The financial health of any medical office, group, ambulatory surgery center, or hospital is dependent upon several factors. One of the leading factors when discussing reimbursement is Payor Mix. Payor Mix is the percentage structure of all the insurance carriers a practice accepts with respect to the total revenue of the practice.
Just like your patients’ health, your practice’s health needs a well-balanced payor mix to ensure the longevity of your practice. Not all payors pay the same reimbursement rates for the same services rendered. When you think of the different payors that your practice is contracted with it is to be expected that your government payors will pay less than your PPO insurances your practice is contracted in network with. Therefore, it is also extremely risky for a practice to only accept one or two insurances and not a good mix of payors. Payors have the ability to impose their lower fee schedules, require prior approval and authorization for services, and request burdensome audits. Then in turn, if the payor finds something not to their standards, they can re-coup all the money paid to your practice retroactively.
While the payor mix is largely determined by the demographics and employer mix in your practice area, it is recommended that you review your payor mix and fee schedules periodically to actively correct any imbalance. Furthermore, keeping track of your individual payor contracts and expiration/renewal dates will furthermore give your practice the opportunity to re-negotiate contracted rates with non-government insurance payors. Credentialing and reviewing your practice’s payor mix and their associated contracts are a specialty of Expert Medical Billing.