College of American Pathologists
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  Bringing the hospital into the equation






September 2007
Feature Story

Anne Paxton

How can pathology practices keep managed care companies from dictating their payment terms? Mick Raich describes how a basic scenario might play out and how it can be steered to pathologists' advantage.

"Say a large national plan comes in and announces: We're going to cut your reimbursement from 140 percent of Medicare to 60 percent of Medicare. The group calls back and says, 'No, we can't do it,' but the payer says 'Tough.' Typically a lot of groups will say okay. They don't like it, but they'll just take the pay cuts."

"Most hospital groups have a Part A contract with a typical managed care clause, saying the group must make efforts to sign with the plans the hospital participates in, and the payers know that," Raich points out.

What he does is bring the hospital into the equation. "I will sit with the CEO of the hospital and say: We're taking an X percent pay cut and it's going to cost us $40,000 a year. Now give us the leverage to negotiate that contract, which means we have to have the option to terminate that contract."

"The hospital can then say to the payer: That pay cut you're proposing is coming out of my pocket. So the bad guy here is more the managed care plan. The hospital has a fixed budget and can't get more money." While it doesn't work all the time, Raich says this strategy has helped to create the leverage a practice needs to negotiate.

Some pathology practices may have to take the leap and terminate contracts and become non-participating, as most emergency room physicians already do. "I think to be non-participating is a good thing from the revenue side, but not from the patient's point of view. It's a win-win scenario when you can renegotiate and get paid more."

Anne Paxton is a writer in Seattle.


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