The issue here is, you can't control who walks into your retail clinic. If someone comes in with a more severe problem and it can be evaluated and/or treated there within the provider's scope of practice, are you supposed to turn them away because they're "too severe"? I don't think that would be ethical or legal, and that's the position they're trying to put you in.
If they have written protocol regarding this issue, you may have your hands tied - particularly if it's stated in your contract. Even if it is the rule, though, they should be willing to make exceptions on a case-by-case basis. I would try appealing with medical records showing why a higher level visit is justified, acknowledging that it's not the norm for the typical patient encounters at that location, and emphasizing how much money you inevitably saved them by avoiding a trip to the ER over something that could be handled at a lower rate of reimbursement. Then I'd review my contract with this payer to see if it's worth it to renegotiate in the future. If you don't get anywhere, take this to the state board in charge of licensing your practitioner and to your state's insurance department. You may even be able to get assistance from a provider advocacy group - I know that many APN's and PA's have state-wide organizations that would be glad to assist you in a situation like this one. Good luck to you!
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