One of trickiest issues that dermatologists face is negotiating with managed care companies. If you are the only dermatologist in a 50-mile radius or part of the Memorial Sloan-Kettering Cancer Center, negotiations are easier because you are really needed or really too big to ignore. Dermatologists who practice solo in areas where other dermatologists practice face a more daunting task. I have heard that New Jersey United/Oxford simply does not negotiate any variation on their street rate contract with private practitioners.
In this article, I want to describe the twists and turns that a dermatologist might face in negotiating a contract. I foreswear the use of real names; I will tell the story of a negotiation with a managed care company as a parable.
Cast of Characters
The characters in this parable are:
Doctor: a dermatologist board certified in dermatology and pediatric dermatology
The Health Care Company for the Common Man (HCCCM): HCCCM has
3 lines of policies commercial, Medicare and Medicaid
The United Doctors (UDIPA): an independent practice association (IPA) that the Doctor is a part of. It negotiates the rates for the voluntary staff of Man’s Greatest Hospital (MGH)
Icicle: the HCCCM manager for the street rate (ie, the rate that HCCCM offers to any provider from the HCCCM without negotiation)
Steel: the HCCCM manager for contracts
with UDIPA
Valiant: the interface between Steel and the member of UDIPA
The Back Story
The Doctor rates defined by UDIPA’s negotiated rates provided care for all the patients of HCCCM, Medicare, commercial and Medicaid. A decision was made by HCCCM to cut the rates for 2013 versus 2012 that it paid for members of UDIPA by 10%-50% for HCCCM, Medicare and commercial contacts and 80% for HCCCM Medicaid contracts.
There were whispers among the UDIPA members who said that perhaps all doctors should consider dropping all their contracts with HCCCM. After all, if HCCCM could drop its rates so drastically, other insurers might take this as a cue to cut their contract rates. It should be noted that few of the members provided care to Medicaid patients. The whispers came to nothing and most doctors just accepted the HCCCM rate cuts.
The Conversation
The Doctor was a rarity in the UDIPA as he saw Medicaid patients in the ambit of the UDIPA. While the coverage paid less than Medicare and commercial patients, he was a physician in the truest sense and wanted to provide care to the poorer patients. He decided to call Steel and see if his rates would not be subject to the 80% cut and got Steel’s e-mail and phone number from Valiant. The Doctor introduced himself to Steel with a telephone call. Steel stated that it was not up to her to vary the rates set by HCCCM. This was a decision of the management of HCCCM and while the Doctor might be a very fine doctor the rates HCCCM offered UDIPA were final.
The Doctor decided that the 80% cut was drastic. Because he was the only pediatric dermatologist in 100-mile radius to provide non-clinic based care to HCCCM Medicaid patients, he also decided that HCCCM needed him. Steel directed him to speak to Icicle. She was in charge of street rate contracts so perhaps she might be able to negotiate another contract.
The Cold Shoulder
The Doctor called Icicle and asked if he could negotiate a separate contract for HCCCM Medicaid patients. Icicle asked what he meant by that. The Doctor asked for his old “UDIPA Medicaid rates.”
Icicle explained, “I do not have access to your UDIPA contract. Therefore, you need to be specific as to the rates you are requesting for Medicaid patients.”
The Doctor asked what would happen if they could not come to some better rate schedule, and he wanted to get out of the Medicaid part of his UDIPA agreement.
Icicle noted, “You would notify your patients of your termination with the Medicaid line of business (LOB). Also, termination requires 90 days notice to the company.”
Then Icicle added that if the Doctor wanted to negotiate a different rate for HCCCM Medicaid patients than the Doctor would have to drop out of UDIPA.
Icicle negotiated contracts and said that a doctor had to accept all LOB (ie, commercial, Medicare and Medicaid). Specifically, Icicle explained that the Doctor “could not pick and choose to be part of the UDIPA for some Medicare and commercial contracts” and that to negotiate a rate for Medicaid, “I will move forward with bringing to HCCCM management the reimbursement rate of 100% of Medicare reviewed for the Medicaid line of business only.”
Then she went on to ask, “Did you review our fee schedule? This is the schedule that would be used for all other LOB; if you wish to go through the credentialing process for HCCCM. You cannot participate with UDIPA for commercial jobs and directly for HCCCM Medicaid. If you want to renegotiate rates that needs to be done for all LOB. You would need to make the decision to participate through UDIPA or HCCCM direct.”
The Doctor noted he was one of only 2 pediatric dermatologists who took HCCCM Medicaid in a 50-mile radius. Icicle explained that this did not matter, as management did not see a need for having another pediatric dermatologist because one pediatric dermatologist in a Medicaid clinic did take HCCCM Medicaid.
The Doctor decided to give HCCCM via the UDIPA a 90-day termination notice as was required by his contract, and he would abide by this contract as he tried to find other doctors to take over the care of his HCCCM Medicaid patients. Then a curious thing happened. HCCCM put the termination notice into effect immediately. The Doctor called Valiant and Valiant investigated. Several hours later Valiant responded, “This appears to be a systematic issue with HCCCM — apparently having a future term date in their system is making you show up as non-participating. Our rep is trying to fix this. Try the referral again either later today or tomorrow.”
Several days later the Doctor asked Icicle to deliver an offer to the management of HCCCM that the Doctor be paid 100% of Medicare for all patients. He did not get a reply. The Doctor spoke to Icicle a week later. “I did not proceed with reviewing for counter once I knew that we could not match UDIPA rates, especially since your main concern is Medicaid LOB. We cannot match anywhere near 100% of Medicare for the Medicaid LOB. A 3% increase over our current fee schedule is more in line with what I can get approved for you,” said Icicle.
As a result, the Doctor stopped seeing HCCCM Medicaid patients at the end of the 90 days of termination notice. He wondered what happened to the patients as few requests for old medical records where sent to his office.
Takeaway Message
Every parable has a moral and the moral of this story is that while there can be power in numbers, in the end insurance companies set the rates and do business as they see fit in under the aegis of the legal system. Some management experts recommend a practice should consider dropping its lowest paying provider each year, especially in those parts of the country where there is a 6-week wait to see a dermatologist. I would think that HCCCM did not cut the rates for MGH only for the voluntary attending physicians, but I do not know. Every rate schedule is a secret and this is only a parable.
The pressure to cut rates is great even for the Centers for Medicare & Medicaid Services (CMS) which provides the benchmark for rates. The issues of increased payments for services is one that CMS is facing as more practices are bought out by hospitals, and the hospitals split the bill with a facility fee and a professional fee. More doctors are working for hospitals to avail themselves of the hospitals higher rates (increasing the cost to CMS while changing no other part of the provision of service) and ability to deal with the complex issues of negotiations, accountable care organizations, electronic medical records, HIPAA and ICD-10. With millions of people about to enter the pool of the insured as the Affordable Care Act is implemented, physicians will face many more issues with negotiations — likely with complex and unlikely effects on the provision of dermatology care.
Dr. Scheinfeld graduated from Harvard Law School in 1989 and Yale Medical School in 1997.
Disclosure: Dr. Scheinfeld has no conflicts of interest with any material in this column.
One of trickiest issues that dermatologists face is negotiating with managed care companies. If you are the only dermatologist in a 50-mile radius or part of the Memorial Sloan-Kettering Cancer Center, negotiations are easier because you are really needed or really too big to ignore. Dermatologists who practice solo in areas where other dermatologists practice face a more daunting task. I have heard that New Jersey United/Oxford simply does not negotiate any variation on their street rate contract with private practitioners.
In this article, I want to describe the twists and turns that a dermatologist might face in negotiating a contract. I foreswear the use of real names; I will tell the story of a negotiation with a managed care company as a parable.
Cast of Characters
The characters in this parable are:
Doctor: a dermatologist board certified in dermatology and pediatric dermatology
The Health Care Company for the Common Man (HCCCM): HCCCM has
3 lines of policies commercial, Medicare and Medicaid
The United Doctors (UDIPA): an independent practice association (IPA) that the Doctor is a part of. It negotiates the rates for the voluntary staff of Man’s Greatest Hospital (MGH)
Icicle: the HCCCM manager for the street rate (ie, the rate that HCCCM offers to any provider from the HCCCM without negotiation)
Steel: the HCCCM manager for contracts
with UDIPA
Valiant: the interface between Steel and the member of UDIPA
The Back Story
The Doctor rates defined by UDIPA’s negotiated rates provided care for all the patients of HCCCM, Medicare, commercial and Medicaid. A decision was made by HCCCM to cut the rates for 2013 versus 2012 that it paid for members of UDIPA by 10%-50% for HCCCM, Medicare and commercial contacts and 80% for HCCCM Medicaid contracts.
There were whispers among the UDIPA members who said that perhaps all doctors should consider dropping all their contracts with HCCCM. After all, if HCCCM could drop its rates so drastically, other insurers might take this as a cue to cut their contract rates. It should be noted that few of the members provided care to Medicaid patients. The whispers came to nothing and most doctors just accepted the HCCCM rate cuts.
The Conversation
The Doctor was a rarity in the UDIPA as he saw Medicaid patients in the ambit of the UDIPA. While the coverage paid less than Medicare and commercial patients, he was a physician in the truest sense and wanted to provide care to the poorer patients. He decided to call Steel and see if his rates would not be subject to the 80% cut and got Steel’s e-mail and phone number from Valiant. The Doctor introduced himself to Steel with a telephone call. Steel stated that it was not up to her to vary the rates set by HCCCM. This was a decision of the management of HCCCM and while the Doctor might be a very fine doctor the rates HCCCM offered UDIPA were final.
The Doctor decided that the 80% cut was drastic. Because he was the only pediatric dermatologist in 100-mile radius to provide non-clinic based care to HCCCM Medicaid patients, he also decided that HCCCM needed him. Steel directed him to speak to Icicle. She was in charge of street rate contracts so perhaps she might be able to negotiate another contract.
The Cold Shoulder
The Doctor called Icicle and asked if he could negotiate a separate contract for HCCCM Medicaid patients. Icicle asked what he meant by that. The Doctor asked for his old “UDIPA Medicaid rates.”
Icicle explained, “I do not have access to your UDIPA contract. Therefore, you need to be specific as to the rates you are requesting for Medicaid patients.”
The Doctor asked what would happen if they could not come to some better rate schedule, and he wanted to get out of the Medicaid part of his UDIPA agreement.
Icicle noted, “You would notify your patients of your termination with the Medicaid line of business (LOB). Also, termination requires 90 days notice to the company.”
Then Icicle added that if the Doctor wanted to negotiate a different rate for HCCCM Medicaid patients than the Doctor would have to drop out of UDIPA.
Icicle negotiated contracts and said that a doctor had to accept all LOB (ie, commercial, Medicare and Medicaid). Specifically, Icicle explained that the Doctor “could not pick and choose to be part of the UDIPA for some Medicare and commercial contracts” and that to negotiate a rate for Medicaid, “I will move forward with bringing to HCCCM management the reimbursement rate of 100% of Medicare reviewed for the Medicaid line of business only.”
Then she went on to ask, “Did you review our fee schedule? This is the schedule that would be used for all other LOB; if you wish to go through the credentialing process for HCCCM. You cannot participate with UDIPA for commercial jobs and directly for HCCCM Medicaid. If you want to renegotiate rates that needs to be done for all LOB. You would need to make the decision to participate through UDIPA or HCCCM direct.”
The Doctor noted he was one of only 2 pediatric dermatologists who took HCCCM Medicaid in a 50-mile radius. Icicle explained that this did not matter, as management did not see a need for having another pediatric dermatologist because one pediatric dermatologist in a Medicaid clinic did take HCCCM Medicaid.
The Doctor decided to give HCCCM via the UDIPA a 90-day termination notice as was required by his contract, and he would abide by this contract as he tried to find other doctors to take over the care of his HCCCM Medicaid patients. Then a curious thing happened. HCCCM put the termination notice into effect immediately. The Doctor called Valiant and Valiant investigated. Several hours later Valiant responded, “This appears to be a systematic issue with HCCCM — apparently having a future term date in their system is making you show up as non-participating. Our rep is trying to fix this. Try the referral again either later today or tomorrow.”
Several days later the Doctor asked Icicle to deliver an offer to the management of HCCCM that the Doctor be paid 100% of Medicare for all patients. He did not get a reply. The Doctor spoke to Icicle a week later. “I did not proceed with reviewing for counter once I knew that we could not match UDIPA rates, especially since your main concern is Medicaid LOB. We cannot match anywhere near 100% of Medicare for the Medicaid LOB. A 3% increase over our current fee schedule is more in line with what I can get approved for you,” said Icicle.
As a result, the Doctor stopped seeing HCCCM Medicaid patients at the end of the 90 days of termination notice. He wondered what happened to the patients as few requests for old medical records where sent to his office.
Takeaway Message
Every parable has a moral and the moral of this story is that while there can be power in numbers, in the end insurance companies set the rates and do business as they see fit in under the aegis of the legal system. Some management experts recommend a practice should consider dropping its lowest paying provider each year, especially in those parts of the country where there is a 6-week wait to see a dermatologist. I would think that HCCCM did not cut the rates for MGH only for the voluntary attending physicians, but I do not know. Every rate schedule is a secret and this is only a parable.
The pressure to cut rates is great even for the Centers for Medicare & Medicaid Services (CMS) which provides the benchmark for rates. The issues of increased payments for services is one that CMS is facing as more practices are bought out by hospitals, and the hospitals split the bill with a facility fee and a professional fee. More doctors are working for hospitals to avail themselves of the hospitals higher rates (increasing the cost to CMS while changing no other part of the provision of service) and ability to deal with the complex issues of negotiations, accountable care organizations, electronic medical records, HIPAA and ICD-10. With millions of people about to enter the pool of the insured as the Affordable Care Act is implemented, physicians will face many more issues with negotiations — likely with complex and unlikely effects on the provision of dermatology care.
Dr. Scheinfeld graduated from Harvard Law School in 1989 and Yale Medical School in 1997.
Disclosure: Dr. Scheinfeld has no conflicts of interest with any material in this column.
One of trickiest issues that dermatologists face is negotiating with managed care companies. If you are the only dermatologist in a 50-mile radius or part of the Memorial Sloan-Kettering Cancer Center, negotiations are easier because you are really needed or really too big to ignore. Dermatologists who practice solo in areas where other dermatologists practice face a more daunting task. I have heard that New Jersey United/Oxford simply does not negotiate any variation on their street rate contract with private practitioners.
In this article, I want to describe the twists and turns that a dermatologist might face in negotiating a contract. I foreswear the use of real names; I will tell the story of a negotiation with a managed care company as a parable.
Cast of Characters
The characters in this parable are:
Doctor: a dermatologist board certified in dermatology and pediatric dermatology
The Health Care Company for the Common Man (HCCCM): HCCCM has
3 lines of policies commercial, Medicare and Medicaid
The United Doctors (UDIPA): an independent practice association (IPA) that the Doctor is a part of. It negotiates the rates for the voluntary staff of Man’s Greatest Hospital (MGH)
Icicle: the HCCCM manager for the street rate (ie, the rate that HCCCM offers to any provider from the HCCCM without negotiation)
Steel: the HCCCM manager for contracts
with UDIPA
Valiant: the interface between Steel and the member of UDIPA
The Back Story
The Doctor rates defined by UDIPA’s negotiated rates provided care for all the patients of HCCCM, Medicare, commercial and Medicaid. A decision was made by HCCCM to cut the rates for 2013 versus 2012 that it paid for members of UDIPA by 10%-50% for HCCCM, Medicare and commercial contacts and 80% for HCCCM Medicaid contracts.
There were whispers among the UDIPA members who said that perhaps all doctors should consider dropping all their contracts with HCCCM. After all, if HCCCM could drop its rates so drastically, other insurers might take this as a cue to cut their contract rates. It should be noted that few of the members provided care to Medicaid patients. The whispers came to nothing and most doctors just accepted the HCCCM rate cuts.
The Conversation
The Doctor was a rarity in the UDIPA as he saw Medicaid patients in the ambit of the UDIPA. While the coverage paid less than Medicare and commercial patients, he was a physician in the truest sense and wanted to provide care to the poorer patients. He decided to call Steel and see if his rates would not be subject to the 80% cut and got Steel’s e-mail and phone number from Valiant. The Doctor introduced himself to Steel with a telephone call. Steel stated that it was not up to her to vary the rates set by HCCCM. This was a decision of the management of HCCCM and while the Doctor might be a very fine doctor the rates HCCCM offered UDIPA were final.
The Doctor decided that the 80% cut was drastic. Because he was the only pediatric dermatologist in 100-mile radius to provide non-clinic based care to HCCCM Medicaid patients, he also decided that HCCCM needed him. Steel directed him to speak to Icicle. She was in charge of street rate contracts so perhaps she might be able to negotiate another contract.
The Cold Shoulder
The Doctor called Icicle and asked if he could negotiate a separate contract for HCCCM Medicaid patients. Icicle asked what he meant by that. The Doctor asked for his old “UDIPA Medicaid rates.”
Icicle explained, “I do not have access to your UDIPA contract. Therefore, you need to be specific as to the rates you are requesting for Medicaid patients.”
The Doctor asked what would happen if they could not come to some better rate schedule, and he wanted to get out of the Medicaid part of his UDIPA agreement.
Icicle noted, “You would notify your patients of your termination with the Medicaid line of business (LOB). Also, termination requires 90 days notice to the company.”
Then Icicle added that if the Doctor wanted to negotiate a different rate for HCCCM Medicaid patients than the Doctor would have to drop out of UDIPA.
Icicle negotiated contracts and said that a doctor had to accept all LOB (ie, commercial, Medicare and Medicaid). Specifically, Icicle explained that the Doctor “could not pick and choose to be part of the UDIPA for some Medicare and commercial contracts” and that to negotiate a rate for Medicaid, “I will move forward with bringing to HCCCM management the reimbursement rate of 100% of Medicare reviewed for the Medicaid line of business only.”
Then she went on to ask, “Did you review our fee schedule? This is the schedule that would be used for all other LOB; if you wish to go through the credentialing process for HCCCM. You cannot participate with UDIPA for commercial jobs and directly for HCCCM Medicaid. If you want to renegotiate rates that needs to be done for all LOB. You would need to make the decision to participate through UDIPA or HCCCM direct.”
The Doctor noted he was one of only 2 pediatric dermatologists who took HCCCM Medicaid in a 50-mile radius. Icicle explained that this did not matter, as management did not see a need for having another pediatric dermatologist because one pediatric dermatologist in a Medicaid clinic did take HCCCM Medicaid.
The Doctor decided to give HCCCM via the UDIPA a 90-day termination notice as was required by his contract, and he would abide by this contract as he tried to find other doctors to take over the care of his HCCCM Medicaid patients. Then a curious thing happened. HCCCM put the termination notice into effect immediately. The Doctor called Valiant and Valiant investigated. Several hours later Valiant responded, “This appears to be a systematic issue with HCCCM — apparently having a future term date in their system is making you show up as non-participating. Our rep is trying to fix this. Try the referral again either later today or tomorrow.”
Several days later the Doctor asked Icicle to deliver an offer to the management of HCCCM that the Doctor be paid 100% of Medicare for all patients. He did not get a reply. The Doctor spoke to Icicle a week later. “I did not proceed with reviewing for counter once I knew that we could not match UDIPA rates, especially since your main concern is Medicaid LOB. We cannot match anywhere near 100% of Medicare for the Medicaid LOB. A 3% increase over our current fee schedule is more in line with what I can get approved for you,” said Icicle.
As a result, the Doctor stopped seeing HCCCM Medicaid patients at the end of the 90 days of termination notice. He wondered what happened to the patients as few requests for old medical records where sent to his office.
Takeaway Message
Every parable has a moral and the moral of this story is that while there can be power in numbers, in the end insurance companies set the rates and do business as they see fit in under the aegis of the legal system. Some management experts recommend a practice should consider dropping its lowest paying provider each year, especially in those parts of the country where there is a 6-week wait to see a dermatologist. I would think that HCCCM did not cut the rates for MGH only for the voluntary attending physicians, but I do not know. Every rate schedule is a secret and this is only a parable.
The pressure to cut rates is great even for the Centers for Medicare & Medicaid Services (CMS) which provides the benchmark for rates. The issues of increased payments for services is one that CMS is facing as more practices are bought out by hospitals, and the hospitals split the bill with a facility fee and a professional fee. More doctors are working for hospitals to avail themselves of the hospitals higher rates (increasing the cost to CMS while changing no other part of the provision of service) and ability to deal with the complex issues of negotiations, accountable care organizations, electronic medical records, HIPAA and ICD-10. With millions of people about to enter the pool of the insured as the Affordable Care Act is implemented, physicians will face many more issues with negotiations — likely with complex and unlikely effects on the provision of dermatology care.
Dr. Scheinfeld graduated from Harvard Law School in 1989 and Yale Medical School in 1997.
Disclosure: Dr. Scheinfeld has no conflicts of interest with any material in this column.
