January 20, 2009 Feature

Making a Move Away From Insurance Contracts

Dealing with health insurance contracts can cost private practices time and money. To reduce the costs associated with filing claims, pursuing payment, and appealing denials, ASHA members may want to consider opting out of private insurance contracts in favor of having patients deal directly with their own insurance carriers.

Whether an insurance contract-free practice is right for you depends on many factors, because the decision will affect the accounting system, staff training, patient education, and advertising. Making the necessary changes will work better for some practices than others.

Is Insurance-Free Right for Me?

To determine the ultimate value of opting out of insurance plans, first take a comprehensive look at the financial profile and revenue streams of your practice. Estimate time providers and support staff typically spend on dealing with insurers and claims, including time with patients on these issues. You will need to consider patients' response to the change and the potential for losing some patients. Other considerations include the initial cost of staff time and consultants, such as attorneys and accountants, to implement changes.

Setting up activity-based cost accounting will help you track staff time allocation and capture time spent on a variety of designated administrative and patient-service activities. If you choose to eliminate your insurance contracts, you will reduce the amount of administrative time spent handling insurers, their requirements, and direct billing. Instead, you will give invoices to patients, who are responsible for submitting their reimbursement claims to their health plan carriers. Patients fill out paperwork, pursue reimbursement, resolve claims issues, and appeal denials. To submit the claim, patients usually fill out a simple, one-page claim form and attach the provider's bill.

Potential Revenue Gains

Your practice can boost its financial welfare by ceasing to contract with insurance plans: recouped administrative time can be turned into revenue-producing time, such as patient appointments and marketing time; freed appointment time can be used to charge full-fee appointments rather than operating under insurers' discounted fees; time spent previously on administrative activities can be charged out; time and money spent on attorneys to review and handle insurers' contracts and related compliance issues will be saved.

Although administrative time for insurance matters can be substantially lowered, it cannot be completely eliminated with insured patients. However, you will likely be able to bill patients for time spent on previously nonreimbursable activities, such as helping patients to file, resubmit, or appeal denied claims. Other billable services include writing support letters for claims, making phone calls related to patients' claims, and completing insurance-related paperwork. It is important to inform patients up front of all potential charges, especially new ones, by posting the information at the reception desk and through other means.

Educate and Empower Patients

If you choose to opt out of contracting with and direct-billing insurance plans, your patients will need assistance to transition into the new process. Patient education and support are important; find creative approaches when you call and/or write to current patients to explain the new procedure prior to their next appointment. You and your staff have the opportunity to incorporate a philosophy of the patient as a self-advocate with insurers. Rather than being apologetic, staff should view this as a positive opportunity to empower patients. Emphasize the benefits patients will reap from your new business model.

When patients call for appointments and ask if the practice accepts insurance, staff should have a scripted, positive message. (For example, "We gladly accept patients insured with any company and will show you how to take control of your relationship with your health plan. Please come in 30 minutes before the appointment so we can get you started.")

A short slide presentation on dealing with insurers and claims may be helpful for patients. Staff can show patients how to fill out claim forms and how to appeal denied claims. This process requires little time expenditure and can be used for current and new patients. Seek assistance from free online articles and information about practice management.

Before making a final decision on contracts, you may want to seek professional input. Providers with current or recent insurance contracts should have an attorney review the contracts to identify anti-competition clauses, holdover terms that require compliance, or other problems that can arise if you directly bill existing or new patients. Some contractual relationships with insurers are not written or explicit, and can be invoked by simply making a reimbursement claim for services provided to a covered member or by other actions. An experienced health care contracts attorney can provide guidance.

This insurance contract-free approach requires some adjustment in your approach to patients, and may also require new marketing and advertising strategies to retain, change, or boost revenue streams. Whatever the cost of restructuring your practice's approach to insurance carriers, the potential benefits are immense as you refocus your energies on patients and reclaim your role as their health care provider, instead of their insurance representative.

Angela Foehl, JD, MPH, director of private health plans advocacy, can be reached at afoehl@asha.org. 

cite as: Foehl, A. (2009, January 20). Making a Move Away From Insurance Contracts. The ASHA Leader.

Financial Factors: What to Consider

  • General financial status of your practice and service utilization trendsin your locale
  • Amount and type of revenue streams, such as percentage of practice revenue from privately insured patients
  • Competitors' billing practices
  • Your and competitors' current, projected, and potential market shares
  • Market area demographics (e.g., patient demographics, wealth distribution, pool of potential patients, percentage of current patients with private insurance) 


  

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