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Evaluating Third Party Performance Is it Time to Fire the Payor?

By Judy Capko

Physicians and practice managers are frustrated with managed care and dealing with insurance payers. They feel the results of increased paper work, reduced reimbursement, increased demands and a slow down in payment patterns. 

Maybe its time to identify and cancel (or renegotiate) those managed care contracts that are more trouble than they are worth.

This strategy has merit, but requires analysis to identify which payers play havoc with your practice, and if it makes sense to eliminate them.  Here is what you can do.

Examine the hassle factor
The office manager and insurance biller will need to rate the insurance plans on these four hassle factors. Rate each payer, giving them one point for each yes they receive on the above hassle factors.  A zero rating represents a premier payer in terms of the hassle factor.

• Require repeated requests for referral or authorization.  Look for the payers (that physicians and staff struggle with or require excessive staff time.
• Slow down in claims processing.  Payers that repeatedly reject claims or ask for information that should not be necessary to process the claim.
• Patients complain about their insurance company. This can be a sign of trouble.  The payer may be cutting staff, because they cannot meet their bottom line and maintain viability.
• Provider Relations support is sub-standard.  If the staff is frustrated with the lack of support, they receive from a payer.

Review payer performance reports
Review the outstanding claims and your aged accounts receivable reports for several months running to identify the payers that are delaying payment and taking up your staff’s time fighting for money that is due you.         

Assess reimbursement rates
Based on the top ten CPT codes utilized in your practice, develop a spreadsheet on payer performance. See Figure 1.  This will compare payer’s payments and identify your poorer paying contracts.

If troublesome payers are identified, measure the impact base on:

• Volume of business the payer represents
• Impact on existing and potential patients
• Loss of revenue and long term economic effect
• Political issues that may exist within the community

The final analysis
When all things are considered, it may be time to test the waters by dropping the worst payer first to determine the impact.

Review the existing contract and follow the terms required for termination. It will be important to continue providing care for patients under treatment and decide how to inform the remaining patients on the plan. 

Monitoring payer performance is good business and a way to make prudent, data-driven decisions.   It is your future and you still have choices!

Figure 1.
Reimbursement per CPT code
	New Patient Visits			Established Patient Visits				Office Consultants
CPT Codes	99203	99204	99205	99212	99213	99214	99215	99243	99244	99245	*Hassle Factor
Ins. Co. 1
Ins. Co. 2
Ins. Co. 3
Ins. Co. 4
Ins. Co. 5
Ins. Co. 6
Ins. Co. 7
Ins. Co. 8
Ins. Co. 9
*Hassle factor ratings should be one point for each indicator for a maximum of 4 points. The more points, the worse the performance.  Zero is the best rating. Hassle factor indicators: Require repeated requests for referral or authorization. Slow down in claims processing Patients complain about their insurance company Provider relations support is sub-standard

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Judy Capko is a healthcare consultant with more than 20 years experience.  Her focus is practice operations, staffing, finance and marketing.  Judy is a national lecturer and has participated in ACOFP conferences.  She is based in Thousand Oaks, CA and can be reached at (805) 499-9203 or e mail: judycapko@aol.com