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How Poor Payer Reimbursements are Affecting Practices During the COVID-19 Pandemic

Most physicians who have been practicing for a few decades remember the days when private payer reimbursements dwarfed Medicare reimbursements. That dynamic has long since flipped, starting with the 2008 recession. Reimbursements have been flat or have lost value from inflation, while practice costs have seen double-digit increases. Meanwhile, hospitals and insurance-owned health networks have seen Medicare reimbursements increase to 300% or more in some cases. For private practices, it’s not uncommon to receive rates far below Medicare standards. Many practices have seen their volumes decrease from 30% to up to 90%, and a significant number are closing their doors for now. Here are three examples of how the COVID-19 Pandemic is affecting specialties across the nation:

Primary Care Practice

One solo physician primary care practice in southern Florida has been hit particularly hard by the pandemic as the physician owner took it on himself to create a separate ‘isolation’ intake entrance with safety gear and safety partitions. He went to these lengths so he could still see patients who might be COVID-19 positive without putting his other patients at risk. Every patient he sees that is prevented from going to the emergency room with a false positive saves the system, and the payers, tens of thousands of dollars. Despite this physician’s efforts to do right by patients, none of these measures are reimbursable. Everyone can see just how unfair and intolerable that is, yet he refuses to stop seeing sick patients. These are the heroes of the pandemic.

Podiatry Practice

One group in New Mexico was also frustrated with the ever-increasing practice costs and narrowing margins caused by years of stagnant reimbursement rates. The owners decided to merge practices with another group to find savings through efficiencies, consolidate costs and increase patient volume. As the pandemic hit, they saw their patient visits decrease by 65%. They’ve furloughed most of the staff and started the process of converting to a multi-specialty with Medicare and payers to try to capture more revenue from more lucrative procedures. They viewed COVID-19 as an opportunity to diversify their services to better weather future disruptions.

OB/GYN Practice

One gynecology and obstetrics practice in Chicago took another approach. There is no delaying visits and procedures for this specialty. Although they’ve had to make dozens of safety protocols and stretch resources and staff, they’ve kept their doors open. They’ve been able to absorb the increasing costs as they decided to negotiate their reimbursement rates with their payers. They were being reimbursed an average of 16% below Medicare before the COVID-19 pandemic and decided the current rates were not sustainable and could not support the practice during disruptions. The payers might argue that increasing rates isn’t realistic during the pandemic, but this is exactly the time for practices to use their leverage and hold the payers accountable.

Strategies for overcoming the loss in revenue

These three cases exemplify different strategies that practices are employing during this pandemic: 1. Soldier on and hope for the best 2. Consolidate and change the focus of the practice to try to find new revenue streams 3. Negotiate your rates and hold the payers accountable. Most practices fall into category one and don’t have the option of category two, as their resources are already at a breaking point. Every practice should be employing the third strategy. Negotiating with the payers to increase reimbursement rates is not only possible but may be the only viable solution to saving many practices in the long term. Why should practices carry the burden of the pandemic when the payers are doing little to battle the pandemic or help physicians carry the financial and systemic load? Practices can utilize their current time and resources to start negotiating their payer contracts or retain an experienced contract negotiator to hold the payers accountable. It’s the simplest way for almost every specialty to find more revenue when the shutdown eases in the months to come.

Cameron Wood Bio:

Cameron Wood is a physician advocate who works with small and mid-sized physician practices to negotiate their reimbursement rates at NGA Healthcare. Cameron is an expert at forging business relationships, marketing, and working with these groups to help discover their leverage against insurance payers.



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