Physicians Push for Better Private Payer Reimbursements

Physicians and their employers want to improve their experience with private payers, according to the 2024 Physician-Private Payer Relationship Report from Medscape Medical News.

While private insurers do reimburse physicians and their practices at higher rates than government programs, 60% of physicians surveyed said the rates are “average,” with 22% saying they are “low.” Only 13% of physicians found their reimbursement rates “high” on average.

Physicians across the United States experience varying levels of disappointment regarding reimbursement rates. For example, physicians in the Mid-Atlantic and South Atlantic states were the unhappiest, with 33% and 34%, respectively, reporting that their rates were “very low” or “low.” On the other hand, physicians in the Pacific and North East Central states (both 22%) had the lowest dissatisfaction rates.

“Are they [rates] high anywhere?” one physician told Medscape Medical News.

Wayne Gibson, senior managing director and leader of Healthcare Risk Management & Advisory at FTI Consulting, said there is no specific reason why physicians in New Jersey should receive lower rates than those in California do. He said reimbursement is mostly based on “individual physician groups or specialty types and their market power,” as well as their negotiation power.

“Do the payers need you in-network?” Gibson asked. “It’s all about how important providers are in that submarket to the payer and how important that payer is in the submarket.”

Almost half (45%) of physicians reported that their employer has “no leverage” at all when it comes to negotiating contracts with private payers. Another 49% of those surveyed said their employer has “some leverage.”

The rates from private payers have not changed much over the past 5 years for employers of 38% of physicians surveyed for the report. However, around one third of physicians said that rates have declined somewhat over the past 5 years.

Bill Ringwood, associate consulting principal with Sg2, part of the Vizient consulting firm, said clinicians are concerned that payments are not increasing alongside inflation and operating expenses.

Gibson also said that clinicians are also concerned with the rise in high-deductible health plans, resulting in higher patient bills that are harder to collect.

Gibson said physicians also take issue with the processes of prior authorization and letters of medical necessity. These administrative hoops, he said, are worse for physicians who work for smaller practices rather than a hospital group or large provider that brings more negotiation power to the table.

A little over one third of physicians surveyed said staff hours invested in prior authorizations “rose somewhat” in the past 5 years, while 31% reported that staff spend “substantially” more time on them.

“This completely aligns with what we’re experiencing with our client base,” Ringwood said. “Not only in the increase in the number of prior authorizations but also their complexity and the time required to successfully complete one.”

“Constant denials and appeals are leading to poor reimbursement and standard-of-care medication,” one physician shared with Medscape Medical News.

Almost 75% of physicians said that their treatment decisions are influenced by private insurers to some extent. Another 16% said that they are not influenced at all.

David Brueggeman, director of commercial health at Guidehouse, offered an example. If one course of treatment is highly effective but involves jumping through many administrative loops, and another is less effective but easier to manage, physicians may be inclined to offer the less effective treatment to a patient.

Private payer audits can present another challenge, but 59% of physicians said they have not experienced one in the past 5 years. On the other hand, 27% reported that they had.

“For the providers I work with, it’s not so much the number of audits as that they can be quite cumbersome,” Ringwood told Medscape Medical News.

Lisa M. Basile is a freelance journalist.