Reimbursement is the Key to Beating POPTS

On one of my earliest posts, I responded to a comment regarding reimbursement and would like to follow up and expound on a few of those ideas here.  

What is the most important fight we face today in out-patient PT?

Other than having a legitimate direct access law on the books (which we of course lack in CA), the most important thing is having a reimbursement scheme that is equal and fair. Our current reimbursement rules allow Medicare (as well as other insurances) to provide different rates of reimbursement for the same services provided in a given geographical area. There are generally three tiers of rates:

1.  Out patient clinics owned by PT's 
2.  Out patient clinics owned by MD's (POPTS)
3.  The most egregious offender of the group would be the rates hospitals get for the out patient services they provide. 

For example, most PT practices in SoCal get close to 100% RBRVS (a relative value scale) for Medicare patients due to the expense of doing business here. POPTS in the same area get closer to 120% RBRVS, and hospital out patient PT gets over 200%!  Couple that with the fact that hospital out-patient PT is NOT capped by Medicare as are all other out patient clinics and you have one big money grab.  I used to think that hospitals were taking a hit by seeing those chronically afflicted Medicare patients, but after finding out a few of these facts, I'm more inclined to think that they probably can't open their doors fast enough to get them into their clinics!

So how is it when talking about how to save the Medicare system millions of dollars, this prescient issue is seemingly off the APTA radar???  I've followed the POPTS debate here in California closely over the past year, and this issue wasn't even part of the discussion against POPTS.  It is many times more significant than the concept of self-referral, and I will expand on this idea in a moment.

Unequal reimbursement is one of the most crippling offenses in healthcare; getting paid differently for the exact same services that are being provided simply because (in this case) you submit your bill under a physician group or a hospital system.  This factor is the primary reason the concept of "a level playing field" is currently a joke for independent practitioners trying to compete in the out patient arena.

It has become common to see private insurers make concessions to their largest providers while recouping those lost dollars by reducing their reimbursement to other smaller clinics in their networks.  In the PT world, the closest thing that exists to having leverage with an insurance company is to have a network of clinics.  We see it with the large companies like Physiotherapy and Associates and HealthSouth to name two.  The other option is to join a network like PTPN that tries to bundle independent clinics in an effort to negotiate better rates on the same basis.  The idea being that by having hundreds of clinics (that serve thousands of patients), you might be able to negotiate a better contract than if done alone as a single clinic.  Sometimes it works, and sometimes it doesn't, but at least you have a seat at the table.  Single entity providers have to take what they can get when trying to become a preferred provider for any of the large insurance companies.  If you don't like their rates, don't join, it's that simple.

But the leverage that is applied within the boundaries of PT corporations is minuscule in comparison to the leverage ACO's, hospitals, and large physician groups can place on an insurer.  Since they are generally the point of access for most of their patients, loosing their services would effect, in some cases, hundreds of thousands of lives, and insurance companies often can't afford the backlash from their participants.  Therefore, they usually are forced to pay these groups higher rates for their services.  When a PT entity is involved in that negotiation (as part of an ACO or POPTS), they usually get a better deal than non-POPTS or non-hospital based clinics would receive.  This fact is what makes offering PT services attractive to these groups.

Where is the APTA on this argument? Your guess is as good as mine.  However, the way to beat this phenomena might be counter intuitive.  PT's, as with most health professionals, are always calling for more reimbursement and more dollars from the federal budget.  But isn't Medicare going broke?   Wouldn't this be the easiest band wagon to start of all time regarding PT on Capital Hill?

PT WANTS LESS REIMBURSEMENT TO SAVE MEDICARE.  

And when I say less, I mean, do away with the 120% and 200% RBRVS amounts being paid to hospitals and POPTS.  Put the care back in the hands of private PT's and let's save the system millions while providing better care.  The data supports this idea.  The pressure would have to come from Medicare via the voters.  No small task given that medical and hospital lobbies would try to crucify any such cuts.   But if it were put into place, can you see, given the economic state of the country, that the house of cards could start coming down quickly?

If the battle cry "Equal reimbursement for all!" started to resonate, PT's might be able to knock the financial carrot right off the stick!  The profit margins that attract our services to hospitals and POPTS would evaporate and maybe they would get out of the game.  The insurers would love it for obvious reasons, and wouldn't the public as well?

It would be difficult to keep going with these lower rates in the short term, but the out-patient PT centers that are already in existence have a distinct advantage.  They have already figured out ways to succeed with the current rates in place.  If the plan worked, eventually as the POPTS and hospital based centers got out of the game (due to lack of profitability), there would be more patients to go around and it would start to get easier via increased patient volume for the remaining clinics.  PT would be more than half way to controlling its own destiny.

The second phase of this process would be to continue working on tightening legislation on the employment of physical therapists, similar to what has been achieved in Delaware and South Carolina, to permanently change the landscape of PT in the United States.  This would set the table for the last transition of this idea.  For those individuals asking themselves, "aren't we unsuccessfully trying to do that right now?"  I would respond, there would be a major difference going forward at that point.  If the money wasn't there, the amount of opposition should be significantly less from the American Medical Association and hospital associations.  Why would they fight for something that is loosing them money?  (Because they want to continue to strive to provide better patient care.....right!)

Continuing with that thought, as PT owned clinics started providing the majority of services in the country, a clear crossroads would surface:  How to charge for PT services?  At that critical point in time, there might be room to jump off the preferred provider merry-go-round.  Physical therapy would have the opportunity to start thinking like dentists and a payer model that is more fee for service, in its truest sense:  set a fee, allow insurance to pay out of network rates, and let the patient make up the difference out of pocket.  Stop making exorbitant write offs, via low-ball preferred provider contracts, and start collecting for what should have been all along.

The biggest obstacle at that point would be PT's themselves.  Because if it ever got to that point, they'd then have to compete with each other based on skill and outcomes.  Something many PT's would fear, similar to what the teacher's unions run into when they start trying to reward good teachers and weed out weak ones.  Additionally, there would be those providers that would never want to stop participating with insurance companies for their low, guaranteed rates due to the members that come along with it.  This would only complicate the horizon.  But if only a handful of clinics participated in these networks due to their low reimbursement, then the net effect of these weak few, would be marginal.  The idea would be to start changing the public's perception of what is normal and customary for PT.

If a low insurance and moderate patient contribution was PT's primary private payer mix (similar to how out of network dentists handle their business), then setting the price for services would become a careful balance of a PT's skills, the market for a given region, and ultimately patient choice.  Isn't that what a free market is all about?  People would have to decide as to whether or not your services validated your fees.

Just think about your dentist.  Why do you keep going there, or why have you left recently?  Wouldn't you like to have a chance at putting yourself in front of the public in a similar fashion?  I would and you should too.  But if the idea scares you, you should take a good look in the mirror and start working on your skills.  Autonomy doesn't come cheap.  And if physical therapists continue to ask for it, they need to be prepared to ready themselves for the transition.