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Prepare for Cooperation, Scrutiny, and Declining Reimbursements in 2010

Managed Care Contracting & Reimbursement Advisor, January 28, 2010

We asked several experts on reimbursement and contracting issues to offer predictions for 2010, and the response ranged from greater collaboration and cooperation to more audits and review. And not surprisingly, most expect reimbursements to drop.

Medical homes and accountable care organizations (ACO) will continue to emerge as viable models, and payers will be placing more emphasis on performance and quality, according to some of our experts.

But the biggest changes may still be unknown because they depend on the reform proposals that emerge from Washington, DC.

Scope, content of reform still uncertain

Mary J. Witt, vice president of The Camden Group in El Segundo, CA, doesn't expect dramatic immediate changes; however, developments in 2010 may set the stage for a larger transformation in the coming decade, as government and private payers seek methods of reimbursement that are not based on a payment-per-unit-of-service methodology, Witt says.

Fredrick T. Horton, president and CEO of Horton, Smith & Associates in Overland Park, KS, doesn't expect massive change right away, either.

With the exception of ancillaries and a "general overall holding of the line on reimbursement," Horton predicts only moderate short-term reform. "The healthcare debate is simply too volatile, and while it is necessary to have full-blown reform, the likelihood is that change will be incremental as opposed to cataclysmic," he says.

On the other hand, Max Reiboldt, CPA, president and CEO of The Coker Group in Atlanta, suggests that the government's increasing involvement in healthcare "will undoubtedly have the greatest single effect on compensation, reimbursement, and overall operations of the medical practice in the next few years."

Greater collaboration

"Providers can expect a new era of collaboration," says John P. Schmitt, PhD, senior managed care consultant at Atlanta-based EthosPartners. What has traditionally been an adversarial relationship with payers will become more like a partnership, Schmitt says, noting that payers are more willing to cooperate and collaborate than in past years.

In particular, Schmitt expects to see more data sharing and relationship flexibility. This shift may leave many healthcare organizations puzzled, he says. Long used to the stick, many may not trust the carrot.

However, you still must do your homework. Now is a good time to identify onerous or unclear contract clauses, ask for changes at the next renewal period, and sever relationships with payers who bring more headaches than revenues.

More scrutiny from payers

But it's not all good news. With Recovery Audit Contractor (RAC) programs kicking into gear, expect more scrutiny, says Maggie M. Mac, CMM, CPC, CPC-E/M, ICCE, consulting manager at Pershing Yoakley & Associates, PC, in Clearwater, FL.

"There will be an explosion of audits and reviews ... from government and private payers," Mac says. And based on her recent experience, she expects many of them to be incorrect, making it incumbent upon provider organizations to perform their own reviews.

There's some disagreement on the effect of RAC audits on private payers. Schmitt says the results of the audits will help set the direction of private payer audits.

But Bruce Hallowell, solution director for revenue cycle and finance at CSC in Falls Church, VA, says the issues RACs uncover will be ones private payers have been auditing for years. However, he expects private payers to continue to focus on pediatrics, rehab, and psych.

But regardless of whether private payers use the same checklist, they will be strongly influenced by the success of the RACs and similar efforts, Mac says.

Declining reimbursements

CMS will continue to examine reimbursements for outpatient ancillary services; sleep labs and gastroenterology procedures are particular focuses, says Brian McCartie, vice president of business development at St. Louis–based Cejka Search.

Overall, ancillary income will continue to decrease, says Horton. Payers will be increasingly reluctant to pay for anything other than direct patient care.

In fact, Hallowell, among others, expects to see reimbursement rates in general continue to fall.

Quality to matter even more

More questions will emerge about how to address P4P and other quality issues, particularly in regard to never events, Witt says. Currently, even when the hospital is not paid, the physician is. But that may change. There are already discussions about refusing to reimburse physicians for never events, Witt says, noting that there has been some discussion as to whether PQRI will continue to pay for quality data or whether providers will be penalized for not furnishing it.

Reiboldt offers a similar perspective. Quality and clinical outcomes will be of great importance. Providers will have to balance the need for each with the attendant economic challenges, he says.

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