OK you’ve done your upfront analysis and have identified a payor who is no longer economically feasible for the practice. The payor represents a small percent of your practice, doesn’t pay enough or requires too much time and energy to maintain. You’ve spoken with them and they are unwilling or unable to accede to your requests. You’ve made the decision to part company. What’s next?
As mentioned in the previous post one of the first things to do is to check the contract with the payor in question and find the section that deals with contract termination. Typically the requirements are that a written notification, stating you intentions to void the contact, be sent to the other party. Some contacts require that you delineate the reasons/rational for the cancellation, others don’t. A tip here is to keep the communication business-like and professional avoid the confrontational. Most often, these written communications must be received 30 to 60 days prior to the effective date. Another tip: 30 to 60 days after the termination date it’s a good idea to check and make sure the practice name has been removed from the in-network provider directory.
From a provider perspective, the key issue is to make the transition as smooth as possible for the organization and the patients affected by the change. You are going to lose some patients, that’s a given. The over-riding objective however is to minimize the number that do and leave them with a positive impression (you never know when they may be back again) A good way to start is to specifically identify those patients who will be affected by the change. Review the list for any names that may be important to the practice. For example, someone you know has frequently recommended the practice or someone with whom you have a strong, personal relationship. With these individuals it may be important to contact them personally to gauge their reaction and to take a personal interest in resolving their predicament. With the vast majority, you may consider notifying them by way of a survey telling them of the change and asking what their intentions may be. Whether you use a survey, place an ad or send a letter, it’s important to keep the communication positive. Avoid making any negative comments about the payor, even though they may be well deserved. Some states actually forbid the public discussion of “contract squabbles” and anyway it’s just bad form and bad business. Focus instead on helping the patients make the transition. Offer your assistance. For example, If you know of a practice that is currently using the specific payor being dropped, offer their name and contact information to those who decide to leave. It’s important that the patient hear the news from you not the insurance company so distribute the communication as soon as possible after you have sent the cancellation notice to the payor.
After you’ve taken care of the patient audience, the next group to address is the referral network. Once again a written notification is necessary. Again, no need to go into the reasons for the change. Keep the communication positive and upbeat. Simply them them of your decision.
There’s no way to really tell how many of the impacted patients will leave and how many will stay. However it’s always wise to hope for the best, but plan for the worst. It would be prudent to evaluate your operating expenditures in the short term, making cuts to offset the anticipated decline in revenue. It may also be a good idea to crank up your marketing efforts to attract new patients to off set the loss. Eventually those losses will be recouped and the practice will be ultimately end up in a better overall position.
In summary, when making a payor cancellation decision: do your homework upfront, give the payor an opportunity to respond, keep all communications positive, do your best to smooth the transition for those patients who decide to leave and do some financial contingency planning. Follow these rules and avoid the pitfalls that often plague this type of decision. Finally remember you may end up back with the payor at some date in the future so don’t burn any bridges.