Establish the Right Payer Mix for Your Practice

Third-party payers (TPPs) and third-party administrators (TPAs) are beginning to play an oversize role in hearing care.

They might seem like an easy avenue for referrals and a solid source of revenue, but how can you know if working with them is the right move for your practice?

Determine if Working with TPAs and TPPs Is Right for You

Your situation might support adding TPAs or TPPs to your patient mix. Your prime considerations in deciding whether to work with TPAs or TPPs are your area’s demographics and your hourly rate. For a new practice or one with other non-audiology providers, this may make sense until you build physician-provider networks and a patient caseload.

Know Your Demographics

Look at your market: Are TPAs aggressively going after patients? Are there a lot of Medicare Advantage plans in your area? If so, you could receive so many referrals that TPA patients crowd your schedule and push out private patients and opportunities! On the other hand, there might be so few expected referrals that it’s not worth the effort to go through the setup, credentialing, and other hoops required to work with that company.

Do your homework now, so when you’re considering whether to work with a specific TPA or TPP, you know the right questions to ask them about the expected number of referrals.

Know Your Hourly Rate

Your breakeven hourly rate accounts for provider time, salaries, benefits, and overhead. Knowing this rate leads to data-driven decisions, not fear-based ones.

This simple calculation begins with your annual contact hours:

(Hours per week of patient care × weeks per year of patient care) × # of providers = annual contact hours

For example: (30 hrs/wk × 49 wks/yr) × 2 providers = 2,940 annual contact hours

Determine your annual expenses (salary + benefits + overhead such as rent, equipment, utilities, and marketing), but don’t include your cost of goods, such as hearing aids, earmolds, and batteries.

Now divide the expenses by the contact hours:

annual expenses/annual contact hours = breakeven hourly rate

Now that you know your breakeven hourly rate, back up and build in your desired profit by adding it to your annual expenses. This will give you your true hourly rate:

(annual expenses + desired profit)/annual contact hours = hourly rate

Now assign fees for each professional service procedure based on your hourly rate and the typical time it takes to perform those procedures. This gives you an idea of what your itemized fee schedule might look like, should you need one. It also gives you a firm foundation for the next section.

Understand Each Contract

This is the heart of the matter. TPAs and TPPs can be a boon or a barnacle, depending on the contract.

Understand the fee schedule. You want to make sure the fee schedule is sustainable for your business:

• Do they reimburse for the codes for all your services and devices? If not, determine whether they reimburse fairly for the codes you use most often.
• Confirm whether the contract allows insurance waivers for patients who want to upgrade their hearing technology beyond the allowable benefit. If so, keep the applicable signed waiver on file.
• Review their process for updating the fee schedule. This should be completed at least annually as contracts and fee schedules change.
• Review their method of notifying you about updates in general (e.g., policies, newsletters, websites).

Understand the legalities. Don’t assume the third-party payer or third-party administrator is in compliance with federal and state regulations — have contracts reviewed by legal counsel.

• Must be in compliance with federal statutes, such as anti-kickback statutes, safe harbor regulations, Stark Law, Medicare requirements, HIPAA, OSHA, ADA, and state statutes.
• Know the denial and termination process.
• Know your professional liability — typically, it is $1,000,000/$3,000,000 — and ensure this meets the requirements of each plan.
• Is the provider-relations representative’s contact information readily available?

Understand the patient relationship. Many contracts specify that you can’t treat their patients differently than others. Some won’t let you market/correspond with their patient, because they see the provider as the third party.

If You Decide to Work with a TPA or TPP

Key to optimizing these relationships is understanding what you’re agreeing to and ensuring the terms work for your practice. Review your contract every six months, with these questions top of mind:

• Is the fee schedule still sustainable for your business?
• Are you able to submit claims within the stipulated time frame?
• Are you paid the correct amount within the stipulated time frame and according to any prompt-pay requirements in your state and the contract?
• Does the fee schedule reflect current market rates?

This review allows you to address problems in a timely manner and helps you keep your relationship with this company top of mind come contract-renewal time.

Establish Your Patient Mix

Regardless of whether you work with TPAs and TPPs, you need to have a plan in place to ensure you have the right number of private payers coming in the door to meet your goals.

Optimize Your Schedule

If you don’t already use a block schedule, establish one. With this type of schedule, each day is divided up into blocks reserved for specific types of activity. The blocks are arranged to prioritize revenue-generating activities and other practice priorities.

For example, if you have three 90-minute periods in your weekly schedule blocked out for private-pay hearing aid evaluations, your schedule won’t get bogged down with free clean and checks, follow-ups, or other non-revenue-generating services.

Use Marketing to Increase Private-Payer Flow

Drive more private-pay patients to your practice so you can be intentional about which types of patients fill your schedule.

• Grow your online reviews — they’re trusted as much as personal recommendations by most consumers, and they help determine your search ranking.
• Use paid search to reach beyond your market — local SEO (search engine optimization) heavily favors the city your clinic is in. But paid-search marketing targets patients based on your chosen criteria, such as a different city or a specific radius.
• Create a patient-referral program — it’s a low-cost, high-impact alternative to traditional marketing. Someone on your team visits local physicians to develop a referral relationship. It’s a time investment that reaps great benefits.

Navigating Industry Changes

As more insurance plans take on third-party relationships and more baby boomers come into retirement age, the number of private-pay patients is decreasing. But even in a changing hearing-care field, your independent practice can thrive. The key is doing your homework to understand what patient mix is right for your practice.