MGMA survey highlights reimbursement disparities

Practices reported lower actual payment rates than those contracted for nine of the 10 common CPT codes examined.

By Mike Norbut — Posted Aug. 9, 2004

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Physician practices in Colorado that know their contracted reimbursement rates receive on average 4.5% more for a standard office visit than practices that don't know their rates, according to a recent survey by the Medical Group Management Assn.

The survey, which compiled information from 51 practices across the state, not only uncovers the disparities some physicians find between contracted and actual reimbursement rates, but it also highlights the idea that some doctors don't know what should be coming to them.

Many of the respondents to the survey were tracking their reimbursements based on their explanation of benefit statements from insurers rather than their contracts.

"What's a little disappointing is the number of practices that didn't have specific payment rates," said William F. Jessee, MD, president and CEO of MGMA. "We've been advising our members to regularly audit their EOBs, but you can't do that if your insurer doesn't give you the fee schedule."

Jeremy A. Lazarus, MD, vice speaker of the AMA House of Delegates, said the AMA considers the disparities between contracted and actual reimbursement rates to be a "systemic" issue, a result of insurers' claims processing and payment systems.

"This reduction in payment to physicians is a direct consequence of the unfair business practices of health plans that include downcoding and bundling of physician claims, as well as delayed, partial paid and retroactively denied payments to physicians," said Dr. Lazarus, a psychiatrist from Greenwood Village, Colo.

Officials from America's Health Insurance Plans, the Washington, D.C.-based association for insurance companies, did not respond to requests for comment.

The MGMA report was a pilot project that tried to go beyond the standard payment satisfaction questions while investigating physician-insurer relations. Health plans generally received a marginal approval rating -- a score of 2.1 on a four-point scale -- and approval ratings grew among practices that reported higher reimbursement rates.

The survey reported that some managed care contracts still do not contain such vital details as payment rates, leaving physicians to ponder if they're receiving the correct amount. Other medical groups are too small to afford a sophisticated auditing system and have trouble tracking what they're receiving.

"The dangerous thing is a lot of groups probably won't know until this study that a problem exists," said Manoj Pawar, MD, a family physician and medical director of the Exempla Physician Network, part of the Exempla Healthcare system in Denver. "By virtue of our size, we have [auditing] processes in place. There are a lot of practices that don't have the same capabilities."

The report offers data for 10 common CPT codes, as well as comparisons between specialties and regions of practice. For example, the average contracted rate for CPT code 99203, a lengthy new patient office visit, is $116, according to the survey. Physicians who reported their reimbursement levels based on their explanations of benefits, meanwhile, received an average of $111, or 4.3% less. Reimbursements for CPT code 99213, lengthy office visits for established patients, were listed at $66 at the contracted rate and $63 at the rate listed on the explanation of benefits.

MGMA only released dollar figures for those two codes.

According to the survey, the average actual reimbursement rate for an office visit that included a pelvic exam was nearly 7% less than the contracted rate. The actual rate for a short office visit for an established patient, meanwhile, was nearly 4% less than the contracted rate. Only a short office visit for a new patient had a higher mean reimbursed amount than contracted amount, according to the survey.

The survey found practices belonging to independent practice associations also received more on average than those that did not share an affiliation, illustrating the power of numbers and negotiating leverage.

Groups that were large enough to negotiate on their own didn't seem to encounter issues with payers, mainly because most had their own rigorous auditing processes.

Jeff Millburn, senior vice president of Colorado Springs Health Partners P.C., an 80-physician multispecialty group, said the group often found payment discrepancies, but he attributed those errors more to the complexity of the systems than purposeful underpayments by the insurers.

"Generally, the payers pay us as they agreed," he said. "[Discrepancies] are honest mistakes. We may get into some disagreements on bundling or denials, but those aren't contracted rate issues."

Debbie Welle-Powell, vice president of managed care for Exempla Healthcare, said the group is extremely vigilant soon after negotiating a new contract to make sure the insurer has loaded its new fee schedule into its system. Auditing reimbursements against the contracts and state laws is important as well, she said.

"It's very important that a physician practice read its contracts," she said. "It's necessary, even as a one- or two-doctor practice. You can lose 5% to 10% of your revenue, which could be $20,000. That could be the difference between a margin and no margin."

The survey also showed a significant difference between reimbursement rates in urban and outlying areas. Denver practices, for example, received 13.4% less for a standard office visit than practices outside the city. The results were not surprising to most groups, considering the fierce competition and high supply of physicians in the city.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn