It’s a fact of medical practice management life that unilateral decisions by other organizations can show up out of the blue and negatively affect the practice business, such as when a payer changes reimbursement terms or stops paying for a code that was previously reimbursed. In situations like these, practices have no obvious short-term option but to accept the decree or perhaps vow (through gritted teeth) to drop the payer at the next opportunity.
These episodes can be understandably frustrating, even downright infuriating. Sometimes, though, the emotions triggered have the potential to turn a third party’s adverse decision into an even more harmful one you make yourself, if you’re not careful to take a breath and evaluate all the data you can get your hands on before responding.
A recent case in point: a client of ours found that Medicare had suddenly decided that a particular CPT code for administration of a biologic drug was inappropriate and could no longer be billed for that purpose; the substitute code pays only about 20% of the one the practice (and others across the country) had been using for several years. At the same time, a national health plan that is the practice’s top payer announced that it will continue to pay the higher-value code, but will only permit one use per patient per day. This is a problem for the practice because the medication in question often has to be administered twice during a single treatment, and each administration requires that the medication be individually mixed and prepped.
The practice has found this therapy to be increasingly important and beneficial to a growing proportion of its patients. More staff time has been allocated to it as demand for it has climbed steadily over the past few years. Because of this, these unhappy reimbursement surprises sparked a strong reaction from the physician owner and his practice manager. With respect to their national payer, they were all-but-ready to drop the plan entirely.”If we can’t bill twice when we administer two shots,” the manager was immediately certain, “we’ll lose money! We’re going to have to drop that payer.”
Luckily, the manager was willing to take a step back and do some analysis first. It turned out that, even with the coding change for Medicare and the limit of one reimbursable admin code for the national payer, the treatment still more than broke even for the practice. In fact, it was the first time the manager had actually looked in detail at the cost of the service and the revenue it brought in. When the practice had started offering the treatment, it was fairly new, and only a tiny part of their practice. Because they’d started with it so slowly, the practice had done little financial analysis of the treatment at first; since it grew so rapidly, the team made assumptions about the expense and revenue drivers of its profitability that hadn’t really been correct.
We also discussed the most fruitful ways to fight back. With physician and practice manager time scarce and very valuable, picking battles is essential. A single doctor and practice manager trying to fight a Medicare decision on their own, by phone with whomever they’d be able to reach at their contractor, were unlikely to have any success at all; they’d likely end up wasting time and feeling more aggravated than ever. But the practice’s goal is perfectly aligned with bigger players who share their concerns about reimbursement for this treatment: their specialty society and the product vendor. Instead of going it alone, the manager could work through these partners, who had much more potential influence with Medicare (and private payers as well). And, of course, the practice might even be able to secure new reimbursement terms for this service with its private payers in the coming year, if it proactively initiated negotiations with them during the contract renewal/renegotiation window (rather than trying to fight contracted terms mid-stream).
Anyone can see how a reduction of pay, unilaterally implemented without discussion or even advance warning, would prompt a highly emotional reaction. The feeling that third parties exert so much control over practice revenue and insert themselves so frequently between physicians and their patients only intensifies the frustration. But it’s always best to try to stay cool and evaluate as much hard data as you can before reacting. Otherwise, it’s all-too-possible that the emotion of the situation will lead to a decision that does even more harm to the practice business — and may even make it harder for patients to continue to use your services.
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