"Cut Your Best Deal for Out-of-Network Services"
When dealing with repricers you have the upper hand
Gil Weber, M.B.A.
Adapted with permission from Podiatry Management
© Copyright, 2008. All rights reserved.
To contract with third-party payors physicians are required to accept significant, sometimes ridiculous discounts off Usual and Customary (U&C). Adding insult to injury, they often are forced to wait an unreasonable amount of time before payment arrives. And so they should make every effort to capitalize on any opportunity that would allow collecting something closer to U&C, and especially if it would also include quick payment.
Oftentimes a practice can collect more in total reimbursement when the patient is seen on an out-of-network (non-par) basis. In these instances the amount received from a third-party payor added to the patient's out-of-network co-insurance can be quite a bit more than that paid to panel (in-network) physicians. Of course there are some issues the practice needs to address to preclude claims submission and payment problems being thrown in its path.
One of those is when a third-party repricer, working on behalf of the payor, contacts you and tries to extract (or coerce) a discount you're not required to give. Some podiatrists don't realize the "game" that's being played on them by repricers, and in that failure they acquiesce to ridiculous offers and needlessly give away dollars. But in most situations if you dig in your heels and stand firm for what you're entitled to receive, the extra revenue you can realize makes it worth devoting a little time to turning the tables on those who would try to strip you of hard-earned monies.
Let's discuss two scenarios to get the best reimbursement when a patient sees you out-of-network: first, when a repricing company sticks its ugly head into the mix and tries to negotiate on behalf of a payor and, second, when you deal directly with that payor.
Providing Out-of-Network Services
In an ideal situation you'd collect full charges (U&C) from the patient seeing you as a non-par provider. You'd then give the patient a paid receipt and she'd submit to her insurance for partial reimbursement. In an almost ideal situation you'd collect full charges, but with part coming from the patient as co-insurance and the balance coming from the payor. Experience tells us the latter happens more often.
For example, let's say a patient is seen for surgery and the U&C charge is $1800. Assume the patient has a 70/30 out-of-network plan. Then the patient should pay $540 and the insurer should send you a check for $1260. It sounds simple, but quite often reality is so different.
These days it's quite possible that you may not be able to collect 100% of what the patient owes. And instead of receiving the $1260 balance in a timely check from the payor, you could find that it was mistakenly or even intentionally mailed to the patient. (See "Treating Out-of-Network Patients" for an article on this subject applying across all medical specialties.)
When you request the funds from the patient he refuses to turn them over. Now the entire $1800 is sitting in accounts receivable, and you might not collect any of it. What should have been sweet turns out to be very sour.
Repricers – A Scourge Upon the Managed Care Industry
Another, very common scenario is that you might be contacted by a repricer working on behalf of the patient's insurance company. Increasingly repricers are being engaged to act as middlemen whose task is to extract non-contracted and, truthfully, undeserved discounts.
The last thing that insurer wants is for you to receive more as an out-of-network provider than it would have to pay one of its contracted physicians. So, for example, let's say that on the $1800 U&C charge mentioned above the payor's contracted reimbursement to par providers is only $600. A repricer is going to try to get you to accept something between the $1260 you're entitled to receive as a non-par provider and the $600 par fee. Perhaps the repricer might ask you to accept $900 as settlement from the payor.
Repricers are paid commissions based on the discounts they can extract from physicians. As such, if you accept the offer that repricer's income increases as yours decreases.
You may be asked to grant a one-time discount for a service, particularly for surgeries. But the audacity ("chutzpah") of some repricers is truly astonishing, and you may be presented with a document that, if signed, would authorize the payor to take a considerable discount on all claims presented by the repricer. Further, the letter you're typically asked to sign offers you few benefits, and may carry with it significant downside risks – not the least of which is slow payment.
As an out-of-network provider you're not required to grant any discount. Why would you agree to a repricer's ridiculous requests?
Putting the Screws to Repricers by Demanding That They Meet Your Terms
There may be reasons why you would choose to deal with a repricer. For example, if you've waited a long time for the payor to send "$X" then it may be worth granting a nominal discount from "X" if the repricer will guarantee payment within a week or 10 days. Or you may be tired of fighting with patients who, despite signing an assignment of benefits authorization, won't turn over payments improperly sent to them by the insurer.
If you do choose to negotiate with a repricer then you'll want to memorialize the understanding in writing, preferably in a document of your design rather than something created by the repricer to protect its interests. Included below is a sample form you can use as a boilerplate in designing your own (Courtesy Michael Lockard, software and practice management consultant, e-Informatics). Show this to your attorney, and have it modified as necessary to reflect state law and to serve your purposes and interests.
You'll note that the terms and conditions of your accepting any discount are spelled out, as is the fact that the agreement and any discount described in the agreement are deemed void if you are not paid per the terms you demand. Keep the payment time frame very short (much shorter than the contractual payment terms you'd have as a network provider), and offer only a nominal discount.
Ask your attorney about including a statement that has the payor acknowledging that the practice may collect in full from the patient (Member) if the repricer or the payor reneges on the deal. If there's trouble and you don't get your money, then send a copy of the form to the payor with a letter stating that you will collect in full from the patient if you are not paid immediately at the agreed rate. (Note: you might even consider demanding full charges from the payor at this point since the payor has not complied with the terms of the negotiated deal.)
In addition, get the patient involved. Send a copy to the patient and watch the fireworks when she/he realizes the payor is not paying and, further, has agreed that you can charge the patient the entire amount if you're not paid as agreed.
You Have the Upper Hand
Remember, you are under no obligation to consider any repricer's offer. This deal is yours to strike, and if the repricer won't agree then let it go back to the payor and report that you demand full U&C. You might be surprised to get a better offer if that repricer has to come back with its tail between its legs.
When dealing with repricers you have the upper hand. Since you are not contracted to the payor or the repricer you can play hardball. This is one of those situations where you give only very little if you choose to give at all. So don't blink first!
Working Directly With Payors, Even When You're Non-Par
In some but not all cases it is possible to deal directly and more favorably with the payor rather than with its surrogate, the repricer. How, you wonder, is this possible if you're not contracted to the payor? And why would a payor even consider talking with you when you're trying to go around its surrogate?
It's all a matter of dollars and cents. If you crafted a deal with the payor that compensated you more than offered by the repricer but also eliminated payment of any commission to the repricer, they'd likely come out ahead on balance. Without the surrogate in the middle you get more and the payor pays less, so it's win-win for everyone except the repricer who gets nothing on the deal.
Dealing directly with the payor and collecting more of the total fee from that source potentially has other advantages.
- You may be able to establish a working relationship with the payor that precludes the repricer getting between the parties if you file other non-par claims in the future.
- If due to the patient's benefits plan design the non-par reimbursement rate is actually less than the par rate then by working directly with the payor rather than through a repricer you might be able to collect at the higher par rate. That then reduces amounts owed by patients and could increase the likelihood that you'll collect patient balances in full.
- You can insist that as part of the deal the check goes to you, not to the patient. That would eliminate one of the most irritating problems of billing as a non-par provider.
Crafting the Deal: Appoint a Negotiator
Designate one person in the practice to be responsible for all negotiations with all repricers and payors. Give this person the authority (within defined boundaries) to be as aggressive or agreeable as each situation demands. It's critical that all information and authority be centralized so that these negotiations are not done helter-skelter. After all, when you start out with the upper hand it's essential not to do anything that would weaken your position.
Crafting the Deal: Defining the Terms
Again ask your attorney to create a formal agreement memorializing the terms and conditions. Much of what is in the sample form for repricers could be used, but certainly your written document must include:
- the service(s) for which you will be paid,
- the amount(s) you will be paid,
- the amount(s) that will be owed by the patient (Member),
- that you will be paid directly by the payor,
- the time frame within which you must be paid by the payor,
- the consequences if the payor does not meet its obligation(s),
- the breadth/limitations of the agreement (i.e., if it for just one claim or for all claims from this payor?)
Gil Weber is a nationally recognized author, lecturer, and practice management/managed care consultant to physicians and industry. He can be reached at (321) 433-0623 or by e-mail through his website contact page.