Payer Mix

[wolverine41]

Im interested in what people think is a "good payer mix". This is a term always tossed around but never really defined by percentages. Im sure this depends on specific speciality and location but generally, what do people think is a reasonable percentage of Medicare, Medicaid, BCBS, Commercial, etc

Obviously less medicaid and uninsured patients is ideal for re-imbursement, but for early practice docs, I think its hard to limit yourself from the start if you are building a private practice.

 

 

 

[Zaphod]

wolverine41 wrote:

Im interested in what people think is a “good payer mix”. This is a term always tossed around but never really defined by percentages. Im sure this depends on specific speciality and location but generally, what do people think is a reasonable percentage of Medicare, Medicaid, BCBS, Commercial, etc

Obviously less medicaid and uninsured patients is ideal for re-imbursement, but for early practice docs, I think its hard to limit yourself from the start if you are building a private practice.

 

 

 

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It seems that way, but probably is easier. You're slower, dont 'need' the money, teaches you to start and live small, etc...You'd have more time with the pts. It'd be much harder to start pruning people after several years, and likely harder emotionally to see any kind of volume drop as well, you'll feel that means you've made a mistake. Whereas if you start slow, you're just starting out no big deal, etc...and let it grow naturally, which it will.

I cut out a lot of stuff that I didnt think paid well almost immediately, and sure I could have made a few more dollars nominally, but I was building the practice I wanted and felt was a better return on time. For example a procedure I cut immediately pay at very best 1/3rd the price/h, had 8-10 months more follow, longer consults, higher revision rates, and more unhappy pts. Stopped consults for that in month 3. Was great, they all flowed to the other guy which took his consult/OR time and fed me the higher $/h cases, with happier pts and high referral rates, etc...I got busy over time anyway but was using my time in a wiser fashion.

I cant speak for payer mixes but the same idea applies, work for the practice you want, whatever that means in your field/pay type.

[ENT Doc]

As it pertains to private practice, it depends on what you're seeking.  If you're seeking experience, take and see whatever.  Plenty of stories about the little guy taking out the big guy because they were willing to take on business rejected by the big dogs.  Think Outliers (Jewish law firms chapter) by Malcolm Gladwell, or Netflix beating out Blockbuster.  In medicine this might equate to seeing Medicaid patients.  Where profitability can be obtained is in how you orchestrate care given the lower payments.  If you develop a more efficient process for managing those patients profitability may follow, and when you take on other patients from better payers that core competency will allow you to beat out the competition.

If you're seeking profitability and don't want to take on the short (and possibly long-term) risk of doing something like the above scenario, then a more diverse payer mix is superior to a concentrated one.  Porter's 5 forces - bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitutes, and industry competition - determine profitability in an industry.  The bigger your group, the more bargaining power you have.  The more concentrated the payer mix, the more bargaining power they have.  Each specialty and location will differ in this regard.  You can't change whether or not payers exist in a given market.  The only things under your control are whether you accept them or not, and what your negotiated rates are.  Since you'd prefer to not outright reject large swaths of patients in a concentrating payer market, the superior of these two levers is increasing your leverage with payers with size or profit-sharing agreements with hospitals (which in effect is the same thing as increasing size).

[wolverine41]

Thanks for reply - I find the two philosophies interesting to consider as my practice develops. Currently, I accept a few Medicaid products but not all. I think something like 10 % of my practice.

[The White Coat Investor]

wolverine41 wrote:

Im interested in what people think is a “good payer mix”. This is a term always tossed around but never really defined by percentages. Im sure this depends on specific speciality and location but generally, what do people think is a reasonable percentage of Medicare, Medicaid, BCBS, Commercial, etc

Obviously less medicaid and uninsured patients is ideal for re-imbursement, but for early practice docs, I think its hard to limit yourself from the start if you are building a private practice.

 

 

 

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In EM, you don't have much choice. You take what you can get. But if you're building a FSED, you build it on the nice side of town in hopes of decreasing the percentages of self-pay, Medicaid, Tricare, and Medicare and increasing the percentages of private insurance. A bad payor mix in EM might look like this:

50% self-pay, 30% Medicaid, 10% Medicare, 10% insurance

A good payor mix might look like this:

20% self-pay, 15% Medicaid, 15% Medicare, 50% insurance

If you have some control over your payor mix, you're faced with an ethical dilemma I don't envy. "No margin, no mission" vs "Why'd you go into medicine in the first place?" I guess I would encourage every doc to do at least some free work and at least some Medicaid/Medicare. But it's a free country and I certainly understand why people don't want to work for free.

[jz]

Consider that Medicaid payment varies hugely by state.  At the Illinois/Wisconsin border, we've observed  that IL Medicaid currently pays zero/nothing/nada. Wisconsin's BadgerCare (Medicaid) is regarded to pay well. In IL, the retired state employee and Medicare supplement insurance currently pays nothing.  IL has Potemkin-plans.  They have glossy brochures, lists of providers, colorful websites, "insurance" cards to carry;  but there are no payments.

[Rando]

jz wrote:

Consider that Medicaid payment varies hugely by state.  At the Illinois/Wisconsin border, we’ve observed  that IL Medicaid currently pays zero/nothing/nada. Wisconsin’s BadgerCare (Medicaid) is regarded to pay well. In IL, the retired state employee and Medicare supplement insurance currently pays nothing.

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I had the same thoughts - I'm on the Iowa/Illinois border.  Iowa Medicaid is reasonable to deal with but Illinois Medicaid was so bad I quit accepting it.  Felt kinda bad doing so but Illinois was paying me about 5-10% of charges if at all.

[ajm184]

Code rates for Medicaid in IL are among the worst in the nation.  Because of the state's bill backlog (I believe at like 8+ billion plus and counting), physicians who's patient mix is less than 50% Medicaid go in normal order (meaning years to get paid), whereas those with > 50% Medicaid patient base go to the front of the line for the crumbs (months).

We left the state over 3 years ago and my wife is still owed monies from the State for services provided to State Employees.  Must be a nightmare being a physician in Springfield (area with a high concentration of state workers).

[fiomi]

This is a great discussion. On a similar note, does anyone know how to look up payer mixes by city or state? For example how to find out in a particular region, what % of the population is Medicare, Medicaid, Private insurance, etc?

[abds]

An ideal payor mix and a realistic payor mix may be 2 very separate ideas. You should talk to your partners about what is realistic. It of course depends on your speciality too.

Work comp pays far and away the best in most states, but can be a hassle if your office isn’t efficient with it.

Most specialities and even PCP private practices in my area don’t accept Medicaid. You certainly could if you’re slow however you may find yourself in a situation of slowly trying to cut those patients out of your practice. Again, depending on speciality, that may be difficult (or not).

[Wiscoblue]

jz wrote:

Consider that Medicaid payment varies hugely by state.  At the Illinois/Wisconsin border, we’ve observed  that IL Medicaid currently pays zero/nothing/nada. Wisconsin’s BadgerCare (Medicaid) is regarded to pay well. In IL, the retired state employee and Medicare supplement insurance currently pays nothing.  IL has Potemkin-plans.  They have glossy brochures, lists of providers, colorful websites, “insurance” cards to carry;  but there are no payments.

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I’m on the wisco side of said border. We get people with Illinois Medicaid showing up for emergency services over here. My accounts receivable on Illinois Medicaid is over 12 months. Fortunately it’s not a huge number of patients, just the gangbangers that show up in the middle of the night for GSW and stabbing.

[Wiscoblue]

fiomi wrote:

This is a great discussion. On a similar note, does anyone know how to look up payer mixes by city or state? For example how to find out in a particular region, what % of the population is Medicare, Medicaid, Private insurance, etc?

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It can vary between two hospitals in the same city.