Over the years, I would bet almost every E.D. Physician Group has been forced or strongly encouraged to contract with managed care plans. Often times, one of the essential elements in the contract with the hospital is that the E.D. Physician Group will participate with the hospital managed care plans. In the 1990's, physicians signed contracts with these provisions without hesitation and quite frankly without regard to their ramifications. As a result, income decreased and managed care plans quickly realized they had the power because the E.D. Physicians were contractually obligated to participate, or so they thought.
The great equalizer for E.D. Physicians came in the form of the passage of the “Prudent Layperson” definition of an emergency. In most states, “Prudent Layperson” definition is accepted as the standard and thus insurance carriers have either decreased the number of non-emergent denials or stopped denying E.D. claims altogether. What does this mean for E.D. Physicians? Simply put, this gives you greater leverage to negotiate. Just as you may be obligated to participate with plans due to your contract, they now must pay your claims due to State Law. For no other reason, this is why the passage of the “Prudent Layperson” definition of an Emergency was so critical to the livelihood of Emergency Physicians. If parties try to impinge on this language, you must fight to the end for its continued acceptance as the standard.
When negotiating with managed care plans remember these basics. First, never sign a contract for a long term (more than two years). Long term deals provide tremendous power to the managed care plan. Second, make certain you have a “without cause” termination clause with no more than 90 days notice required. This will provide great protection in the event they don't pay according to their contract or have failed to disclose bundling practices. Third, obtain professional assistance from a billing industry expert to review the contractual language. The devil is in the details. What they may say is standard contractual language is generally written only for their benefit. Fourth, ask questions regarding whether their software is designed to bundle codes that are not universally bundled for CPT. Inappropriate bundling is the number one scheme in the business. Many plans have installed edits in their payment software to bundle codes that should not be bundled simply to reduce your payments. Fifth, never accept their first offer as there is always room to negotiate. If they won't negotiate, you are usually getting a bad deal. Sixth, try to negotiate a percentage of charges or flat rates rather than a percentage of Medicare. As you know, Medicare is volatile and cuts there should not create cuts across the board for your practice. Lastly and most importantly, remember than many of the major plans will pay any E.D. visit at or close to your fee schedule amount because they realize that the “Prudent Layperson” definition of emergency is a losing fight for them. Contracting even at a good rate is most often far less than not being contracted and receiving a high percentage of billed charges as your payment. They real key to staying non-par without upsetting the hospital or patients understands how the plans in your area process out of network claims. Make sure you know this prior to making the decision to go non-par.
Classic Example
Group A has the following for Managed Care Plan X:
Group Fees # of Cases Plan Fee Schedule Pmt out of Network
99281- $60 20 $35 $48
99282- $105 100 $65 $84
99283- $190 800 $115 $152
99284- $300 600 $155 $240
99285- $450 400 $205 $360
99291- $600 80 $290 $480
The plan fees schedule is fairly close to 150-170% of Medicare, which in many cases would be good rates from a managed care plan. Pmt out of Network represents 80% of the group fee schedule, which is often obtainable as non-par. Below you will see how the annual reimbursement is drastically different.
As Par with the Plan Fee Schedule :
(20x$35) + (100x$65) + (800x$115) + (600x$155) + (400x$205) + (80x$290)= $297,400
In network, you would collect $297,400 or $148.70 per patient
Out of Network:
(20x$48) + (100x$84) + (800x$152) + (600x$240) + (400x$360) + (80x$480)= $457,360
Out of Network, you would collect $457,360 or $228.68 per patient
As you can see, the basics of managed care plan negotiation can result in very different outcomes. Consult an industry expert or billing vendor with expertise so your group will win the managed care negotiation.