Starting a Medical Practice: Understanding Medical Insurance Payers
Before we go into more details of revenue generation in a medical practice, let me introduce you to the payers. The term ‘payers’ is a professional slang used by us doctors referring to the medical insurance companies who pay on the behalf of patients. It is important for you to know these important players in the field. We are not always sure whose side these payers are on. Policy changes by major payers affect not only our revenues, but also the way we practice medicine.
Managed Care: It refers to this whole system of medicine, where insurance companies act as intermediary between patients and physicians. The system is supposed to cut medical costs. But has given rise to what I call is ‘Managed Mess’. The intermediaries have become middlemen who are using the system to make more money, physicians are getting short changed and patients are more restricted in terms of what medical services they can get. But the true miracle of ‘managed mess’ is that the medical costs still continue to rise.
Medicare: Government funded program for qualified citizens more than 65 years of age.
Medicaid: Government funded program for people who cannot afford their own medical care.
Health Maintenance Organization (HMO): Type of insurance plan in which patients are assigned a PCP or Primary Care Physician. All services including referrals are to go through the PCP. Here the PCP acts as a gatekeeper.
Preferred Provider Organization (PPO): Type of insurance plan in which patients are covered to a varying degree depending on if they stay within network or out of network. They are better covered ‘in network’ than ‘out of network’. The ‘In Network’ physicians charge the medical insurance companies a discounted rate, which is passed on to the patient. The patients have to pay higher copay or insurance if they go out of network.
Capitation: It is a payment system where physicians are paid fixed amount of money per month or per year. Physicians are then assigned a fixed number of patients. Then it is upto the physician how frequently he decides to see them.
You would also need to understand some other definitions related to medical insurance coverage before we go on about how to negotiate with these systems. You will find some relevant definition at page at healthsymphony .com
