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Practice Management Alert

Are You Sure You Want to Opt Out?

Published on Tue Dec 09, 2003

Count these little-known costs before you drop an insurance carrier

Cutting off ties with a particular insurance carrier can mean forfeiting long-term profits if you haven't done your research.
 
"Proceed with caution," says Joan Elfeld, CPC, president of Medical Practice Support Services Inc. in Denver. Disenrolling from a payer is "a huge homework assignment," she says, and you need to look into how it will affect every aspect of the care you give, the other providers you work with, and the facilities you use.

Look at the Numbers First

Before you sever your relationship with a carrier, you should do two things: 
 

  •  Analyze your patient base to determine how many patients you could lose if you opt out of their insurance. Even if the patient percentage is very low, remember that people change insurance companies all the time.
     
    Demographic research may lead you to think it's OK to opt out of a certain carrier because it is a payer for only a small percent of your patient base. However, "you never know when that's going to switch around, and then you're shutting yourself off from all those current and potential patients," Elfeld says. If one or two large employers in your area switch carriers, your practice could suddenly be out-of-network in a big way.

  •  Root out the source of the troubles you're having with a problem payer. If reimbursement is too low, you can try to renegotiate your contract or get some carve-outs so that the fee schedule is below your costs. It's a good idea to first do "a full cost analysis" of your practice so you clearly understand what each procedure and service is costing you, Elfeld says. This way you can go to your problem payer armed with the evidence that will convince it to renegotiate.

    If you think the payer is simply being too difficult, first direct your attention to your own office staff. All too often, Elfeld says, problems with a payer can be cleared up with better coding-and-billing staff training. Talking to a payer's provider relations representative can also help. 
     
    Even if a payer is difficult, Elfeld says, you should focus on training staff how to handle difficult insurance companies.
      
    One more hidden cost to think about: Depending on what type of practice you have, dropping an insurance carrier can limit referrals from physicians who have patients with that insurance. Steer clear of diminishing your relationship with your referring doctors.    

    If You Do Opt Out

    Your practice may weigh its options and decide that opting out is best. If so, make sure you inform your patients promptly. 
     
    "As soon as we knew we were going to do this, we let our current patients with that insurance know about it," says Jennifer Schmutz, CPC, with the Neurosurgical Association in Salt Lake City. "We still accept patients with non-par carriers, but we do let them know that they will be paying higher out-of-pocket fees."
     
    But what if you feel bad about the possibility of losing faithful, long-time patients? "If the physician office works with the patients on payment arrangements up-front, most of the time the patients will stay with them no matter what the situation is," says Kathy Philp, billing manager at Oklahoma Cardiovascular Associates in Oklahoma City. 
     
    However, make sure your physicians know that a patient is out-of-network before they send him for expensive tests and procedures he can't afford. 
     
    "You don't want to function as an out-of-network doctor when there are in-network benefits that a patient is going to need to have," Elfeld says.

    Here's the Perfect Compromise

    You may need to close your practice to new patients with an insurer that's been giving you trouble. Your current patients get to keep their benefits so you won't risk losing them. Meanwhile, you won't be increasing your dealings with that pesky problem payer. More and more practices have been taking this approach, Elfeld says. Of course, you'll first need to check on the terms of your contract because you might not be able to shut off new patients under your current agreement.

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