Embracing Flat Rates

For an urgent care operator, shifting reimbursement models and financial management can be a nightmare. As the industry shifts further and further from fee-for-service to flat rates, urgent care clinics must have the tough conversations about the challenges associated with this kind of change.

While contracting for a flat rate isn’t a revenue magic bullet, it provides predictable revenue, it streamlines billing, and it’s lucrative for low acuity patient visits. Keeping those advantages in mind, the downsides of a flat rate must be noted, too – taking a loss on higher acuity cases, possibly discouraging in-house testing, and potentially encouraging some providers to send more cases to the emergency room.

When deciding whether contracting for a flat rate is worth it, first look at the market and the average reimbursement when negotiating an agreement. That average becomes the threshold. From there, factor in time – the average days to bill and the time in accounts receivable. Also factor in the cost of billing. With a flat rate you bill with one code, so theoretically you can afford to accept a lesser rate because you’ll be paid more quickly and your billing expenses are less.

Here’s how you can then maximize that flat rate: market your low acuity cases and stay true to urgent care services. Don’t be distracted by offering additional services like physical therapy or advanced imaging. When insurance companies finally caught on to what urgent care medicine is, they set parameters for services. This is how payors determine the fee they’re going to pay urgent care clinics.

You can also maximize the flat rate by seeing higher acuity patients. While you might initially lose money on a patient with a broken ankle, you will likely make up for it when that same patient comes back for an earache – delivering repeat business.

Since the dawn of urgent care medicine, we as an industry set out to reduce emergency rooms visits and overall healthcare costs. However, a number of reports have shown that hasn’t happened. In fact, urgent care clinics tend to draw more from primary care providers and pediatric clinics.

If we use flat rates as a reason to send higher acuity patients to the ER, we’re simply feeding into that vicious cycle and potentially damaging our opportunity to demonstrate to insurance companies that urgent care clinics are making a difference in the greater healthcare ecosystem. Hopefully, at some point, urgent care clinics will be recognized for taking on those higher acuity cases and be reimbursed at a higher rate.

Understanding the value of flat rates is critical to an urgent care clinic’s success. Ward off the financial frustration and the ensuing headaches by embracing flat rates. Understand the minimum thresholds, the potential uptick in patient volume, the possible referrals from higher acuity patient visits, and the cost of doing business. Flat rates aren’t going away, so it’s time to wake up and find a path to profitability through flat rates.

Tammy Mallow is DocuTAP’s Director of Contracting & Credentialing.

About Tammy Mallow

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