Tips for your managed care exit strategy

As reimbursement continues to decline (has a managed care plan ever called you to say you were getting a raise?), physician practices are going to have to take a long hard look at continued participation in some plans. This is especially true with regard to your worst paying contracts. The following are a few exit strategy steps you might want to consider:

§  Review your various contracts for termination (“without cause”) notice requirements. For example, some could require 30 days notice, some 90 days, and others until the end of the contract year. Make a timing assessment or an ideal schedule for terminating your contracts to minimize any adverse effects on patients and employers. This also serves to buffer any dips in cash flow for your practice.

§  Serve termination notices and then watch and observe the effect on your patient counts and receivables. Also, look into termination agreements from all perspectives. If a patient decides to leave the practice, take the necessary steps to transfer his or her care.

§  Conduct a review of your retail fees. This is a critical step for specialists. If you want to retain patients, I recommend an adjustment of your fee schedule—generally an adjustment down.

§  Train your staff, including phone staff, billing staff, and anyone else who may come into direct contact with your patients. This is important for scheduling staff, for example, because they have the opportunity to intercept patients and prepare them for any out-of-network differences that they may experience along the way.

§  Review your practice’s financial policy for write-offs. Also review your financial guidelines for patient income (e.g., hardship cases). These are especially critical for maintaining cash flow.

§  You must have physician buy-in every step along the way. You can’t have one physician who is not on the same page as all the others. The communication between the physician and the patient in the exam room has to be consistent with this plan. It has to really be part of the culture of the practice for this to work.

§  Look carefully at accounts receivable. In many cases, I think you’ll see fewer patients but make the same level of money.


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