March 31, 2020

Negotiate Better Agreements with Health Insurers

Health Care Practice
Ronald B. Allen

Who is the health care provider? Is it the big insurance company or is it you and your health care practice? You get up early and work late taking care of your patients. The “big daddy” insurance company negotiates contracts with large companies and then offers you access to “their” patients on financial terms favorable to them and on terms that squeeze the financial life out of your health care practice. Can you negotiate better agreements with health insurance companies? Should you take less of their “business” and look elsewhere for patients? In this day and age, your health care practice needs someone like Exigo Business Solutions to help you understand and deal with the financial results of working with (or under) health insurance companies.

When Office Calls Were a Dollar

Some of us of a certain age can recall when going in to see the doctor cost a dollar. And many of us recall the smell of alcohol and the sting of a penicillin shot for fifty cents more. In that bygone era a doctor had a nurse, a combination lab and x-ray tech, and a person who manned the front desk, did the books, and cleaned up at the end of the day. There may have been two doctors but only one more nurse. And, the bulk of the business was ideally cash on the barrelhead unless it was a farmer’s family and then payment (plus a couple of chickens and a sack of potatoes) would arrive after the harvest.

A health care practice was a profitable profession and the business aspect was not all that complicated. Then health insurance became more common and Uncle Sam got involved with Medicare and Medicaid. In the beginning, this situation was a financial boon for health care providers. The elderly and the poor for whom medical care had often been granted free of charge were paying for their care (or Uncle Sam was). But then the Federal Government realized how expensive it was going to be when everyone was getting health care, living longer, and costing more money.

The current complicated state of health insurance, payment systems, and high health care practice overheads date back to when the Feds decided that Medicare was costing too much money. It is highly unlikely that this situation will change in any material fashion. But can you negotiate better agreements with health insurance companies to keep your health care practice financially viable? To do this you need to spot the problems and be ready.

Hidden and Not-So-Hidden Costs of the System

An example of the problems that come from “health care provider” agreements comes from a retired doctor friend of ours. His practice took on a number of capitated or pre-paid patients from a large health care insurance company. On the one hand, the company sent a check the first of every month so there was no collecting on unpaid office calls. And, in order to prevent “unnecessary” or “frivolous” visits to the doctor, the folks with that insurance had to pay a “co-payment” when they came in to see the doctor. In that era, the “co-pay” was $15 for a $33 regular office call (a long way from $1). However, no one bothered to tell the folks at the factory that, number one, their insurance now made them go to a different doctor and that they would need to pay part of the cost up front.

So, one of the guys working on the assembly line cuts his hand. He is bleeding like mad and arrives at the doctor’s office. He does not have any money because his billfold is back in his locker at work. Of course, the doctor takes care of him and then assigns the job of collecting the “co-pay” to one of his many office workers (who never see patients but only fill out insurance forms). This scenario is repeated over the next year in many forms. And one day our good doctor finds out that the person who needed to track down and collect the first “co-pay” is now doing that job full time. A quick pencil and paper calculation reveals that the thirty percent that she is able to collect comes nowhere near the amount of her salary and benefits!

Putting on Your Negotiating Hat

The solution for the good doctor in this day and age is not to spot the sort of issue we just mentioned. It is to have someone like Exigo Business Solutions at their side and QuickBooks bookkeeping software and QuickBooks Custom Reports to spot the problems.

In this day and age, it can be more cost efficient to refuse a contract with a health insurance company that to sign it. Many of your old patients may simply decide to come to you anyway and pay your office call with cash on the barrelhead. And, if they do not, you will have room in your schedule for new patients.

And, there are times when taking a limited amount of your business from an insurer that does not pay well is financially OK if it is not at a loss and simply helps cover overhead.

These are issues to talk through with someone like Exigo before sitting down with the insurance company to negotiate. For more help in this regard contact us today.

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