MIAMI — Pediatricians typically undervalue themselves with managed care organizations but need to negotiate and fight for all the money owed them, according to Dr. Richard Lander.
“Yes, you can make money today in the world of managed care,” Dr. Lander said. “In the real world, we the pediatricians are the fools because we undervalue ourselves every day. Don't forget that managed care organizations need us.”
As with ob.gyns., families first look for pediatricians in a network, which gives the physicians leverage with managed care companies. “They need us to take care of the patients in their network,” he said at a pediatric update sponsored by Miami Children's Hospital.
Pediatricians also save managed care organizations money, Dr. Lander said. “We provide evening and Saturday hours, and are available 24/7, so there are less ED visits.” Provision of in-office services also reduces emergency department utilization. “You are not referring every headache to neurology or every stomach pain patient to a GI.”
Therefore, you should get tough with a company that denies claims for in-office services, Dr. Lander said. “I once had a denial for nebulizer treatments in my office. They might expect the good pediatrician will still give nebulizer treatments and just eat the cost. Don't do it.” He added, “I called and said I would refer all my asthmatics to pediatric pulmonologists or to the ED.”
“Since you save them money, you want money. But you have to negotiate—it's a business like any other,” said Dr. Lander, who is a pediatrician in private practice in Livingston, N.J.
“I love the kids. But I realized a long time ago this is a business. I still have to pay staff and vaccine bills.” Vaccines account for only 2% of managed care organization budgets, but if that figure was increased to 2.5%, each pediatrician would make about a 25% profit above acquisition cost, he said.
“Across the country more and more pediatricians are no longer vaccinating children,” Dr. Lander said. “If the insurance company only pays us $19 and the vaccines cost $20 or more, it doesn't make sense.”
Prepare a spreadsheet with vaccine purchase costs and reimbursement without administration fees, Dr. Lander suggested. “Figure out what percentage above cost you are getting. I don't accept 5% above cost or 3% above cost. I'm comfortable with 12%, not happy, but comfortable for vaccines.” He added, “If they offer me 10%, I say no.”
In addition, do not permit managed care organizations to pay you less on vaccine costs because they pay better on vaccine administration fees, Dr. Lander said. “These are two separate areas.”
A meeting attendee asked for advice on what to say when an insurance company asks to see vaccine charges. “We get that request all the time,” he replied. “Just say no—it's none of their darn business. What if I have a great negotiated rate?”
Knowing your “walk-away point” is the most important element of negotiating a managed care contract, Dr. Lander said. “If 110% of Medicaid is your bottom cut-off, and they offer 109.5%, walk away. If 110% is your floor, what is your ceiling? No one knows. But don't start at your floor level.”
Securing one rate for all charges is another tip. “The managed care company might say they will give you 115% on your asthma counseling changes, which we don't do frequently, and 100% on more frequently used charges, and it's not fair.”
Consult your current contract for the Medicaid rate, Dr. Lander said. “We all have contracts that keep 'evergreening' year after year. There have been slight increases in the past several years. Make sure you are using the most current rates so you can maximize your profits.” In addition, do not sign a contract longer than 2 years, he advised.
To gain experience with negotiations, begin with some of your smaller payers, he suggested. “Even if you walk away, you won't lose as much.”
Sometimes the best negotiation comes after a termination letter, Dr. Lander said. “If you are smart, notify your patients ahead of time what is happening [and tell them] the plan is going to be dropped.” Instruct unhappy patients to contact their human resources department staff, who can then contact the insurer.
“Most of the time we pediatricians cave in,” he said. “The managed care organizations figure we are bluffing.”
But if you are not happy, “go out and get a better contract. Don't be afraid of managed care.”