Diversify income and expand your cash flow through these additional avenues of reimbursement
Success in a chiropractic practice can be measured with several metrics. Patient satisfaction, response to care, and provider fulfillment are certainly at the top of the list. However, as with any business, the bottom line is generating the income to maintain the practice and the provider’s home life, with protection from the ability to diversify income.
As with all businesses, success relies on the income your business can generate in deference to what it costs to deliver the services. For a chiropractic practice, there are not only the hard costs of the office and staff, but your student loan debt and other payments should be included. A higher volume of patients will decrease the cost per patient, however volume may not be infinite as there may be a time dependence.
Consider diversifying your practice
Don’t rely on one or only a few avenues of reimbursement. A practice that is all cash is a great idea, but is it sustainable in all areas or during a down economy? There are seven ways a chiropractic office can be paid. Utilizing only one, or too few, could lead to issues of contraction when one of those avenues is compromised:
Direct payment from a patient is always a primary business model, but relying solely on this may reduce greatly the number of patients who have insurance that will not pay out of pocket when they pay, or have insurance that covers chiropractic.
There are areas of the country that will allow a model where patients may prepay for visits or the time-of-service payment can be discounted from your regular rate. Cash payments are always part of an office income, but a cash-only office requires a location where there is a higher-than-average income and patients can afford and are willing to pay out-of-pocket for all services, which necessitates salesmanship and personality to promote.
2. Standard health insurance
It is not uncommon for insurance plans to cover chiropractic, and 41 states have mandatory chiropractic benefits.
However, the variance of payments (allowable rates), deductibles, and limitations to the number of visits do affect how effective they are to maintaining a practice. Some plans may allow north of $100 per visit while others allow $50-60. These plans provide fewer out-of-pocket costs, which often removes the barrier of costs from the equation to getting care.
When a patient has a plan that allows 30 visits a year, even though they may feel better within 12 visits, they may request additional care as they see they have another 18 to use. In deference to the cash model, this is certainly a positive, but the provider must be aware that insurance pays for necessary care to cure or relieve a condition and not for maintenance.
The downside is that many patients may have large deductibles or coinsurance that may prohibit use due to cost. In these cases, you can simply convert them to a cash patient and potentially offer a discount compared to your insurance rate.
The upside is that you can pick and choose, and you are never obligated to bill insurance. Insurance billing is a courtesy and not a requirement, and you may choose to bill insurance plans A and B but not bill plans C and D. You are only obligated to bill when you join insurance as a provider member
3. PPO and HMO insurance
These plans have chiropractic benefits but may limit the patient to seek care from “in-network” providers only or reduce the out-of-pocket costs paid by the patient. These plans offer a trade-off in that when you join, you are obligated to see the patient, bill their insurance, and accept the contracted rate.
The providers cannot bill the patient beyond that allowance. But you will have greater access to more patients and may care for a higher volume of patients.
This is where you have to look at the cost ratio and decide if the reimbursement is at a level that covers overhead in an adequate manner. Note that a higher volume of patients will reduce the per-patient amount, but it also requires seeing a higher volume. These plans often limit reimbursement per visit from as little as $30 per average visit (visits with exams and X-rays would be higher) and up to $60.
If your practice is in a region with a high volume of people who have these plans, it is likely that you will enroll in some. Otherwise, you will not have access to these patients because often they will seek care only from providers in the network.
You may choose to join one insurance and not the other and still can give yourself some solidarity. Joining one never means you have to join all, and many of these PPO plans contract with several payers and will allow you to pick and choose in which plan you wish to participate, a great chance for you to diversify income.
4. Workers’ compensation
All states require employers to provide workers’ compensation insurance, which covers all work-related injuries and illness.
A chiropractor may be a primary provider, and the payments — though often within a mandated fee schedule — generally for a typical visit will be north of $100 per visit. The patient has no deductible or out-of-pocket costs. While the patient has the choice of provider, always assure that the claim was accepted and authorized. An authorized claim is a guaranteed benefit and a great way to diversify income.
5. Personal injury
Auto accident claims are always viable payment for chiropractic services, which may be primary care. There can be direct payment in “no-fault” or tort states under personal injury protection or PIP or med pay (direct medical benefits under auto insurance).
All are essentially guaranteed payment and will pay the billed amount unless your fees are well above usual and customary for your region. If the claim is a third-party liability and in an “at fault” state, medical payments will not be paid to the provider but to the patient or their attorney directly.
The latter can be riskier, as the payment is dependent on the settlement of the claim. Lower settlements often lead to the patient or an attorney attempting to negotiate your fee.
When vetted properly for injury to the patient, property damage and liability, these claims can result in high reimbursement. The nature and severity of the injuries may require more intense and often longer care plans.
While limited to spinal manipulation, Medicare does offer chiropractic benefits for a very large segment of the population.
All patients over 65 and anyone permanently disabled for two years or more are Medicare patients. Medicare has specific rules of protocol for diagnosis, including subluxation as the primary diagnosis with a secondary neuromusculoskeletal diagnosis. The number of visits allowed per year often ranges between 20-40 visits for an average Medicare enrollee.
The deductible is one of the lowest of any insurance, and the patient has often met with medical providers before seeing a chiropractic provider. The payment ranges from about $30-50, with Medicare paying 80% and the patient 20%. The patient is also liable for services other than spinal manipulation, for which they may be billed, but other services may also be payable by any secondary insurance plan.
You must register as a Medicare provider to see a Medicare patient, and if you choose not to register, you cannot see a Medicare patient even for cash payment. This means that if you are not part of Medicare, you will eliminate a large portion of society who may try to seek care from you.
7. Veterans Administration
The VA Choice program allows veterans enrolled in the program to receive care from a chiropractor registered with Triwest (in the western half of the U.S.) and Optum Health (for the eastern portion).
These patients require direct authorization, but due to the opioid crisis, chiropractic has become a strong arm to the management of acute and chronic issues for veterans. These plans cover complete care and can range from as few as 12 authorized visits to as many as 48. Payment for services includes not only chiropractic manipulation but exams, X-rays and a multitude of physical medicine services. This plan is also guaranteed payment with no deductible or out-of-pocket costs by the patient.
Diversify income via your payment sources
There are multiple ways to run a successful practice, and success can be defined by several facets, including the fiduciary and viability of the practice to sustain itself.
The more diverse your payment sources, the more likely you are to have sustained success. Your practice will be a big wheel, and it’s better to support it with multiple spokes rather than one or a few. There will always be an ebb and a flow that will reduce one and make the other greater, and when you have a larger wheelhouse, you are less likely to ground in low tides.
SAM COLLINS, DC, is an internationally recognized coding and billing expert of chiropractic. He is a member of Optum Health Reimbursement and Coding Committee as well as the World Health Organization, and a U.S. representative for the ICD11 diagnosis coding and Functional Disability Rating Group. He is a chiropractic college graduate and a guest lecturer for many chiropractic colleges. He is also the primary lecturer for HJ Ross and National Chiropractic Council for continuing education seminars across the United States. Email him at firstname.lastname@example.org or visit hjrosscompany.com.