<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=339317286824015&amp;ev=PageView&amp;noscript=1">
ByNathaniel Arana

Not All Reimbursement Rates Are Created Equal

I remember the call distinctly. I had just written an article for a publication titled “How to Negotiate Reimbursement Rates.” Dr. Jordan, a New York dermatologist, called and asked to speak with the author. I replied it was me, and he said, “I really need your help. I can’t survive under these reimbursement rates.” I let Dr. Jordan know I could absolutely help him and would need a few items before getting started. I begin explaining the process, and he stopped me in the middle and, in a strongly worded statement, said, “I need to meet with you immediately. In person.”

Dr. Jordan insisted that I travel to New York so I could tour his offices. He felt it was necessary for me to see the practice if I was going to negotiate on his behalf.

I arrived in New York to meet Dr. Jordan at his offices in midtown Manhattan. Dr. Jordan had been running his practice for decades with several locations scattered throughout the Bronx. His focus was on helping the indigent and the poor by providing dermatology services in underserved areas. These people had nowhere else to seek services other than emergency rooms—not the most ideal place to treat dermatology needs.

I asked Dr. Jordan why he also maintained an office near Central Park when most of his offices and clients were in the Bronx. “Simple,” he said. “Most of the patients who live in the Bronx commute to this area for work. They work in the hotels, for wealthy residents, and other blue-collar jobs. You have to understand it is hard for them to take time off work. We opened this location so that it is easier for them to have follow-up appointments.” Dr. Jordan was not only a good doctor but also a savvy businessman.

After meeting with Dr. Jordan for some time, his practice administrator, Kristen, and I hopped in Dr. Jordan’s car with his driver to go tour the other offices in the Bronx. Having a driver was the only way Kristen could feasibly visit each of the offices in a single day. As we started heading north, the area quickly became a bit less dense and obviously a bit more impoverished. Kristen warned me to remain vigilant as we arrived at the first office. I had a brother who lived in New York and had been there several times. I knew to remain cautious as I would in any large city.

We arrived at the first office to a packed waiting room. There was a station with coffee and donuts near the entrance. “Dr. Jordan likes to provide breakfast for the patients as they often don’t have time to grab something to eat, especially in the morning,” Kristen explained. “The patients like it. Sometimes patients who don’t have an appointment still come to enjoy a cup of coffee.” It was a kind gesture, but Dr. Jordan knew that he was dealing with a population of people who lived different lives than most. It was about making sure that patients had every opportunity possible to make it to their appointment.

Kristen reviewed on-site inventory of common medications and biologics. Again, Dr. Jordan wanted to make patient compliance his number one goal. She met with the providers and reviewed patient satisfaction surveys and discussed other housekeeping items. We left the practice with the providers and staff feeling heard and supported from the central office and administration.

The driver picked us up, and we started the drive to the next location. It was a similar theme. Happy patients. Happy staff. A refuge in an otherwise rough part of town. Patients were seen as quickly as possible, and you could tell there was a high level of care—but most importantly, a high level of patient engagement.

As we were driving, I asked Kristen, “What makes Dr. Jordan different?” Kristen responded with, “He cares about the patient. Sure, he is running a business, but he really does care. There is nobody else here to serve these patients. He knows that. He has seen it all. Cellulitis that turns septic, untreated abscesses. Many of these conditions can be treated in the hospital, but what about the follow-up? The ER is not a place for these patients, but that is where many of them go for treatment.”

In addition to making same-day appointments available, Dr. Jordan ensured that all patients had several follow-up calls to his patients prior to their appointments. He wanted to ensure patients were having their usual scheduled skin checks—particularly those with a history of skin cancer. This was all automated, but if a patient still didn’t respond, office staff would start calling the patient and would send letters.

The practice locations were placed strategically throughout the Bronx so the entire area had coverage. He educated his patients on the importance of using the emergency department only for emergent reasons. Dr. Jordan even forged relationships with the local hospital so that routine dermatology needs could be triaged and sent directly to Dr. Jordan without ever admitting the patient to the emergency room. He kept slots open at all of his offices precisely for these patients.

Dr. Jordan understood these patients and how to effectively provide care. His providers collectively spoke over ten languages so that they could treat these patients in their own language and in a culturally sensitive manner. He knew over 60% of Bronx residents spoke a primary language other than English. Dr. Jordan personally trained every provider that started at his practice. He wanted to ensure that they met his high standards and expectations.

I left New York and returned home only to be followed by a box of EOBs sent by Dr. Jordan. He had no idea where his insurance payer contracts were, so I needed to manually review each EOB and understand how the group was being reimbursed. I spent an afternoon going through the stack of EOBs and was shocked at how poorly the group was reimbursed. Some plans were paying 50% of Medicare. Others barely over 60%. Just about all the payers were falling in this range. To most, you would assume that operating in New York means you get better reimbursement. Not so. The reality is that the payers are happy to pay local hospital systems multiples of Medicare, but do so at the expense of small and medium-sized groups such as Dr. Jordan’s.  Most practices can’t survive for long with reimbursement rates this low, and it was a wonder that Dr. Jordan had been able to offer the level of care he had at those rates.

I knew I had an important negotiation ahead of me. It was a typical scenario. The physician was doing everything right, doing everything they could to help the patient, but the insurance company simply did not care. It did not matter that Dr. Jordan was going the extra mile. We knew we had to represent the group with gusto and help get his rates to more acceptable levels.

What ensued was 18 grueling months of negotiating Dr. Jordan’s contracts. It was astonishing how difficult these negotiations were and the resistance from these New York health plans. It affirmed my opinions further that insurance companies do not care about the physician. They care about their hospital relationships, employer relationships, and of course their bottom lines and stock prices.

With few regulations and very little enforcement of current regulations in place, insurance companies will continue to dismantle these small private practices. One of the few saving graces is negotiating reimbursement rates to ensure continued viability. Without doing so, Dr. Jordan would have to sell or close his practice and work for a corporation. A corporation is not going to allow Dr. Jordan to employ the things he knew were helping patients because they technically did not contribute financially.

At the end of the negotiation, we were able to increase Dr. Jordan’s rates by 10% to 30% depending on the insurance payer. This meant hundreds of thousands of dollars per year and allowed Dr. Jordan to continue his practice and continue helping patients. Other practices are not so lucky and have closed. This is not the type of healthcare we want to have as patients or citizens. Unfortunately, we will need to work under the current parameters unless things change—but such change is unlikely given the stronghold insurance companies have on our healthcare. Dr. Jordan stood up to the insurance companies and made it work. Our only hope is that the other Dr. Jordan’s of the country are doing the same.

About the Author

Nathaniel Arana

Nathaniel Arana is nationally recognized healthcare business consultant with experience ranging across many different specialties. He is a physician advocate and has helped practices become more profitable by allowing his clients to focus on patient care.