Should you terminate your physician provider managed care relationship?

A medical practice should determine whether it makes sense for the practice to continue its participation in the plan by answering the following questions; this should be done on an annual basis:

• Is the volume of patients higher than expected? If yes, evaluate the potential effects on other aspects of the practice. Determine if the practice’s payer mix is shifting dramatically to managed care.
• Is the volume of patients too small to warrant continued participation in the plan?
  Review the payor’s reimbursements and assess the level of fee discounts. Are such discounts acceptable to the practice?
• If applicable, is the withhold reasonable? If not, and the practice has not received any reimbursement of the withhold, take this into account when evaluating the fee discounts.
• Assess any administrative burdens placed on the practice by the plan. Do these burdens interrupt the efficiency of the practice?
• Is the plan adding competing physicians in the area of the practice’s medical specialty? If so, assess the potential impact on the practice’s future revenue.
• Evaluate the profit or loss on capitated contracts, if applicable.
• Evaluate how quickly the plan pays the claims submitted by the practice.

Now is also a good time to assess each major managed care payor of your physician practice and determine if it makes sense to either (1) Continue participation in the plan or (2) Renegotiate the contract. Now is also the time to develop a managed care strategy for your practice. As managed care grows in a particular area, exactly how does the practice intend to deal with it? Those that are prepared and proactive are usually the ones who are successful dealing with managed care.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.