Managed Care Guru Dr. Ty Talcott tells you The Secrets to surviving and thriving in the managed care arena.
If you have decided managed care has the ability to destroy your practice or provide an opportunity, is it not simple to make the next step. If you wish to survive and thrive in the future, you are going to have to follow the dollars. If you avoid managed care, you will continuously be cutting out a larger percentage of the population that could potentially see you.
Some individual practices will survive while ignoring managed care. Your first decision is whether you feel you fit one of these “niche” situations:
1. If you possess a special talent or skill and have an established opportunity to use it on a specialized market. Example: you found a niche area within or outside the United States where there is no competition and adequate appropriate population to support a practice, or you speak a foreign language in a heavily populated ethnic area that is under-served….
2. You have a highly successful injury clinic. Typically they are not as affected by managed care; however, most PIP carriers are talking about a change to a managed care system. Most workers compensation systems have gone to discount schedules and/or a true managed care (PPO/HMO) model. Combine that with the continuous threat of no fault insurance and tort reform and that PI practice could easily crumble.
3. You have a great deal of inherited money or success in a previous business which makes capitalization a “non issue.” With unlimited capitalization, a practice can continue to subsidize itself until such time that the type and kind of practice desired can be developed. If only 8% of the market place qualifies as the type of patients you wish to treat but you can capitalize your business long enough, reach that market convincingly enough, and create enough traffic through your facility, you may be able to create your perfect conceptual model.
There may be other special situations such as: you are hired by a medical multi-specialty conglomerate who is willing to pay you well to render services and has high volume..
Once you have evaluated these (and any other unusual circumstances) you will likely see you are in the 97% who do not fit these categories. Therefore, your only option is to evaluate where the market stands in your geographic area and begin appropriate planning.
Yes, that old word “planning” comes to the forefront again. he doctors who plan and initiate those plans appropriately, will be the ones who survive and thrive in the future. Most successful practitioners have a plan for developing the cash portion of their practice, the personal injury portion, and any niches they can exploit (even short term). They are constantly evaluating the market for new patients. Once you have identified these (workers compensation, personal injury/attorney, PIP, cash, standard insurance, if standard indemnity insurance still exists in your geographic area), you can determine the impact of managed care.
Depending on your geographic area, managed care can comprise anywhere from 0% (in Wyoming or Utah) up to 80% of the entire population in saturated areas such as New York, Minnesota, Southern California, Florida, Texas, et cetera. If you are in a rural area and feel you will not be impacted by managed care, you need to re-evaluate your thinking.
PHOs (Physician Hospital Organizations) have targeted rural America and small town USA. They are forming networks within local hospitals to provide managed care for insurance carriers who supply 80/20 type indemnity insurance presently. This allows insurance companies to utilize their PPO/HMO plans in outlying areas. Insurance companies are not idiots. They started PPO/HMO programs in metropolitan areas where doctors were easy to “sign up” and the majority of their policies were sold. In other words, they followed the dollars. If you wish to survive and thrive in the future, you are going to have to follow the dollars. If you avoid managed care, you will continuously be cutting out a larger percentage of the population that could potentially see you. Will some of those people come to you anyway and pay cash? Yes. But, how many? Would you if you could go down the street to another doctor or even go to another town a few miles away and receive care that is fully covered and you were living on a typical workers wage? Bottom line economics most people make decisions based on where their bills will be covered. You may say “but before chiropractic was covered by insurance, there were busy practices.” True. If the MD failed to provide relief, the patient sought and paid for an alternative care. But today there are other chiropractors on the insurance panel and/or worse PTs, doing manipulation… It is not the same world as “back then.”
There are changes in managed care that benefit chiropractic. The picture is not as bleak as it once was-if you are involved in the system. If you are not involved in the system then you are outside looking in and will not benefit from the improved situation.
In evaluating your practice for managed care, you may wish to consider several factors. Most practices are down. Most are not making the same income, seeing the same number of new patients or the same number of patient visits that they were ten years ago. Many doctors are waiting for a return of the “old days”-that will never happen. There are only “new days” ahead. Trying to maintain status quo while waiting for a return to the “old days” is foolhardy and will not create the results that you wish. The key is to plan ahead for the changes that are evolving and be involved at every level possible.
Chiropractic practices (in heavily saturated managed care areas) have gone through similar cycles as big corporations in the United States. They first downsized to become the leanest, meanest, fighting machines possible. While thinking in terms of reducing overhead, relieving staff from their positions, moving to smaller offices, et cetera, it is difficult to also think about growth or establishing new markets. Most people cannot do both at once, so the typical survivor has rapidly downsized and (like large corporations) is now on a “new” track called “growth.” This is one of the most exciting aspects of today’s environment. Sev-eral offices have blazed the trail for others across the United States. They rapidly downsized, eliminated waste, tightened the belt and are re-focused on being able to grow (without severe concerns about bills being met). Why should we not mimic the large corporations that are hitting the financial pages with the “new attitude” of growth in production. The pages are full of companies now anticipating growth and expansion due to increased value of their stock from downsizing, mergers and acquisitions. This new trend in business should inspire the chiropractic practitioners who will be the big winners. They will grab coat tails and go.
If you have decided managed care has the ability to destroy your practice or provide an opportunity, is it not simple to make the next step? There is only one way to choose. If you take the alternative you will probably not be reading chiropractic journals much longer.
Still want to fight the choice? Consider this: presently, there is wonderful research coming out about chiropractic effectiveness; however, the utilization of chiropractic has not significantly increased within the general population. There are more chiropractors in practice now than ever. Many colleges are turning out record numbers of new graduates. Where are these people going to go? Who are they going to see? On the short term, some will group together and share overhead to go into survival mode. To thrive they have to be able to see people. Many have seen their comrades survive in practice on 10, 12, or 15 visits a day.
With managed care, workers compensation fee schedules, and other discounts, those same 14 patient visits per day do not produce the same amount of dollars per visit. Therefore, those practices can no longer survive. They either go out of business or merge. You are faced with more chiropractors to serve the same percentage of population, (even though the research and public education should have changed this), and decreased reimbursement for services you render. You need to see more people to be at the same place. If you decide to ignore managed care and take that portion of the market away from your practice, you will see less versus more. Instead, let’s look at proactive steps that can be taken to make you one of the 20% who will thrive in the coming decade.
1. Attitude. You must become involved in managed care with the right attitude. You want to do it for the right reasons, it is good for your business, so your doors stay open and provides a place for your patients to be treated. Bottom line-it is good for your patients. Be assured you are where the action is. According to the New England Journal of Medicine, in the past decade enrollment in HMOs soared from 10.2 million to almost 39 million. Enrollment is expected to reach 50 million by the end of 1995, which is 1/5 of the total U.S. population. Additional growth in PPOs went from 1.3 million households in 1984 to more than 27 million in 1992.1 At this rate, within a few years, almost every American with private health coverage will be involved in a managed care plan. In fact, PPOs during 1995 have surpassed HMOs and both have over 50 million enrollees, meaning that MCO insureds are approaching 50% of all the insured people in the United States. It is estimated by several MCO experts that by 1997, 75%-80% of all insured individuals will be part of some form of managed care plan. This will include Medicare, Medicaid, personal injury and worker’s compensation insurance as well.
2. Adjust your attitude to long term thinking versus short term thinking. Positioning is the key in managed care. You must be persistent, positioned and go through the tough time of waiting until it produces. It is worth it. All indications point to the fact that managed care is here to stay.
A recent study by KPMG, Peat Mark-wick, says: Patient deaths are 8% lower and hospital costs 11.5% lower in cities with high penetration of managed care. Another report states hospital stays are 17% shorter where there is high managed care. The first quarter of 1995, 78% of HMOs showed a rise in net earnings. Many of the same HMOs also showed record quarter earnings. For example, Oxford Health Plans, Inc., reported first quarter, 1995, net earnings rose 87%.
Specific Care Health Care Systems, Inc., reported a 28% increase and Value Health Inc., stated record revenues the first quarter of 1995 with a 28% increase. Some of the latest information shows HMOs cover 3,000,000 people in New York City, 1/3 of Los Angeles residents and 2/3 of Portland Oregon.2 As the integration of health care continues, we will see more and more HMO and PPO mergers. It has been estimated that by the year 2000, there may only be 20-30 national MCOs remaining. It will be very important for you to be a member of those remaining MCOs. Beyond attitude will be the ardent pursuit of inclusion in these types of entities. To pursue them, you cannot wait and you will probably need expert help. That help can come from literature, groups of doctors working together, management companies and IPAs (Independent Physician Associations).
3. This is the era of “Let’s make a deal.” You must be willing to take discounts. Managed care is really managing costs not managing care. For you to be an asset to the MCO (Managed Care Organization) you must save them money. Saving them money is done by discounting your fees. Normal discounts are 10% to 30%. Often discounts to the MCO can be offset by savings in internal or external marketing and advertising. This is because your office is in the PPO directory and won’t need to spend the money on advertising. While you must be flexible, you must also evaluate each contract as it stands on its own. You don’t have to take every deal but you do have to be flexible.3
It is true some contracts offer poor fee schedules or inadequate coverage; however, most MCOs have fairly good reimbursement and often will cover 90% or more of chiropractic fees. Often fees of chiropractors, physical therapists, hospitals, DOs and MDs are lumped together to come up with averages or percentiles that will be paid. Since their fees are usually higher than chiropractic fees, the chiropractor often wins in this situation.
4. You must pursue local MCOs. You can often do this by obtaining a list of all of the HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Organizations), IPAs and other MCOs (Managed Care Organizations) from your state chiropractic association. If they do not have the information or it is inadequate, peruse the chiropractic journals for appropriate IPAs that are reputable and have the ability to get you included in multiple managed care organizations.
5. When you identify an MCO target, make sure you treat the provider relations person of that company as a very special person. To obtain the applications for membership as a provider, you begin by surveying your community and patients. Make a list of the HMOs, PPOs, and managed care networks in your area. Now assign one CA in your office to phone the carriers and ask for provider relations. This person is in charge of sending you an application. Your CA should use a script something like this: “I am _____ from Dr. ____’s office. We have had several patients ask if we were providers for______. We would like to apply for provider status. Please mail an application and a new provider information kit.” Before you close the conversation ask the provider rep if you can send the application directly to them and then use the ultimate close. “Ms. ____ could you please do me a favor (wait for a response), Dr. ____ is an excellent doctor, he/she really cares about his/her patients and they really love him/her. Can you personally advise us what we should do to get him/her accepted as soon as possible?” This often will elicit a very favorable response from the MCO personnel. They take a lot of “grief,” day to day, from “unhappy campers.” Someone treating them with respect and acting as though they have some authority is usually a pleasure.
6. Have large area employers get you into HMOs and PPOs. Large employers have tremendous sway with their insurance carriers. An employer with 10,000 employees may be paying annual premiums of 15 million dollars plus. HMOs and PPOs want and need these premiums and they will do anything short of losing money to keep these types of accounts. If you know contacts within large companies, such as a patient who is in personnel or a patient who is an executive, et cetera, their recommendation can go a long way to making sure you are accepted as a provider on the panel.
When it comes to nationally dealing with large PPO/ HMO insurance organizations, you will likely need help. Your best help will typically be in the form of an IPA.
7. IPAs are probably the future key to your ability to have ongoing inclusion within the managed care arena. It appears that Independent Physicians Associations will be essential in the future. More and more insurance companies are demanding higher and higher levels of credentialing and are unwilling to pay for that credentialing and maintenance of that network. Therefore, IPAs that take on the expense and burden of credentialing and verifying credentials are being sought by insurance carriers.4
8. Get into reputable IPAs that have real contracts as early as possible or you will miss some opportunities. Different IPAs start with different objectives. If an IPA happens to land a significant contract and you are not a member of that IPA at that time, you may miss the only opportunity that comes for that particular IPA. Some IPAs never have more than one real contract and if that contract closes its panels and does not accept any additional members, you are out before you even get started.
Even IPAs with multiple contracts run into certain MCOs that close their panels, meaning that individuals who join late rather than early, have fewer panels they can access and must wait for the IPA to get more contracts in the future.
9. Chose IPAs where you have the right to accept or reject each individual insurance contract. Some IPAs require a power of attorney that allows them to commit you to an insurance contract. Be very careful of these IPAs as they could potentially commit you to a contract with a company that wants to pay for only five visits a year at $10 per visit… This often happens if the IPA is also making money by repricing claims on a per claim form arrangement. Therefore, it does not matter to that particular IPA whether you are well cared for or not, as long as claim forms are flowing so they make money. Be careful when dealing with the few IPAs that reprice claims.
10. Join IPAs that don’t limit the doctors accepted into their network. Reputable networks have a credentialing process that eliminates chiropractors that may create problems. It has not been shown that MCOs are demanding individuals within chiropractic be specialists (such as chiropractic neurologist, chiropractic orthopedist, et cetera). If IPAs exclude doctors for arbitrary reasons, the IPA may run into problems relative to restraint of trade and thereby lose some of their contracts. As well, there are major legislative moves to stop discrimination.5
11. When considering an IPA or a PPO, ask the right questions or you will miss opportunities. IPAs, PPOs and HMOs are all different animals. PPOs and HMOs are typically payors. They have risks, they have a money pot, they collect premiums and dole out when services are performed. In considering joining a PPO panel, simply find out how many covered lives they have in your area and what they are paying. If you like the contract-join; if not-don’t. An IPA is different. An IPA may have contracts with multiple PPOs and other MCOs. An IPA represents you to multiple PPOs and MCOs.
An IPA credentials you and presents a group of credentialed doctors to the MCO organizations. In evaluating an IPA, you can’t ask how many covered lives they have in your area because they don’t have covered lives per se. Instead, they have contracted to provide the network to multiple MCOs. Those MCOs may have then leased the network to other MCOs, may have gone through mergers et cetera. To evaluate an IPA, look at the cost to join and the on-going cost, look at their credentialing and make sure it is at the level of the National Association of Quality Assurance (this is the present gold standard). Look at their track record. Do they have local, regional, and national contracts and how many? See if they have appeared in the chiropractic media, do people know about them?
In other words, check their reputation and their credibility. See if they are in place to be long term players. If they are not and have no contracts, you may be wasting your dollars.
12. Stay current with new trends or developments in MCOs. The marketplace is rapidly changing and very competitive. As larger MCOs move into an area, they can take over a market and your office can loose “big time.” This is the main reason to be in a national IPA.
As you identify companies locally and nationally it will be very important that you apply appropriately to these companies so that you will be accepted.
13. Be patient during the processing phase of your application. The start of your process will be to fill out contract documents. If you are a member of an IPA that obtains the contract, you often have one page to read, digest and sign. If you are not, you may have 15 to 60 pages to fill out and/or review. If these are not done correctly, and completely, your application will typically be thrown into the circular file and they will simply take another individual whose application is complete.
If you are lucky, they will send you a letter asking for the information that is missing. However, this usually only happens if they have already put in a great deal of time on your application and don’t wish to waste that time. You cannot count on this. Even if it does not stop the process, it will delay the process and you cannot afford delays. You can’t afford delays because it can take 3-5 months for those papers to be processed. Through an IPA it usually takes 15-30 days, but even those can be longer depending on the contract. Do not hound the insurance company with telephone calls asking where you are in processing. This creates a hassle and they may choose another doctor over you. It is okay to call after a reasonable period of time to see if there are any other documents you can provide or information they need-but do not harass the company.
14. Once you receive an application for an MCO, follow these steps:
a. If they request a sample of your fee schedule don’t send the entire fee schedule, simply send those procedures you most commonly do in the office. This is what they are interested in.
b. Don’t hide stuff that you don’t want them to know. They will find out!
c. Send applications or requests to the attention of Provider Relations.
d. Use insurance adjusters as references.
e. Type your application.
f. Mail your application in a 9″ by 12″ envelope instead of folding it.
g. Type addresses on envelopes.
h. Attach a CV (if you must) to answer questions relative to advanced training. Don’t list every seminar you ever attended in the blank for continuing education.
15. Get all of your documents together in one location. Once you see the type of documents required by PPOs and HMOs, you do not want to have to chase these documents down every time you are filling out a new form. Therefore, get copies of your license, cover sheets of malpractice liability insurance, copies of radiology certificates, et cetera, together in one place. Every time someone new asks for a new type of document put a copy in your document file so this process will get easier and easier.
Once you have pursued and identified PPOs, HMOs and IPAs, sent in your application, and shown you are an expert… you now work on the fine tunings to make sure you are accepted. Some things that can be helpful:
16. Get credentialed wherever and however you can. The more places you are credentialed (example: IPAs, hospital staffs, professional organizations, et cetera), the better. Often managed care organizations simply pick up the credentialed doctors from some other entity and offer them the opportunity to participate in contracts. If you are not on-you are not in. If you are on-you are automatically in-if you wish to be.
17. If you happen to be accepted on a MCO panel as an individual, find out if that MCO is also accepting members from IPAs. If they are, then you may wish to join that IPA as well. If in the future the MCO decides to remove certain individuals from the panel you will be less likely to be removed if you are a member of a larger group, hence the IPA helps protect your contract.
It is very important once you are accepted to talk appropriately to patients about MCOs.
18. Track patients who drop out of care to see if they are doing so because of a managed care organization. Some of your patients may drop care for vague reasons. If you push you may find their employer has purchased new insurance which does not cover your office. You can often regain these patients by becoming a member of that MCO or by explaining “out of network” benefits to them.
It is important once you are participating in the MCO environment to cooperate as best you can with the insurance companies and also with the MD gatekeepers (for those contracts that have gatekeepers), otherwise you may find that your contract is not renewed.
19. Make sure you train your front desk CA appropriately to answer the most common questions asked by managed care patients. Your front desk CA needs to fully understand managed care and how the reimbursement works. Obviously, patients are always interested in what they have to pay. Some policies have fixed co-payments, some pol-icies still require a percentage of fees be paid. Some companies may have fixed co-payments for all other providers and then require a deductible for chiropractic, et cetera. So your CA must become familiar so she can make your patients comfortable.
20. Mail literature to your patients on managed care. Once or twice a year, send a letter to your patients telling them the different managed care networks in which you participate. Also send them a letter they can fill out and return to request you be included in their network, if you are not already a participant.
21. Work more with MDs and DOs. You are going to be forced to better communicate with MDs and DOs within the managed care environment as you will have to explain to them the procedures you are doing, why you are doing them and the justifications for continuing care for a patient. Therefore, the more people you know and work with ahead of time, the more favorably they will work with you if they become a gatekeeper on a system in which you are a participant.
a. Get letters of recommendation from MDs and DOs. The more letters you have with positive comments from medical doctors who are also on the MCO, the more chance you have of being accepted.
b. Try to establish a referral network with other physicians, ancillary pro-viders and outpatient centers. When you need to refer a patient for evaluation or treatment it will be important to know what doctors and facilities are providers in the networks in which you belong. If you refer patients “out of network” the patient will incur deductibles and/or larger co-payments and the MCO will become perturbed that you are not working within the system.
22. Develop a plan of improvement to become more desirable to MCOs. Evaluate the interior and exterior of your building. As MCO contracts become more competitive, on sight inspections become a regular function performed by many MCOs. Your office appearance will become important during these on sight inspections.
23. Understand the “mind set” of most PCPs (Primary Care Practitioners/ Gatekeepers). In most cases, the general practitioner that acts as the PCP does not prefer to treat neck and low back conditions. They traditionally refer these people to physical therapists for “therapy.” It becomes imperative that the chiropractor inform PCPs that chiropractors not only do therapies but can fully diagnose patients, help in the management of the case, order diagnostics, change treatment plans, et cetera. Send PCPs information on your office, chiropractic, pictures of your office, et cetera. We have to teach them. We must be the ones to show them what we do.7
24. The most important thing is to remain flexible. The system is changing nationwide and world wide. It is also changing in your geographic area whether you know it or not. If you are open to changes and will keep your eyes open for what changes you should participate in, you can turn what looks to many as a lemon into excellent lemonade.
Get started, be persistent, stay patient, work hard, get help from experts and reap the rewards or lick your wounds!
Dr. Ty Talcott serves on more than 55 managed care organization (MCO) panels and is on the Board of Trustees of SPN, a national Independent Physician Association (IPA). He also serves on the board of the Planning Committee for Chiropractic in Texas. He is past chairman of the chiropractic committee at Tri-City Hospital and post-adviser to the Workers Compensation Commission in Texas. He can be reached at 214-231-9391.
1. Managed Care Literature Search on Chiropractic, Page 4, MCO Info. Division, Shared Physicians Network.
2. Dynamic Chiropractic, January 15, 1996, “New York City Being Devoured by HMOs”, Taken from Managed Health Care, December 1995.
3. The Do’s and Don’ts Guide to Managed Care Participation, Page 3, Shared Physicians Network MCO Information Division.
4. A.C.A. Today, December 1995, “How to Gain Inclusion on MCO Panels” Ty Talcott, D.C.
5. A.C.A. Today, December 1995, Page 9, “ACA Managed Care Coalition to Launch Major Grass Roots Effort in ’96’.”
6. A.C.A. Journal, 1996 Membership Directory Feature Article, “What Happened to Managed Care in ’95’-The ‘Alphabet Soup’ Now & Then” by Robert J. Templeton, MHA, Shared Physicians Network and Ty Talcott, D.C.
7. Dynamic Chiropractic, January 5, 1996, “Report of my Findings,” Donald Peterson Jr., B.S., H.C.O.
