Urgent Care Center Reimbursement Rates
As payor contracts change, providers at urgent care centers (UCCs) are caught in the debate between the new flat-rate reimbursement option and the traditional fee-for-service (FFS) option. Flat-rate reimbursement includes one rate for all the services provided in a visit, while fee-for-service reimbursement is just that; providers will be reimbursed for each individual service that they perform. In order to pick the best option, providers should analyze all of the pros and cons of each method.
Tammy Mallow, Director of Contracting and Credentialing for DocuTap and Adam Rogers, Partner at DLA Piper compare some of the basics of the two urgent care center reimbursement rates.
|Predictable revenue||Risk shifted from payor to providers|
|Streamlined billing||Redirection to ER|
|Lucrative on low acuity||Loss on high acuity|
|Less days in accounts receivable||Ethical/moral concerns|
“On a flat-rate basis, providers can still project and maintain the margins to be profitable,” Rogers says. “The providers really have to know what they’re doing, though.”
Roger says that the success of flat-rate reimbursement depends heavily on the complexity of the cases that the providers are seeing.
“A provider gets the same amount reimbursed whether the visit took 10 minutes or an hour and 10 minutes,” Rogers says. “If a provider does not have consistency among its clinicians with respect to clinical protocols, they could end up losing money if the cost of treating a patient and running tests is high than the flat-rate being reimbursed, particularly if it accepts a flat-rate across the board without tiering based on case complexity or acuity.”
“The insurance companies are saying that they’ll only reimburse a certain amount for each visit, regardless of the level of acuity involved,” Rogers says.
On the upside, providers can benefit from receiving a flat-rate for all services. They can turn a larger profit from a flat-rate if they’re getting a lot of low acuity visits. However, high acuity visits are a concern for providers.
“One high acuity visit in a flat-rate world is going to be a lot,” Mallow says.
“There is definitely risk that is being shifted back to the provider from the insurer when going from an FFS to a flat-rate reimbursement model,” Rogers says.
Mallow advises providers to ‘take one for the team,’ and reminds them that one high acuity visit could equal numerous low acuity visits. In addition, the patient relations that come out of high acuity visits are well worth it.
“If you have flat-rate reimbursement, and you have a patient come in with a laceration repair, you’re going to lose money,” Mallow says. “But, if you keep them out of the emergency room and treat them at a low cost, they’re going to be much more inclined to come back and see you when they have the flu.” Mallow says that this can lead to referrals if the high acuity visit involved an employer, or a decision maker of a family or a company.
However, if providers are not receiving a high enough flat-rate to cover their costs and expenses, they may have to start redirecting high acuity visits to the emergency room.
“Urgent care centers exist to keep patients out of the emergency room, but then providers have to send them back there because they can’t afford to treat complex cases,” Mallow says. “It’s a vicious cycle.”
With flat-rate reimbursement, providers are also faced with ethical/moral dilemmas.
“If we’re not going to get paid for the procedures, why should we do them?” Mallow says. “This may encourage some providers to send cases to the emergency department, perpetuating that vicious cycle.”
|Paid for each individual service||Difficult to predict revenue|
|Allows for extra services||Lengthier claim processing|
|Risk shifted from providers to payors||Becoming more obsolete|
|More patients = more revenue||Ethical/moral concerns|
“In the FFS model, providers know that as long as they get patients in the door, they can make a profit,” Rogers says. “The more services you provide, the more revenue you generate.”
“In order to understand if FFS reimbursement is right for you, you have to understand the true cost of an FFS schedule,” Mallow says. “This includes proper coding, charges, billing, days in accounts receivable and the number of claims denied.”
FFS reimbursement might also be a better fit for UCCs looking to add additional services to their clinics.
“Many clients tell me that they want to be more than just urgent care, which is why flat rates are not a good choice for them,” Mallow says. “If you’re going to offer advanced imaging and physical therapy, you should get paid for it.”
However, more services charged equals more ethical/moral dilemmas.
“When you’re in an FFS reimbursement system, from a financial incentive standpoint, the only real incentive is to more, but more does not always equate with better,” Rogers says. “Overutilization is definitely more of a potential risk under an FFS reimbursement system as opposed to a flat-rate model, where there is a greater incentive to be cost-effective.”
Historically, FFS reimbursement has been the standard system for urgent care centers. Rogers says that FFS reimbursement may be the best way to go for newly-opened clinics or centers that are still maturing.
“Typically, FFS is easier to manage, and it’s what everyone is used to,” Rogers says. “As a center starts growing, has more processes in place and really understands its clinical operations, acuity mix and cost structure, operators will be in a better position to take on the risk of flat-rate reimbursement.”
With pros and cons for each system, providers have to really analyze their practice to determine what the best option is for them. If a clinic is in a location that has a lot of low-acuity visits, flat-rate reimbursement might be the way to go. In addition, chains of clinics may be able to get a higher flat-rate from a payor company if all of the centers convert from FFS to flat-rate imbursement.
Flat-rates also come in various tiers, depending on the level of services provided.
“Different tiers have different rates,” Mallow says. “As the levels of tiers rise, the complexity of the procedures and the flat-rate rises as well. Providers will receive a higher flat-rate from a level 3 tier than a level 1 or 2.”
Flat-rates can also include carve-outs.
“Carve-outs are rare, but they’re worth asking about,” Mallow says. “Carve-outs are defined as being paid extra for x-rays, certain procedures and/or injections on top of the flat rate. The carve-outs are priced at a percentage of Medicare, or could be another flat-rate.”
While carve-outs may make flat-rates more appealing, they may not yield the same profit as the services rendered on a fee-for-service reimbursement system. If a clinic wants to add on specialty services such as occupational medicine or physical therapy, individual services could cost more than a high-tiered flat-rate and a carve-out combined. Fee-for-service is also more straightforward, and alleviates some of the risks for providers.
Strong negotiation skills can help providers determine which urgent care center reimbursement rate is best for them.
“You have to understand negotiation tactics and use those whenever possible,” Mallow says.
“Once you negotiate rates, you have to keep in mind that you are a business that needs to stay profitable,” Rogers says. “If you accept flat-rate reimbursement, you have to make sure that you’ve negotiated rates on which you can make a profit and provide care efficiently. Providers that are not in a position to plan for that, or that are unable to sufficiently negotiate high flat-rates, would be better off with an FFS model.”
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