Firing a Payer

In practice, most denials trace back to a handful of causes, including eligibility issues, missing prior authorization, and coding errors. If you're seeing a high denial rate from a particular payer, it may be a sign that it's time to reevaluate the contract. For example, if you're consistently receiving CO-50 denials, which indicate that a service is not medically necessary, it may be a sign that the payer is not willing to work with you to find a solution. On the other hand, if you're seeing a lot of CO-45 denials, which are contractual adjustments, it may be a sign that the payer's fee schedule is not aligned with your practice's costs.

A specific scenario that illustrates this is when a practice is consistently receiving denials for a particular procedure, such as 90832, which is a common code for individual psychotherapy sessions. If the payer is denying these claims at a high rate, it may be a sign that the payer is not willing to reimburse for this type of service, and it may be time to consider dropping the contract. Another example is when a practice is seeing a high number of CO-97 denials, which indicate that a service is bundled into another service. This can be a sign that the payer is not willing to reimburse for separate services, and it may be time to consider unbundling these services or seeking an appeal.

In addition to denial rates, another factor to consider when deciding whether to fire a payer is the reimbursement rate. If a payer is consistently reimbursing at a low rate, it may not be worth the time and effort to continue working with them. For example, if a payer is reimbursing at a rate of $50 per session, but the practice's costs are $100 per session, it may not be worth continuing to work with that payer.

When deciding to fire a payer, it's essential to follow a step-by-step process to ensure a smooth transition and minimize disruption to your practice. The first step is to review your contract with the payer and understand the terms of termination. This may include providing written notice, typically 30 or 60 days, and fulfilling any outstanding obligations, such as submitting claims or responding to denials. Next, you'll need to notify your staff and patients of the change and ensure that they understand the implications. This may involve updating your billing system and notifying patients of any changes to their coverage.

Another crucial step is to ensure that you have a plan in place for transitioning patients to a new payer, if necessary. This may involve researching alternative payers and negotiating new contracts. It's also essential to consider the potential impact on your practice's revenue and to have a plan in place for managing any disruption. For example, you may need to adjust your billing schedule or seek temporary financing to cover any gaps in reimbursement. A real-world example of this is when a practice switched from one payer to another and had to adjust their billing schedule to accommodate the new payer's reimbursement cycle. The practice had to ensure that they had enough cash flow to cover the gap in reimbursement, which was approximately 30 days.

In addition to these steps, it's also essential to consider the potential impact on your practice's relationships with other payers. If you're terminating a contract with one payer, it may affect your relationships with other payers, and you'll need to be prepared to address any concerns they may have. For example, if you're terminating a contract with a large payer, it may affect your ability to negotiate contracts with other payers in the future.

Managing the transition and minimizing disruption to your practice requires careful planning and execution. One key step is to ensure that you have a comprehensive plan in place for transitioning patients to a new payer, if necessary. This may involve researching alternative payers, negotiating new contracts, and updating your billing system. It's also essential to communicate clearly with your staff and patients about the change and to ensure that they understand the implications.

Another crucial step is to monitor your practice's revenue and cash flow closely during the transition period. This may involve adjusting your billing schedule or seeking temporary financing to cover any gaps in reimbursement. It's also essential to have a plan in place for managing any denials or appeals that may arise during the transition period. For example, if you're receiving a high number of CO-16 denials, which indicate that a claim lacks information, you'll need to have a plan in place for responding to these denials and ensuring that the necessary information is provided.

A real-world example of this is when a practice transitioned from one payer to another and had to manage a high volume of denials. The practice had to develop a plan for responding to these denials and ensuring that the necessary information was provided to the payer. The practice was able to reduce the number of denials by 25% by implementing a new process for verifying patient information and ensuring that all necessary documentation was included with the claim.