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Medical Management Associates
Ask-A-Consultant: Managed Care Plan Participation
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Date: 09/12/2000
Q:
About a year ago, I completed my residency and established a general surgery
practice in what I thought was a growing market, about fifty miles from a major
metropolitan area. Thus far, I have contracted with Medicare, Medicaid and Blue
Cross/Blue Shield, but have purposely avoided contracting with any HMOs, PPOs
and other managed care plans over concerns regarding the low level of
reimbursement from those plans. Initially, my practice grew quickly, but
recently I have noticed that my surgical volume has reached a plateau. When I
asked my office manager about the situation, she told me our referrals have
actually increased, but she has to turn some patients away because I do not
participate on any of the plans. Several of the larger plans in the neighboring
city are now marketing in my community. Did I make the right decision about plan
participation?
A:
You should rethink your decision about plan participation and consider
submitting applications to some of the managed care plans in your area. In
general, we recommend that new practices sign up with as many plans as possible
initially, even if the level of reimbursement is less than desirable, under the
theory that physicians can always try to negotiate the fees or terminate their
relationships with the plans if they begin operating above capacity. You may
want to confer with several of your referring physicians to determine which
plans are the most important in their practices. At a minimum, you need to be
able to treat patients referred to you by your colleagues. In addition, you may
find that the managed care plan fees may be negotiable in your area. While
negotiating contract terms may be difficult or impossible in many urban markets
with high HMO/PPO penetration, this is often not the case in smaller markets.
You may find that you can negotiate the fee schedule to provide a relatively
small discount from your billed charges (or an equivalent multiple of the
Medicare fee schedule) while also improving the contract language. In this
regard, we usually recommend extending the term of the contract and limiting
the plan’s ability to terminate the agreement without cause. By doing so, you
may be able to obtain an attractive fee schedule while the plans in your area
are negotiable and then lock in that fee schedule for a number of years. On the
other hand, you want to avoid signing a contract in which a plan can arbitrarily
reduce your reimbursement as it gains more market share in your area.
Lawrence Geller
Director of Consulting Services
MMA does not provide
legal, accounting, or tax advice. If you need assistance in these
areas, we recommend that you consult a qualified professional. In
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