Receiving Payment is Getting Harder for Out-of-Network Providers

June 23, 2008

We all know that being an out-of-network provider in most cases is more financially advantageous than being an in-network provider; this is because payment reimbursement is higher if a provider is out-of-network. But over time, managed care payers are making it more and more difficult for those providers that want to be or stay out-of-network.

It first started with increasing out-of-pocket deductibles for enrollees (i.e. patients) who sought treatment from an out-of-network provider – these deductibles can be 2-3 times higher for out-of-network providers than for their counterparts who are in-network. This is an obvious attempt by managed care payers and employers to discourage their enrollees/employees from selecting an out-of-network provider, assuming of course the enrollee has a choice of providers to select from for a particular specialty.

A physician client recently received a letter from a well known managed care payer that said “Effective Sept 1, …we are making changes in the way we direct claims payments for services rendered by non-network care providers and facilities……we will now pay commercial members directly for services upon receipt of the claim.”

This policy is becoming more prevalent around the country – sending payments directly to the patient instead of to the medical practice or other healthcare provider. It’s just another way managed care payers are trying to force physicians to become in-network providers.

Higher deductibles and mailing reimbursement payments directly to patients will now put even more pressure on out-of-network healthcare providers, especially physician practices, to collect more monies up front from patients, either full payment, partial payment, or some type of “down payment.” It’s also going to put additional pressure on accurate verification of benefits so as to know exactly what the patient owes out of pocket at the time of their visit. In light of these changing policies, the following are a few obvious strategies out-of-network providers should consider:

1. Make sure the office has a collection policy in place to deal with this situation, making sure office personnel are properly trained to collect monies up front – It has been my experience that front desk people are the ones who are the most poorly trained and compensated within the employee group. This makes for a deadly combination when front desk collections are so critically important right now (not only for out-of-network providers but for ALL PROVIDERS!).

2. MONITOR to make sure the collection policy is being adhered to and is successful – Just because you have a policy in place does not mean it is being followed on a day to day basis. Each week quantify the collection success rate for the office; for those patients that should have paid monies at the time of service, how many actually did pay? This would include partial payments. Obviously the higher the percentage, the more revenue the office or facility is putting in to the bank.

3. Attempt to renegotiate your contract with the managed care plan – Attempt to negotiate for the payer to reimbursement the healthcare provider directly instead of sending the check to the patient.

These continued changes are not very friendly overtures to out-of-network providers and expect more changes to come. The next policy change that has very recent beginnings is a reduction in the actual amount a managed care payer will actually reimburse an out-of-network provider for the services that are rendered. Payers are abandoning the old “usual, customary, and reasonable” fee allowance in favor of a lower reimbursement structure based on a percentage of the Medicare fee schedule. The result is a reimbursement gap not that continues to narrow between in-network and out-of-network providers.

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