The Untold Story: How “Zero Sum Total” Reimbursement Policy is Impacting Urgent Care Centers

The Bigger Picture – Urgent Care Center Woes and Reimbursement Trends

The number of urgent care centers in the US is growing rapidly due to their crucial role in the healthcare system, especially in reducing the burden on hospital emergency departments. With new centers opening up nationwide and existing profitable practices expanding to newer locations, there is no doubt that urgent care centers will continue to play a vital role in the US healthcare system.

However, despite factors like convenience, affordable treatment, and shorter waiting times driving their growth, significant shortcomings in the urgent care reimbursement policies are threatening the profitability of small and independent practices to the extent that every month a big chunk of these centers are forced to shut down or scale down.

Therefore, it would be worth taking a look at the issues that this reimbursement policy is causing.

Let’s dive right in!

Why are small urgent care centers facing reimbursement issues?

Ever wonder why urgent care reimbursement payments are always lower than reimbursement claims?

Small urgent care centers often lack efficient systems or processes to collect and store patient information accurately. This may result in errors in documentation and rework, adding to operational costs and may also result in rejection or under payment of claims.

If that was not enough for small UC operators to deal with, many independent operators are now reporting significantly lower reimbursements than their larger counterparts despite providing the same treatment and using the same billing codes.

This is a result of a policy that insurance companies refer to as the “zero sum total policy”.
This policy allows insurance companies to cap reimbursements so that if an UC provider is paid more, another provider must be paid less to ensure the total amount reimbursed does not exceed the pre-established ceiling.

Lower reimbursements, whether a result of operational inefficiencies or the “zero sum total policy”, will almost always, have a negative effect on a healthcare facility operator’s profitability. While issues related to operational inefficiencies can be sorted by effectively filling in the gaps, there is still no definite answer to how small and independent urgent care operators can address the issues caused by insurers’ policy to cap reimbursement expenditure.

What specific problems is the insurers’ “zero sum total policy” causing for urgent care centers?

Some of the most pressing problems that are a result of this policy have been listed below:

  1. Decreasing urgent care reimbursement rates
  2. Decreasing revenue
  3. Increasing operational cost
  4. Increased minimum visits in order to cover fixed expenses
  5. Impact on providers’ profitability
  6. Increasing number of urgent care centers going-out-of-business
  7. Insufficient compensation for extensive on-site treatment and capabilities

Is there a way urgent care practices can avoid these negative effects on their practice?

Urgent care practices can somewhat avoid these negative impacts through operation optimization. Efficient collection and storage of patient data,urgent care billing using EHR, and maintaining optimum staffing levels to handle patient volume are some of the ways to optimize operations.

Besides operational efficiency, UC centers must ensure maximum patient satisfaction to ensure patients keep coming back.

Although there is no guarantee that these efforts will increase the revenue enough to cover losses arising from lower reimbursements, these are steps in the right direction.

Alternately, UC centers that do not have necessary staffing levels or investment in automated processes should consider outsourcing these administrative tasks to a trusted and experienced revenue cycle management company. Outsourcing allows providers to free up resources to focus solely on providing treatment while their experienced and better-equipped outsourcing partner deals with billing, coding, prior authorization, accounts receivables and much more.

For any queries about urgent care operations optimization or profitability or anything related to practice management for that matter, please feel free to reach out to Sunknowledge Services Inc., a trusted RCM company with HIPAA-compliant processes, efficiently serving US healthcare providers for over a decade.