Saturday, May 31, 2003

Handling slow MCO payers
With Michael Barish

Q. My company has a contract with a managed care payer that accounts for more than 25% of our business. As a result of a computer conversion and organizational changes at the carrier, payments have decreased significantly. The decrease in cash flow has made it difficult to meet operating expenses. The carrier readily admits its problems, but does not have any short-term solutions. What should my course of action be with this insurance carrier?

A. Before deciding on a course of action, determine the insurance carrier’s financial condition. If the carrier’s financials are strong you have options. The first option is to construct an A/R and payment analysis that demonstrates the cash flow interruption that your company has experienced.

Use this information to ask for a cash advance, but remember that an advance is just that. Eventually, the carrier is going to take the money back, usually through claim offset. Therefore, it is important to determine if your claims are still in their system. If not, the claims should be resubmitted for priority processing. If the carrier will not work with you, there is always the less favorable legal option.

Additionally, I recommend that you re-evaluate your contract to decide if you want to continue doing business with this carrier. If you did your homework before you signed the contract, you reviewed your cost of goods and overhead allocations. Now that you have been operating under the contract for a period of time you are able to better gauge your actual costs. If the numbers are not favorable, renegotiate, or, if necessary, terminate the contract.

— Michael Barish is president of Ancor Healthcare Consulting at 954-757-3121.