MGMA Report Highlights Disparity Between Contracted and Actual Reimbursement Rates for Physician Practices

ENGLEWOOD, Colo. -- The Medical Group Management Association (MGMA)’s first Payer Performance Survey Report provides information on several aspects of physician practices' contractual relationships with third-party health plan payers, including data about what health plans pay for certain physician services.

The MGMA report indicates a possible disparity in many practices between contracted rates and reimbursed rates. Conducted as a pilot project, the MGMA report is intended to increase the awareness of physicians, payers and the public of the prices actually paid for insured physician services, and of the performance of Colorado health insurers.

"Before this report, the data required to benchmark for contracting and negotiation has been hard to come by," said Daniel P. Stech, MBA, CMPE, director of the MGMA’s survey operations. "We view this report as a tool for medical group practices. We observed that a significant number of survey respondents were likely unable to identify their contracted rates, suggesting a lack of understanding for contracting effectiveness. The disparity between reimbursement values and contracted values should prompt practices to evaluate their contracts and audit payer performance."

The report:

-- Includes responses from Colorado-based primary care practices with obstetrics;

-- Assesses responding medical practices' satisfaction levels with various payer interactions including contracting, payment of claims, claims denial and credentialing; and

-- Highlights reimbursement levels for 10 commonly used evaluation and management (E&M) procedure codes for established and new patient office visits.

"Especially in primary care, the margin of profit on physician services has continued to erode over the years and is reaching an economic crisis point," said William F. Jessee, MD, FACMPE, president and CEO of the MGMA. "MGMA is responding to the heightened need for more information concerning elements that affect revenue and reimbursement. Therefore, it's critical that providers understand what influences their contracts and costs."

MGMA sought the guidance of the Federal Trade Commission's Bureau of Competition to ensure that data were collected and reported legally and within the requirements of federal antitrust laws. As an independent third-party, MGMA collected, analyzed and published the data in aggregate to avoid improper sharing of information about any particular practice or payer. The report is intended for use by physicians, practice administrators, contracting personnel, payers, employers, consultants and others.

"By communicating important reimbursement data to the public in a legally compliant manner, MGMA will promote more informed decision-making by physicians, insurers and other stakeholders in the health care marketplace," said Gerald Niederman, MGMA general counsel from Faegre & Benson, LLP. "Consistent with antitrust law requirements, the report is intended to encourage competition based upon price and quality variables, for the ultimate benefit of health care consumers in the relevant community."

Major findings of the report include:

-- Responding practices that know their contracted rates are reimbursed at higher levels than those practices that do not .

-- Responding Denver-area practices receive lower average reimbursement than practices in other areas of the state. On average, practices outside the Denver-metro area received 12.7 percent more reimbursement than their Denver-based counterparts.

-- Reimbursement levels for similar services are generally similar across the various specialties in responding practices.

-- Practice revenue may influence reimbursement levels. Practices that reported the lowest levels of net revenue also reported lower average reimbursement, and practices with the highest level of net revenue also reported lower average reimbursement rates.

Several factors seemed to influence overall satisfaction levels, including practice size, revenue and location. MGMA surveyed responding practices to rate their satisfaction with various elements of working with payers. On a scale of 1 to 4 (1 = poor, 2 = fair, 3 = good, 4 = excellent):

-- Overall satisfaction with payers from all respondents was 2.1

-- Denver metro-area medical practices were less satisfied than those in other areas, reporting scores of 1.92 and 2.19, respectively

-- Medical group practices are more satisfied if they've refused a contract at some point during the negotiation process

-- Responding practices were more satisfied if their total medical revenue exceeded $2 million

Payers received low marks for satisfaction in credentialing, contract negotiation, communication with payer representatives, explanation of contract terms, explanation of payment terms, explanation of denied payment terms and resolution of denied claims. Payers received higher satisfaction marks on prompt payment of claims.

The MGMA gathered responses from practices with the assistance of the Colorado Medical Society and the Colorado MGMA, a state affiliate. MGMA is evaluating the next steps in expanding the payer performance survey into other states and specialties.

The MGMA, founded in 1926, is the nation's principal voice for medical group practice. MGMA's 19,000 members manage and lead more than 11,500 organizations in which more than 237,000 physicians practice. MGMA's core purpose is to improve the effectiveness of medical group practices and the knowledge and skills of the individuals who manage and lead them.

Source: Medical Group Management Association

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