Medical Malpractice Insurance Requirements – are required by most plans, and they stipulate that you carry a minimum amount of Medical Malpractice insurance. In many cases this is $1 million per occurrence / $3 million in aggregate. If you have any questions about this, ask your med mal company what the community standard is for limits in your area. You do not want to be the highest insured in your community; this only paints a big target on your back in the event a malpractice suit is filed that even remotely involves your practice. Attorneys will always seek out the deepest pockets, and if you carry $3M/$5M in a community where everyone else carries $1M/$3M, the attorneys will be focused on you. And not in a good way.

 

• General Insurance Requirements – Some plans will also stipulate that you carry a minimum amount of general or “property and casualty” insurance. Your insurance broker can help to assure that you have adequate coverage in place. It helps to share that section of the contract with them, as some plans will have a requirement of what your insurer’s rating needs to be, so your broker can sort that out too.

 

• Bill for Non-covered Services – This one is especially important for anyone planning to transition to concierge medicine, as this is the backbone of that revenue model. Be sure there is explicit language allowing you to offer non-covered services to your patients and, provided they know in advance that it’s not a covered service, you can bill them directly. Be sure the health plan will not forbid that kind of direct commerce.

The contracting process can seem arduous and overwhelming. The first time you go through it, you’ll have a steep learning curve. I encourage you to lean into it… this is the foundation of how you get paid. The number of RVU’s you bill out times the conversion factor on your contracts equals the amount of money you are entitled to be paid. Some of that will come from patients, and we’ll discuss that in a future episode. Again, this whole part of the business is key to your financial health. Reach out for help if you’re not familiar with it – even small practices can benefit from renegotiating contracts – we’ve seen increases of $30,000 – 50,000 per year and higher even in solo practices. Outsource to a consultant or check out our Contract Visualizer tool so that you’ve got all the advantages going into the negotiation.

Join me for our next episode, where we’ll talk about who you are taking care of, and what their insurance coverage means to your bottom line. We’ll talk about why businesspeople are focused on payer mix and how best to manage that as your practice grows.