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A growing number of urgent care centers are signing “global contracts” that ensure a flat rate reimbursement for patient visits. Keep in mind it is more probable to switch payment methodologies during the renegotiation process, rather than during initial contracting—where it is less likely that you have a choice in the matter.
The word flat rate certainly comes with a stigma. Providers may initially think this type of contract is bad for business and urgent care revenue. Providers frequently state “they want to secure fee for service contracts because they want to get paid for what they do”. A case rate, however, may be a good deal for an existing center, depending on the current average collection per patient. This information can be extracted through a sophisticated excel spreadsheet or reports out of your practice management system.
Say your fee analysis shows an average collection of $110 per patient from your urgent care center’s largest payer, and during renegotiation that payer offers a $130 flat rate for any type of patient visit. If your center treated 2,688 of the payor’s patient’s last year, and your center collects $20 more for each of those visits it would add up to $53,760 in additional revenue in the course of a year.
|Current Collections Per Patient – FFS||Re-negotiation Proposed Flat Rate||Additional Revenue Per Visit||Patient Visits Per Year||Additional Annualized Revenue|
In order for a flat rate to be viable for an established center, it must reimburse greater than the average currently received, with the understanding that some services just won’t be paid and the center will lose money on some patient visits.
Under a flat rate contract, some services such as flu shots and wellness exams may be non-reimbursable as they are deemed “primary care” and not “urgent care” services. And certain medications, labs, x-rays and supplies are not reimbursed separately under flat rates. Some payors in specific regions may approve carve-outs that would reimburse for those extra services, although it is uncommon.
Ultimately the appeal of a flat rate contract may come down to this question: How long has the urgent care center been open?
If a practice has been open two or three years, its visit mix will switch from new to established patients as loyal patients return. That means net revenue per patient may fall over the course of time, despite the center providing the same level of services.
The premium for new patients makes fee-for-service an advantage for startup practices but over time, as those patients become established, a flat-rate contract can make sense.