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  • Writer's pictureMuhammad Sair Khan

Payor Contracts-the pros and cons of going in-network

Reimbursement rates for all medical services, especially behavioral health services, have changed over the last few years. In the past, many treatment facilities remained out-of-network, avoiding payor contracts that resulted in low reimbursement rates.

But now behavioral health reimbursement rates have fallen across the board, even for out-of-network providers. Additionally, as claims are more closely scrutinized, many facilities are missing out on reimbursement because of incorrectly denied claims or ‘insufficient’ medical records. Download a Medical Record Submission Kit As a result and in order to ensure steady, consistent payment, many facilities are negotiating payor contracts with insurance companies. Even if the reimbursement rate for in-network services is lower, they are becoming a more dependable option.

Going in-network may not be the right choice for every facility with every payor. Learning more about payor contracts can help you decide the best route for your treatment center and your bottom line.

The Pros of Going In-Network

Though reimbursement may be lower, going in-network can have other benefits that increase your revenue.

Increased Number of Patients

Patients are more likely to use in-network services to save them money. Primary care physicians who are mindful of their patients’ resources are also more likely to refer them to an in-network provider for specialty services. Being in-network could give you access to a wider pool of patients, particularly if a certain payor is popular in your area. Even if you get paid less per service, the increased number of patients who use your services could lead to higher revenue.

Flexible, Negotiable Contracts

When you apply to become an in-network provider, you have the power to negotiate your rates and what services are covered. With proper insight to your practice or facility’s financials, you can negotiate a contract that will strategically improve your bottom line. For example, if you are looking to increase the volume of your outpatient program, you should consider going in-network for that service with major payors in your area. An increase in referrals from in-network payors and providers, and a thoughtfully negotiated in-network rate should help you increase your profit margin. But if you are looking to move away from outpatient care, you might leave those services out-of-network.

More Predictable Reimbursement

Your payor contract will outline which services are covered, the codes you should bill, reimbursement policies, and other information which makes it quicker and easier for you to receive payment. Going in-network will simplify your claims process- eliminating the risk of denied claims due to coding updates. Many facilities enjoy dependable and consistent reimbursement, even if rates are lower.

Considerations When Going In-Network

Even with the benefits listed above, lower reimbursement rates or a poor payor contract can make going in-network a less favorable decision.

Too Few Patients to Justify Lower Rates

If a particular insurance company isn’t popular in your area or among your current patient population, you aren’t likely to see a new rush of patients by going in-network with that payor. In the end, you could end up losing money because rates are too low for the volume of patients you see. To avoid this problem, you need to be sure you understand how much impact each payor has on your current revenue.

Datapro offers these analytics. Click here to learn more.

Costs Soar Due to More Patients

If the volume of patients you see increases dramatically, so can your operating costs. More patients means more supplies and sometimes more staff, raising your expenses. Before entering into a payor contract, you should ensure these costs will be covered by your reimbursement rates. You need to know how much money each patient and each service costs to provide.

Payor Audits

As an in-network provider, you are more likely subject to payor audits. Payor audits can add to your staff’s workload. These audits are not necessarily to scrutinize your practice/facility, but rather to gather data for payor initiatives such as value-based care.

Before weighing these pros and cons against each other, you should make sure you have a deep understanding of your facility’s financial situation. If you are still unsure if going in-network is right for your facility, Datapro’s experienced team can help you make the right decision for your bottom line. Contact us to schedule a consultation.

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