by Margie Satinsky
Satinsky Consulting LLC

Hostility toward managed care ranks way at the top of physicians’ frustrations with the current healthcare system. Many physicians who have been in practice for 15 years and more have set aside any appreciation they may have once had for the intended benefits of managed care, i.e. better, more accessible preventive care and coordination of care delivered at multiple sites. Along with their younger colleagues, they are angry. Like a good stew, the anger simmers, and when it boils over, its target can be health plans, patients, other clinicians, and office staff.

Managed care is a fact of life, like it or not. With a comprehensive analysis of your practice’s approach to managed care, a refocus of your efforts, and ongoing monitoring of the effectiveness of your strategies, you can turn a negative into a positive.

What’s So Bad About Managed Care?

It’s common for physicians and their office staffs to lump together in one large negative different kinds of problems related to managed care. The issues that trouble them the most tend to fall into three categories:

1. Financial Issues

Managed care financial issues fall into five buckets:

• Decreasing reimbursement: The cost of practicing medicine is rising. Technological advances and the intensity of labor contribute to increases in the cost of care, yet managed care plans rarely increase reimbursement to keep pace with medical inflation. As a result, physicians see their costs and the reimbursement for care moving in opposite directions.

• Inattention to specialty-specific issues: From a health plan perspective, an efficient way to reimburse physicians for care is to apply fixed reimbursement rates to specific procedures regardless of which specialist performs them. Plans prefer not to recognize important differences in treatment by different medical and surgical specialists. For example, chemotherapy drugs are essential in the treatment of cancer provided by medical oncologists. For other specialists, medication may be much less important than some other type of treatment. Managed care reimbursement that doesn’t recognize differences among practices make physicians angry – very angry.

• Discrepancies between contracted rates and actual reimbursement: The idiosyncrasy of healthcare has always been that payors don’t pay full price. Obviously, then, managed care plans aren’t going to pay 100% of charges. It goes without saying that the reimbursement rate is important. What about the difference between the contracted rate and actual reimbursement? Many practices don’t compare actual vs. expected reimbursement, and this omission may be costing them hundreds of thousands of dollars.

• Confusing contract terminology: Managed care contracts make heaving reading. They are long and detailed. Lacking familiarity with their general terms and expertise in the fine points, many practices unwittingly commit themselves to terms that they later find unacceptable.

• Frustrating negotiation processes: The contract process itself is tedious. A practice may assign the responsibility for managed care negotiations to its practice manager, managed care coordinator, managing partner physician, or some combination of all three. Regardless of who handles the negotiations, many practices fail to bring to the table information that will support their requests for higher reimbursements and/or revised contract language. They may forget the advantages of multi-year contracting.

 Another common problem is the authority – or lack thereof – that the health plan provider relations representative commands. Some plans believe that only a seasoned senior person should handle physician contract negotiations. Others assign the task of physician contracting to a junior and/or inexperienced staff member. The experience and authority level of the negotiator can make a huge difference in the outcome to physician practices.

2. Patient Care Issues

Patient care issues include denial of coverage, access issues, and authorization requirements. Information on all of these topics is provided to patients when they enroll in a plan through their employer or through a public program like Medicare or Medicaid. The information is also available to providers who are part of managed care networks. But with health plans merging, closing their doors, or changing their products, it’s hard to keep current to all the details.

Managed healthcare plans may deny coverage because a service falls outside the list of covered benefits, or because it is not “medically necessary”. Plans generally make a distinction between healthcare providers who are in or outside of their preferred networks. Finally, they may deny payment because the physician or patient failed to follow specific authorization requirements. Although explanatory information accompanies denials of payment, many practices don’t take the time to analyze the number, dollar amount, and causes for denial.

3. Office Operations

Negative attitudes, failure to comply with referral and authorization requirements, inconsistent knowledge among staff, and unclear responsibility for managed care are common problems arising in the office setting. Physicians and their office staff may lump all managed care into a single pot and label it “EVIL”! If they resent managed care, they are less likely to understand it and to work with the plans in ways that may benefit the practice and its patients. Negativity is very apparent to patients, and it is easy for the focus of care to shift from patient care to hostility toward managed care requirements.

The variety of referral requirements is mind-boggling. Practices with good information technology may develop methods for displaying the rules of the most common plans so that staff throughout the office can easily access them. Others don’t have the ability or the desire to organize plan-specific information in ways that allow for easy access.

Inconsistency of knowledge about managed care by physicians and office staff creates major problems. Staff turnover in physician practices is a reality of life. If information on managed care isn’t well organized and taught to new employees and physicians when they join a practice, the practice is bound to suffer.

Finally, and perhaps most importantly, responsibility for managed care within physician practices is not always clear. When managed care responsibilities are divided among many people and not well coordinated, the financial and patient care results will inevitably reflect this approach.

Strategies for Success

A three-part managed care strategy can remove practice hostility toward managed care and achieve positive financial, patient care, and operational results. By analyzing the components of your managed care approach, refocusing your efforts, and monitoring the effectiveness of your strategies, your practice can turn anger into good business sense that supports quality patient care.

The first step is to determine what is going on with respect to managed care in your practice. Using a checklist approach, take an inventory of the many managed care activities that go on within the practice. Are processes and responsibilities clear? Can you identify problem areas and develop solutions? Will you monitor those solutions on an ongoing basis?

Secondly, refocus your practice’s attitude toward managed care. Try treating managed care as a condition of doing business, not as a short-term trend that will eventually disappear. Review the inventory of activities that you have developed and make sure that processes are in place, and responsibilities are clear. Re-evaluate all your contracts, and renegotiate if necessary. Seek outside help as appropriate. If an outside consultant can guide you in improving your processes for contract review and for monitoring expected vs. actual reimbursement, get help. It will benefit you in the long run.

Finally, monitor your managed care activities on an ongoing basis so you know what works and what needs improvement.

For additional information on making managed care work in your office, contact Margie Satinsky, Satinsky Consulting LLC at 919-383-5998 or msatinsky@nc.rr.com.