30 Aug Why You Should Look at Your Payor Mix Today
Have you ever calculated the payor mix for your practice?
Your practice’s payor mix is a measurement that allows you to look at what percentage of your total business is attributed to a particular reimbursement source, whether managed care, government payors, or self-pay.
Having a diverse payor mix takes the power away from any one insurer. This gives you more control of your cash flow, and enables you to better predict how much money you’ll have at any given time.
Forecasting revenue with payors will provide insight into what sources are contributing to your practice. You will want to know if a payor is steadily contributing more revenue to your practice when it comes time to negotiate your contracts, and can focus on the heavy hitters first.
Knowing your payor mix also allows you to manage your revenue flow. You might have one insurer that pays between 30-60 days after being billed. Another might pay between 60-120 days, and a third might pay between 120-180 days. If you have too many claims with a payor that waits the full 180 days, you could end up out of pocket for months at a time while waiting to get paid for the majority of your work.
It’s a good idea to track changes periodically as well. For example, if a large percentage of your patient base comes from a large employer group that provides BCBS insurance to their employees, and one year they decide to shift to Cigna, depending on what your reimbursement contracts look like for each payor, it might be important to know about this change and how it might affect your practice.
Proactively assessing payor mix can help answer questions about financial changes to your practice, and allow you to take charge of the future of your business.