Reimbursement cuts, payment delays threaten ED bottom lines
Seemingly arbitrary payer reductions are announced without warning
On May 1, 2006, Medical Mutual of Ohio (MMO), one of the state's largest insurers, instituted an immediate reimbursement rate cut of 50% for all physicians, including ED doctors. In the same year, TennCare, created in 1994 to replace Tennessee's original Medicaid program, disenrolled more than 100,000 people as a cost-saving measure.
These are just two of the higher-profile moves that have taken place recently that threaten the economic well-being of EDs and the ability of ED managers to attract and retain talented physicians. Insurance companies are exerting unusual influence in abruptly and arbitrarily reducing payments or delaying them, industry sources say. They are announcing that they won't pay for certain services, such as observation, X-rays, or EKGs, or they are bundling the charges with evaluation and management (E&M) services.
"I've heard numbers [for reimbursement cuts] ranging from 10%-20% to the 50% MMO announced," says Ron Stunz, MD, medical director of Healthcare Business Resources in Bala Cynwyd, PA, which provides ED management services to hospitals. "I have also seen, in my experience as a managing physician in a fee-for-service practice, periodic and recurrent delays in reimbursement that are inexplicable" based on any business consideration, he says.
While Medicare always pays for EKGs, many private payers will deny or bundle the charges, adds Dave Packo, MD, president of Emergency Medicine Physicians (EMP), a Canton, OH-based provider of emergency medical services that is fighting the MMO increases. Packo also is a practicing emergency physician.
Packo reports a new wrinkle he has just personally experienced. "We recently had a hospital that signed a new insurance contract for their employees, introducing HSAs [health savings accounts] of $3,500 for each person, but the payer said they wanted us to sign on to a 50% reduction in fee schedule," he says.
Packo says EMP is still trying to negotiate a better arrangement. "No doubt in the long run we will take a big hit if we want the contract," he concedes. "We've been told if we not do agree quickly, they will find another group that will."
The bottom line is that all EDs and physician groups are under a lot of pressure from the expense and revenue side, Packo says. "We have a lot of payers who are either cutting rates, bundling certain CPT codes, or denying particular payments like EKGs or after-hours care."
Implications are serious
Moves like these can have serious implications for ED managers, experts agree. TeamHealth, a Knoxville, TN-based provider of ED administrative and staffing services, serves more than 50 EDs in the state of Tennessee. TeamHealth is fighting the TennCare changes, notes Ron Matthews, senior vice president of operations and managed care. Reportedly, TeamHealth has taken action against MMO, according to sources. "TennCare has been very slow to react, and they plan to go live in April," Matthews says.
Because ED physicians in Tennessee will not be able to work for less than they are making now, the proposed changes will "exacerbate things in the ED," he says. If primary care providers cease participating in the TennCare program, the ED will be the only place many of these individuals in rural areas can visit to receive medical care. "They will be even busier, for fewer dollars," he says.
These kinds of developments clearly have implications for staffing, says Stunz. "How many hundreds of thousands of dollars in reimbursement have to be lost before it means the ED has lost its ability to hire physicians or PAs?" he asks.
Stunz adds, tongue very much in cheek: "I'm not aware of Ohio reducing its malpractice insurance [to compensate for the MMO cuts]." ED doctors and departments, he notes, face a number of fixed expenses. "EDs may have to cut redundancy of staffing to compensate," he predicts.
For the ED manager, the impact of all of these trends is interwoven, says Packo. "For example, some cuts may not impact directly on the hospital, but you could still have a group of unhappy physicians," he says.
Of course, there always is the option of terminating a contract, as EMP may have to do with MMO. "We're still negotiating, but this affects the ED manager because when you terminate a contract, they either need to make cuts in the practice or cut the hours they work, and this affects patient care," Packo explains. "You can't change even one thing in this process without it having an impact [on another area]."
Know appeals process
Before you reach a point as dramatic as terminating a contract, there are other steps that can be taken against onerous reimbursement cuts — although success is far from guaranteed, say observers.
What's important when you sign a contract with a carrier is that you really need to know how their appeals process works, says Stunz. "However, the reviewers may not be 100% objective," he says. There still is a "bounty hunter" mentality among reviewers in that they are compensated in some way based on what they find, Stunz notes. "However, while they are incentivized to 'find' something, what they find may not be in line with the industry-accepted coding policy," he says.
You do have a right to challenge, but the problem Packo finds is that the reviewers tend to be blinded to any opinion other than their own. The insurance companies may say they are using a nonbiased auditor, "but sometimes that auditor is on their payroll — or, the appeal is sent to their medical director, who invariably agrees with them," he says.
First of all, you need to know how the appeals process works, who does it, and what the mechanism is for dispute resolution, Stunz says. "In other words, if you are not happy with the outcome, what option is left to you?" he says. "Many ED managers just don't bother to get down to that level of granularity."
Catch things early
There are perhaps greater opportunities to prevent an onerous financial outcome by catching small problems before they become big ones, say the experts. Stunz says his general advice when first negotiating a contract "is to have someone with you at the table from the coding and billing side who has some experience with multiple payers and has some idea of what should and should not be in it."
Clearly, keeping a close eye on cash collections is important, Matthews advises. "With any payer where you see a specific trend, you need to go in and review claims," he says. "Do your own sampling."
How many charts should you review? Stunz says, "I wouldn't look at less than a couple of hundred charts if I felt there was an issue, but [when you don't necessarily suspect something] a sampling of 100 charts or less might unveil a potentially irregular increase."
Regularly compare your volume stats with your revenues, so you can spot sudden substantial discrepancies, Stunz suggests. "Except for regular seasonal changes [for example, there are traditionally delays in reimbursement in January and February] — assuming your volume is constant — if there is suddenly a drop in revenue, that's a potential red flag that there is a delay on the part of the payer," he says.
If you are concerned about reimbursement for procedures, "you should track payments yourself or have your billing company track procedural codes to make sure you are being separately reimbursed [for each procedure]," Stunz advises.
He also recommends that you check the Internet and emergency medicine listservs to learn about coding issues that already may have been adjudicated. One site he particularly recommends is [email protected], a list for hospital-based emergency medicine practitioners provided by the University of California at San Francisco medical center. (To subscribe, send an e-mail to: [email protected]. Put SUBSCRIBE EMED-L in the message line. For more information you can contact the list owner at: [email protected].)
On May 1, 2006, Medical Mutual of Ohio (MMO), one of theïYou have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content