3 Nontraditional Payment Programs: Could One Be Right For Your Practice?

As primary care physicians in the U.S. struggle with inadequate Medicare reimbursement rates, frequent payer underpayments, and ignored patient co-pays, some are taking nontraditional approaches to payment in order to lessen their reliance on payers.

With research estimating that U.S. medical practices fail to collect about 25% of the money, they’re owed for treating patients, who can blame docs for trying something different? These payment models all have their pros and cons, but they’re helping some providers retake control of their cash flows or serve uninsured patients without taking too hard a financial hit.

If you’re fed up with business (and billing) as usual at your practice, consider if a new take on payments would be feasible for you.

Direct Pay
The concept here is as simple as it sounds: patients pay providers directly for care. A medical practice delineates a set price for each of the services it offers and makes it clear to patients that the full cost is expected to be surrendered at the time of service.

Direct pay practicing allows physicians to pull their businesses out of the insurance cycle while still enabling patients to use their health plans to reimburse encounter costs. At Care Practice, a San Francisco Urgent & Primary Care facility, patients are given a bill at the end of each visit alongside a packet of forms to submit to their insurance.

By making reimbursement the patient’s concern, rather than the practice’s, a medical office can have instantaneous control of its cash flow and budget. Instead of waiting for remittance or facing claim denials, physicians always know how much money to expect each month based on how many patients visit the office.

In the current economic climate, with over 8% of Americans unemployed and thus having less access to adequate health coverage, the growing availability of affordable direct pay care is highly beneficial for the uninsured.

But the model has its disadvantages. It can be very expensive for patients who need frequent care to pay upfront and, if they work with their insurance, inconvenient to wait for reimbursements.

And direct pay physicians must place a great deal of trust in their patients to pay upfront or adhere to payment plans. If a number of patients were to dodge responsibility for expensive procedures, the practice would be in trouble.

Concierge Practicing
The advent of concierge medicine, in which patients pay an up-front (usually annual) fee to secure the services of a physician, is growing in popularity due to a shortage of physicians. The American Academy of Private Physicians reported in late 2011 that the number of concierge or “retainer-based” doctors in the U.S. had doubled over the preceding two-year span.

The advantages of this model, also called “boutique” medicine, can make it appealing to both providers and patients.

Since most concierge practices still charge patients for treatment and transact with insurance companies, charging an annual fee allows docs to earn some up-front payment to offset the low reimbursements typical of primary care encounters.  That can enable them to see fewer patients without hurting their bottom lines.

By paying a fee, patients gain a “premium” relationship with their primary care provider that usually involves easier access to appointments, longer visit times and more communication. This relationship is especially appealing to those with chronic conditions who need frequent, on-demand access to their physicians.

The expansion of the concierge model, though, is a controversial trend. Detractors say it promotes the idea that better, more patient-focused care is only available to those who can afford to pay more for it.

So despite its benefits, if you move to this model, you may want to prepare yourself for some backlash.

Alternative Currency
The models above, for all of their benefits, would reap one very major consequence on your practice if you switched over: a large, sudden loss of patients. One physician reported losing 4,500 active patients when he switched to a direct-pay-only program.

If you’re looking to make a smaller, less comprehensive change, consider accepting nontraditional forms of payment from some of your patients.

Bartering is an old-fashioned option that gives cash-strapped patients a way to repay medical expenses through alternative means. Medical practices can barter directly with patients, negotiating the “cost” of a medical service against what a patient can offer – anything from an office cleaning to cooking a meal for the staff.

Or physician managers can contract with a barter exchange company. Upon joining a formal network of bartering businesses, you agree to adhere to a set list of cash equivalencies for various goods and services and can transact with other companies in the network using alternative currency.

Though it may sound like an unusual way of conducting business, around 400,000 U.S. companies engage in bartering every year – many of them in healthcare. As long as your practice keeps records and follows the IRS’ bartering guidelines, there’s nothing stopping you from trading lab tests for plumbing services.

A similar option is to use time as currency by participating in an organization like TimeBanks USA. With “time banking,” you can provide medical services to an uninsured patient and accept his time credits, formally awarded through the time bank, as payment.

Credits are earned through volunteer work or, as with money, by accepting another person’s credits in exchange for goods or services. Should your practice join a local time banking network, you’d also be able to use time credits to “buy” from other participating area companies.

Relying solely on bartering or time banking would obviously cripple your business – you can’t pay your staff in credit-hours – but accepting nontraditional payments from a small percentage of your patient population allows you to provide services to the uninsured or less fortunate while still seeing returns.

Would you consider moving to a nontraditional model or accepting alternative payments? Why or why not?

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