Radiologists’ New Approach to Managed Care Contracts

In today’s ever changing world of imaging providers, gone are the days of maximizing volume to make up for low reimbursement rates. A once straightforward business process is now a complex myriad of possibilities. Utilization management practices and tougher scrutiny from benefit management companies and insurance carriers is now the catalyst for change in radiology practice management strategy.

Now, it's a cash play from the payers in terms of how they're directing business. Contracting has changed as well. Instead of seeking more patients, groups are looking for the right contract from the right carrier.

Take for example an imaging group that’s offered contracts from two managed care companies, both of which have the same number of patients to offer. However, managed care company A has bad payment practices, takes 45 days to pay, denies 15 percent of claims and requires the group to jump through a lot of hoops for payment. Meanwhile, company B has a denial rate of 5 percent and is easier to work with, but its reimbursement rates are slightly lower.

In this environment, you don't just want to go for every extra dollar from additional volume. You also need to understand the other ancillary activities that the payer makes you go through and that cost you money. Those things were never looked at before.

Too often, physicians simply accept what is offered from carriers without looking at the true cost of a contract. It's not just about reimbursement anymore; it's about process engineering.

Here are some tips for how practices can really evaluate managed care companies and their payment practices:

• Denials: Compared to your company average, denials can be more than two standard deviations higher than the norm, which costs more in personnel time and effort. And, of course, if they are never followed up on, that money is lost.

• Pre-exam requirements and paperwork for authorizations: It’s important to prove that your group uses clinical decision support software on exam appropriateness. This can also be expensive since you are employing people to handle these tasks.

• Supplies: Additional exams tend not to be covered after exams are completed. You need to negotiate these in before.

• Claims submission: Since 5010 was implemented, certain carriers’ claims acceptance rates have been inconsistent. As a result, more claims end up "missing as never received." This is also costly in the time value of cash and people required to research and resend the claims to be paid. Groups need to have an electronic submission and validation of claims received.

• Co-pays and deductibles: The perfect time to collect co-pays and deductibles is at the time of service. Having this information is critical to maximizing the collection of dollars on the front end of the revenue cycle.

• Negotiated rates: You may negotiate a great rate, but health savings accounts and other high-deductible plans lead to increased bad debt. The carrier can allow whatever amount, but with the patient responsibilities increasing, it is a crap shoot.

Taylor Moorehead is regional partner, West region and corporate compliance officer for billing company Zotec Partners. Moorehead oversees operations in California of more than $700 million in charge billing and more than $225 million in payments annually.