Landmark Healthcare obtained the following results from a survey conducted to gain a better understanding of alternative medicine. Why is this survey important? An emerging trend in society is signaling a change in the type of medical care that health plans are offering to consumers. A 1991 study conducted by the Harvard Medical School indicated that more than one in three Americans has used alternative medicine. Even though the Harvard study shows that alternative medicine is being used by a greater number of consumers, there has been little research done on health maintenance organizations’ (HMOs) interest in alternative medicine. We feel this survey provides a valuable insight into health plans’ opinions of alternative medicine and hope that research on this important topic will continue. Landmark Healthcare
Numbers are numbers, but interpretation can make the difference between success and failure in business. As an example: the ACA released statistics relative to services rendered in a chiropractic office broken down by category of reimbursement. Between 1994 and 1996 they show only a 2-3% change within most categories. Their breakdown shows income received as 25% cash, 30% private insurance, 15% auto insurance, 10% Workers’ Compensation insurance, 8% Medicare, 7% managed care, and 1% Medicaid. So, you may say; 7% managed care! What’s the big deal?” The “big deal” is that this is not all of the important information. What these stats actually show is inability of a profession to rapidly adapt and capitalize on a tremendous opportunity. (It also shows, a failure on most DC’s part, to shift to handle the patients in the way they are covered!) Many chiropractors have either stuck their head in the sand or attempted to attract patients within the other payment categories. Don’t believe it? Try these stats on for size. They are also “real numbers.”1
Between 1988 and 1996, only an eight-year period, dramatic changes have taken place regarding coverage by different forms of insurance (see Table One above). This whopping change equates to 72% of all medical insurance switching to managed care with about 20 – 30% “private insurance.” But wait, didn’t the ACA stats say 30% of chiropractic cash flow comes from private insurance? Doesn’t that number mirror the percentage of population now covered by private insurance? So answer me this: why is there not a 72% cash flow from managed care into chiropractic offices to reflect that percentage of the population? (I still see a lot of denial and sand in ears!) Throw in the managed care Workers’ Compensation pa-tients, managed care Medi-care plans, some PI plans, and the numbers become more staggering. Non-MCO participating chiropractors only have a fraction of the population to draw from as they did just eight years ago. Yes, managed care only accounts for 7% of the money coming into our profession. What a shame! We are leaving hundreds of millions of dollars on the table for other professions to collect for their growth.
This is also consistent with the fact that only about 10% of chiropractors are heavily involved in managed care and why practices (in general) have been reporting an average 35 to 50% decrease in volume since the late 1980s.
Think of this another way. In 1988, if you saw 40 people a day and 9% were cash, 70% private insurance, 10% auto, 10% Work-ers’ Comp, 1% Medicare, and 0% managed care, and now you’re at 20 patients a day with 25% cash, 30% private insurance, 15% auto, 15% Workers’ Comp, 7% managed care, and 8% Medicare, you would be misguided to think those figures reflected changes in the percentage of those types of coverages in the population. In fact, you’d better see more cash patients, auto, Workers’ Comp and Medi-care to make up for the people you lost from private insurance when they went managed care (often without you even knowing it). They simply picked up their PPO book when new insurance was issued, found the provider down the street where they could be covered (you weren’t it) and left. Your practice shrunk. Many still don’t know why.
You might be down 35% to 50%. Why? Simple. Over 50% more people are on a managed care plan now than eight years ago. A large number of chiropractors have not maximized managed care involvement so many practices are down that 35%-50%. Don’t these numbers make sense? Many have missed the boat. What’s really sad; many don’t even know there was a boat! In some areas, the boat has not arrived yet and positioning is still the key.
O.K. You’re more savvy. Many years ago you got on some plans, you know the basicsso what is new?
Lots of bizarre things. Most metropolitan areas have been eaten alive with managed care that has “closed doors” to new participants. This makes access very difficult unless you join the appropriate Independent Physician Associations that hold many of those contracts. Other contracts are directly between insurance carriers and individual providers, so nobody can get in. Also, there are some “bad” Independent Physician Associations. When I say “bad,” I mean that they are bad for the profession in my opinion. Some require Powers of Attorney (or that you must participate in all contracts)… Some have “sold out” to insurance carriers by saying they have a network of doctors that will gladly treat patients for $7 or $12 per visit, or 5 visits a yearet cetera. This leaves the doctor no way out, no way to negotiate, and scraping to “win back” their freedom taken by companies paid by the number of claims they process… When an IPA is paid by the carrier beware. This has created some bad situations.
Some states have “any willing provider” laws. This means the insurance companies simply go into stall routines or there are so many companies the chiropractors don’t know who they are, how to access them, or cannot undertake the massive paper work to apply and follow through on all of them.
Most of this sounds like bad news; however, there are areas of hope. First, a little more background on managed care. You have to remember why it happened. Employers pay health care bills for the majority of people. Virtually all employers felt they could not afford the rising cost of health care insurance. Therefore they forced the change to managed health care. They were successful. We just saw some of the numbers and they are mind-boggling. According to Medical Economics, by 1997, 84% of all employed workers with health insurance will be covered by either an HMO or PPO. By 1998, every American with health insurance will be involved in a managed care plan, including Medicare, Medicaid, Personal Injury and Workers’ Compensation insurance.2
By the end of the 1990s, 75% of doctors (chiropractors included) are expected to belong to some form of group organization. This is because individual practitioners need to be more attractive to HMOs, PPOs, other insurers and employers. This has prompted groups such as the American Chiropractic Asso-ciation to “gear up” to help individual chiropractors. The ACA states: “The profession faces an uncertain future unless it adapts to the changes occurring within the health care delivery system.”3
The impending demise of the fee-for-service method of third party payment is compelling. The reasons are:
1. Quality of care.
Fee-for-service plans can’t selectively contract on the basis of quality indicators or cost effective care. In other words, all doctors can be part of the plan. With managed care this is not true.
2. Core competence.
The traditional strengths of insurance companies underwriting, benefit design, and money management will not be the keys to success in the future. Managing health care vs. paying claims is the key to future success.
3. Medicare/Workers’ Comp/Medicaid managed care.
The advent of $0 deductible, $5 co-payment, “free” prescription HMO plans for age 65 and the proliferation of Workers’ Compensation managed care plans have hastened the growth and penetration of HMOs. “Mandatory” Medicaid legislation is pending in most states.
4. Health Care Reform.
Given that indemnity plans are destined to attract the highest risk patients, the impact of this adverse selection is likely to raise the premiums above the market and make them unattractive due to higher premiums plus present health care reform curtails the use of “flexible savings accounts” for unreimbursed medical bills.
THE OUTCOME?
This has led a stampede of practitioners to the managed care environment. Many are being turned away. The good news for chiropractors is nearly all carriers have stopped internal network development and gone to “out-sourcing.” The main outsourcing mechanism has become contracting through IPAs (Independent Physician Associations). Instead of spending time and money to process, credential and verify individual applications, MCOs (Managed Care Or-ganizations) are contracting with IPAs for entire groups of credentialed chiropractors. I know of one chiropractic IPA with over 1,000 chiropractors nationwide, that MCOs can develop new markets or easily satisfy individual employer’s needs using this network. Therefore, joining networks with contracts becomes a way to enter the managed care arena. That’s one area of good news.
How about more good news; such as a fee-for-service HMO that embraces chiropractic (due to its ability to create cost savings) and eliminates the gatekeeper? Well, there are such creatures. They’re on the rise. One of the newest is an HMO that recently “hit the ground running” in the southern Texas region. They are in agreement with many basic tenants that we would like to see prevail throughout the HMO arena. First, they’ve utilized a chiropractic IPA that is nonexclusionary. They have agreed to take all participants in the organization who pass credentialing. This is the way it should be. Why should IPAs exclude, especially if chiropractors are in control or on the board?
Insurance companies are great at excluding chiropractors, we don’t need our own organizations doing it as well. An IPA does not have to be exclusionary to successfully gain contracts. When shown, MCOs see that by using a nonexclusionary approach they save money, escape community uproar (by not forcing people to “change their doctors”), and escape litigation. This allows for better reimbursement schedules due to decreased expenses. Let’s hope more and more MCOs see the light.
More good news? How would you like hospital privileges due to an organized approach by the profession? Yes, it’s true. There are exciting things being accomplished. Most IPAs are developed for the purpose of credentialing chiropractors and/or multi-specialties to help gain access to managed care contracts. However, there are other benefits and power in numbers. To help integrate appropriate referrals from chiropractors to orthopedic surgeons, neurologists, pain management specialists, et cetera (who eventually hospitalize a certain percentage of patients), one hospital felt it was in their best interest to “market” the services of chiropractors and their referrals to other physicians on staff of the hospital and to incorporate chiropractors into the hospital environment with co-admitting privileges. This allows closer contact with the medical staff and direct involvement with the hospital facilities. The concept was significantly strengthened by the fact that this IPA network of chiropractors was already involved with a large number of managed care PPO/HMO panels, thereby helping to bring patients to the hospital environment.
What about rural chiropractors who think, “It won’t hit me?” Guess again sometimes it’s not so bad let’s look at one example of a PHO (Physician Hospital Organization) that supplies chiropractic care. In most markets, PHOs start as groups of doctors on the staff of a particular hospital forming a miniature IPA. The hospital is the center of services. The hospital markets to payors (PPOs/HMOs, et al) by negotiating to provide discounted treatment.
Recently, many PHOs have gone a step further and combined multiple PHOs to “tie up” an entire geography and “wrap up” the majority of physicians (this occurs primarily in rural areas). Some PHOs create their own insurance product and market directly to employers. Chiro-practors are generally not on hospital staffs. But many PHOs want chiropractic so they can be competitive in the market place and have discovered Independent Physician Associations (IPAs) as a way to fill the credentialing void and deal in an organized manner. The easiest way to explain this is by exampleplease refer to “One MCO’s Point-of-View” at right. What about other areas of the country? This is happening. If you know of a rural/small town area that is being impacted by a PHO, run do not walk to a large legitimate chiropractic IPA. Become a member. Let the IPA know about the PHO and see if they can get you and chiropractic included. The chiropractic IPA is typically the only effective way to interface with a PHO conglomerate. Let’s make more victories by working inside the system. If you don’t think a PHO can take over a market and insert themselves between the insurer and the purchaser (employer), you are wrong. There is now a company that “brokers” services (provides the network) for every major insurance company in that entire region of Texas. Why? Because they are the only game in town. Over 32 insurance companies and 64 major employers utilize their system.
CONCLUSION
In some areas of the United States, the game is over. You’re either ‘in’ or you’re ‘out.’ Most areas are minimal to moderate infiltration at present. This gives many a fighting chance. Get positioned. We have been preaching ‘get positioned’ for six years now. Many of those who did are reaping the benefits. It’s not too late for many. In moderately evolved markets, managed care is a zero sum game. This means for every managed care winner, there is a managed care loser. The reality is in managed care dominated markets, the most cost effective providers who have maintained high quality prosper. Those unable or unwilling to compete do not prosper. It also means when an area has “gone managed care,” providers who missed the boat, have often missed the boat for good.
Dr. Ty Talcott of Dallas, Texas, serves on more than 55 managed care organization (MCO) panels and is on the Board of Trustees of Shared Physicians Network a national Independent Physician Association (IPA). A graduate of Logan College of Chiropractic, Dr. Talcott also serves on the board of the Planning Committee for Chiropractic in Texas, is past chairman of the chiropractic committee at Tri-City Hospital and past advisor to the Workers’ Compensation Commission in Texas. He can be reached at 214-231-9391.
