Reimbursement Page
Deal…Or No Deal?
By Joe McTernan, AOPA Government Affairs Department
“Deal…or no deal?” is not just a question heard on the latest instant-millionaire game show. O&P business owners have to answer the same question when considering contractual arrangements.
While there are no flashy show hosts or gleaming silver cases full of money, deciding whether to make a deal with insurance companies and managed care organizations will significantly affect the future of your business. No owner should make it without a full understanding of the potential consequences.
This month’s “Reimbursement Page” offers some questions you should ask yourself in order to make the best business decision for your practice. It does not, however, provide advice on when you should consider offering discounts for your services, nor does it discuss how much is too much.
Are discounts legal?
O&P practitioners ask AOPA’s reimbursement staff this
question on a regular basis. The short answer is yes—under
certain circumstances.
Federal anti-kickback legislation, first passed in 1972, made it illegal to “knowingly and willfully receive or pay anything of value to influence the referral of federal health care program business.” But as managed care became more prevalent in the United States, several “safe harbors” were created. One of the safe harbors, initially published as an interim rule in 1992 and finalized in 1996, allows providers to offer discounts to managed care organizations in exchange for access to their patient population.
In today’s health care environment, insurance companies and managed care organizations are constantly trying to minimize their costs. One way that they achieve these goals is to negotiate contracts with providers at discounted rates in exchange for access to the insurer’s patient population. The insurer gets the benefit of reduced cost and the provider gets the benefit of the ability to provide services to patients enrolled in the insurer’s health plan.
The fact that negotiated discounts with managed care organizations are legal does not mean that they are in the best interest of your business. You should consider several questions before deciding whether to offer a discount.
Three key questions
2. What’s your competition like? If you are surrounded by competitors vying for the same access, try to streamline your operating costs so you can present an attractive proposal to the payer. Conversely, if you are one of only a handful of O&P providers in the area, you have a negotiating advantage. Keep in mind that a cardinal sin in any negotiation is voluntarily giving up more than you need to in order to reach a successful outcome.
3. How long it will take you to break even? Most discount contracts trade reimbursement for access to patients. The break-even point occurs when the increase in business negates the loss in reimbursement caused by the discount. While it is impossible to pinpoint the exact break-even moment for any given contract, estimating that point should assist you in negotiating. You may be able to negotiate a slightly larger discount with a payer that has a large pool of enrolled beneficiaries on the assumption that the increase in business will make up for the lower per-service reimbursement.
Remember, there are strategies you can use to negotiate a contract that will get you closer to the break-even point. For instance, you might negotiate for certain special services to be reimbursed at a higher rate. Or, you might propose a different discount rate for orthotics versus prosthetics based on your analysis of your business.
If you present these options professionally and persuasively, you may wind up with an easier decision to make.
Make decisions for right reasons
A very popular statement in contract negotiations is, “If you are unwilling to accept these terms, [your competitor] will surely consider them.”
Your competitors may consider the terms and may even accept them, but decisions made by your competitors should not influence your decision. Your competitors probably operate very differently from you. Your decision to negotiate or not negotiate should be based on your practice’s individual needs.
Payers need to make decisions for the right reasons, too. If you believe that payers are basing their decision solely on financial criteria, take the time to explain to them how their patients will receive the best O&P care available. Tell the payer all of the steps that must happen before you must place a device on a patient. Or add in service options for patients, such as having someone on call on weekends, and ask that the reimbursement be increased. Ultimately, they need to understand that good care will lower their costs.
| Need Some Help? |
If making decisions about discounts seems overwhelming, don’t worry.
AOPA has a number of resources that should answer your questions.
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Get others’ opinions
Finally, it is always a good idea to involve people who understand your business in the decision-making process. Anti-trust laws prevent you from discussing your negotiations with your competitors. However, the people that know the most about your business are your employees. Employees who may not have a vested interest in your business may be able to provide you with a valuable point of view when it comes to negotiating contracts.
If you retain the services of an accountant or an attorney, you may also want to seek their counsel before making any final contracting decisions.
Be prepared
The key to successful contract negotiations is preparation. To get what you want, you should enter any negotiation with a thorough understanding of what you can afford. Through proper preparation, you can confidently answer the question: Deal…or no deal?
Joe McTernan is assistant director of reimbursement services for the American Orthotic & Prosthetic Association (AOPA). Questions? Call (571) 431-0811 or visit www.AOPAnet.org.
