Revision of CMA Response Post

I last reported that California Medical Association (CMA) had responded to the CA PT Board and posted a letter that was taken from the stoppopts.org site.  After further review, it was noted the letter was dated December 10, 2010.  So it wasn't exactly current, nor was it in response to the latest letters sent out to California POPTS PT's.
In any case, the CMA's website has stated in their July 22 legislative update that both AB 783 and SB 924 (PT direct access) are on the top of their agenda once the legislative summer recess ends on August 15.  All bills that are going to be passed will need to be through the legislative process by September 9.  So it should be a busy end of the summer.  It will be interesting to see what happens as the CMA and PTBCA continue to duke it out.

For those interested, the CMA verbiage regarding these two bills is listed below.

AB 783 (Hayashi) is the technical fix that codifies into law the longstanding practice that allows for medical corporations to hire certain allied health practitioners, most notably physical therapists. Thought the bill received zero “no” votes in the Assembly, it did not receive the votes to pass out of Senate Business & Professions (B&P) Committee. After the failure of SB 924 (Walters), a bill that would have allowed physical therapists direct access to patients without a prior diagnosis, Senate B&P tried to take another bite at the apple by asking for AB 783to be amended to include direct access in order to receive the support of the Chair, Senator Curren Price. The committee heard testimony from all of the providers in support of the bill, and hundreds of physical therapists asking to keep their jobs. The California Physical Therapy Association (CPTA) testified in opposition, arguing that this bill brought a competitive disadvantage to physical therapy small business owners. An equal number of physical therapists testified in opposition as well. The discussion quickly disintegrated into a debate about direct access, with the CPTA arguing that it would it was necessary to equalize competition. Senators Correa, Vargas and Wyland all voted in favor of AB 783 and spoke to remind the committee that the bill before them was not about scope of practice, but was closing a loophole in corporate code. Still, the bill was 2 votes shy and failed to pass out of committee.

CMA Responds to CPTA POPTS Mandates

Well it appears that the California Medical Association (CMA) isn't going to just sit back and let the California Physical Therapy Association (CPTA) break up their POPTS clinics without a little more money and a some more legal fighting.  Imagine that!?  If I spent over $2.4 million dollars trying to get a piece of legislation passed (and lost), I think I might counter punch a few more times on principle alone.
The next round will more than likely happen in a court of law after the California Board gets sued for the first clinic they force to disband via their new interpretation of California business law: see brief description of the Moscone-Knox Act below: 

Moscone-Knox Professional Corporation Act is the general corporation law which govern the professional corporations of California. Certain professionals those who must be licensed by the State of California to carry on their professional trade may only incorporate their practice as a Professional Corporation. Such Corporations are governed by the Moscone-Knox Professional Corporations Act

 To see the details of the objections being put forth, please read the following letter which was sent by the California Medical Association's legal counsel to the CA PT Board:

So the PT Board has their legal argument and so does the California Medical Association.  Stay tuned to see who wins the next round.  In the meantime, the POPTS will continue to do business as usual.

ACO and Insurance Company Ownership

In my last blog I discussed some of the basic tenants of what an Accountable Care Organization (ACO) is all about.  So now that you are up to speed, I'd like to now talk more about how insurance companies work with the ACO model and why that topic is relevant to the national healthcare discussion.

• To date, most people in the PT world that know anything about ACO's probably have taken the position, "Isn't that what Kaiser is all about?  But they are their own thing, not competing for my PPO or Medicare business, so who cares?"  Well, Given that Kaiser Permanente has figured out how to make a profit on servicing 6.7 million enrollees, maybe we should.   Other insurance companies are starting to get it, but more on that in a minute.   Regarding ACO structure, the Integrated Healthcare Association points out that the most successful ACO in California is Kaiser Permanente,

"where there is an exclusive relationship between the insurer and its medical groups and, in most regions, with its own hospitals.  Some thought leaders consider vertical integration with an insurance provider to be core to the success of this ACO...."

• That's right, everyone is on the same team: The hospital, the doctors, and the insurance company.  (Start making your cries about socialized medicine now, it might be closer than you think in some regions!)  Imagine that, all the players with the same goal; control services to make a profit while providing adequate enough care to keep new customers rolling in.  If you think I'm stretching this idea, then check out this piece from June 2011 in The Washington Post: http://www.washingtonpost.com/insurers-quietly-gaining-control-of-doctors-covered-by-companies-plans/2011/06/29/AG5DNftH_story.html.  The article points out how insurance companies are quietly purchasing medical groups.  Why you ask?  Can you think of a better way for an insurer to control costs than to control the providers that see their members?  "Oh, you don't want to streamline your care and help us save on the bottom line?  We aren't going to kick you out of our network, we are going to FIRE YOU."  Has a nice ring to it, doesn't it?  "Now go treat some patients!"
• So if you are an insurance company and you want to have the most bang for your buck regarding control, where would you turn?  Wouldn't you try to purchase as many services as possible?  In doing so, you'd have better control of the entire healthcare ship (that includes ancillary services, which is where the high and mighty PT profession stands in this grand discussion).  Enter: ACO structure.  You have a nice and neat working community with all the services under one managed umbrella.  It then comes down to grabbing enough market share in an area, controlling costs well enough to keep premiums down so you can attract new enrollees, and slowly you start to take over the market in that area.  
• Would joining a Kaiser system (as a patient) be that bad if the majority of your doctors worked in that system?  Wouldn't that take out the need to have infinite choice as a consumer and make the HMO you are looking at more attractive, especially if it were cheaper and had a much more solid cap on your maximum out of pocket expenses?  (Oh, and what if there were also a way to see those few doctors out of network by paying a little more out of pocket for their services?  See more in my next Blog on how that can be done.)
• Hopefully by now you are beginning to see how big the players are in this equation and how the PT victory of AB 783 could really mean next to nothing in the grand scheme of things if these types of groups start to form across the state.  If you still aren't putting the pieces together, know that these groups are going to have their own PT groups.  If the ones they have aren't adequate, they could very well build satellite clinics to meet their needs.  The only reason they'd need to contract out to an independent PT clinic would be if it made financial sense to have them provide service to a zip code outside the spheres of their primary locations.  So for those of you about to cry, "that's not fair!  What about national anti-trust laws, can't they help us?"  The ACO model is Stark exempt, so they can refer to themselves as much as they want and nobody can cry foul (this is because the ACO model removes the entire concept of referral for profit.  Both the doctor and the PT want the patient out in the fewest visits possible to control costs and make the group more profitable.  There is no inherent reason to regulate over utilization in a capitated system).  
• So toss this thought around a little bit longer, all the players on the same team: doctors, hospitals, insurer, ancillary services.... the real question is, will your clinic even be on the field?  
• My next post will discuss how ACO's that aren't partnered directly with a single insurer can still turn your lights out.

What is an ACO?

Many of you have probably never heard of an Accountable Care Organization (ACO), but many of you will begin hearing about them in the coming months due to their role in the Patient Protection and Affordable Care Act.  Due to their complexity, I will be making multiple posts describing them as well as highlighting how they may or may not influence your current practice.  Much of the data I will be quoting was provided by The Integrated Healthcare Association, a not-for-profit multi-stakeholder leadership group located in CA http://www.iha.org/.
Definition:   An ACO is a group of providers that work together in controlling health care costs while improving quality of care.  The group may or may not include a hospital in their structure.  They have traditionally been the operative arm of HMO contracts, where capitated rates could be paid to an ACO for the care of a group of participating patients, usually no less than 5000 in number.  In very simplistic theory, if the group kept their costs below their capitation pool total, they were rewarded by keeping the surplus.  The risk being that if the provided services exceed their capitation pool, they lost money.  Big picture: generally cut back on patient services, the ACO makes money.  The balance for patient protection was provided via various regulatory statutes on the ACO by the state of CA.
History:  When I started researching ACO's, I was under the impression they were a relatively new phenomena.  However, they have been present in California for 30 years and provide 54% of the medical services provided to insured Californians.  The largest of these groups is Kaiser Permanente, which provides service to over 6.6 million people.  There are 285 physician organizations (ACO's) in CA that range in structure and size, as well as the contracts they serve.  These variables make the topic quite confusing and complex when trying to apply it to your own zip code.
Relevance:  Health care providers need to understand the implications of ACO's, because they are a major structural tool that Medicare and other insurance providers intended use to address the demands of the Patient Protection and Affordable Care Act, aka "Obama-care," in CA and across the country.  For an Obama-care refresher, you can find details at: http://dpc.senate.gov/healthreformbill/healthbill04.pdf.  Currently, trial markets across specific areas of the US are participating in data collection that will help define future ACO structure.  South Orange County, CA  is one of these areas and the primary reason why I am investigating this topic.
Details:  Let's look at some of the ACO details to help you better understand what they really present to the health care community.

1. Size: ACO's can range in size from <5000 enrollees (26% of ACO's) to >100,000 enrollees (8% of ACO's).  The size of a group does not dictate the profitability of the group, however, larger groups benefit from modest economies of scale when investing in their infrastructure (IT, electronic records, supporting programs).
2. Structure:

• Integrated Medical Groups (IMG).  133 groups in CA.  They are groups of primary care and specialty physicians that are usually associated with a hospital or community clinics.  ( Example: Kaiser).   
• Independent Practice Associations (IPA).  152 groups in CA.  It is an umbrella organization that encompasses solo practitioners and small to mid-size groups.  This format serves 4.8 million HMO enrollees, where the network performs many of the same tasks as an IMG: contracting, paying physicians, providing information technology services, billing services, etc.  (Examples: Monarch HealthCare, Sharp Community Medical Group).
• Some organizations incorporate both models.
• Structure has not been directly linked to profitability or quality of care of a group.

    3.  Insurances:  The initial intent of an ACO was to provide capitated service to private HMO participants, Medicare (HMO), and Medicaid participants.  They have traditionally had trouble attracting PPO business, but due to the leveling of HMO and PPO costs (similar monthly premiums) and several other factors, this is no longer a cut and dry issue.  This key aspect of the insurance make-up of an ACO has been changing in certain markets and has the potential to significantly change in the future.  This will be the key topic I will touch on in my next post.  It is very important to understand that the regulation of PPO contracts (and the services they provide their members) is much less regulated than HMO contracts in CA.  See the California Department of Managed Health Care (DMHC).  As a result, if ACO's start attracting PPO clientele through more promising rates and better coordinated care, there will be very little watch dog supervision over them.  Did I mention that ACO's are Stark exempted as well?   Maybe you can start to connect the dots and see how this is going to effect PT.  Imagine your Medicare patients and a large chunk of your private pay patients becoming ACO participants during future open enrollments.  For them to continue to seek your services, they will have to pay more to go outside their network, similar to our current PPO provider network arrangements.  The difference in this case is that as an isolated PT provider you will have a marginal chance at becoming a future preferred provider and the pool of patients you will be out of network on could be greater than 300,000 patients (in the case of South Orange County, CA).   Do you think that your PT clinic could be influenced significantly?  Think about that for a few minutes....  There will be much more to come on the PPO/ ACO topic in my next post.  At least now you should have a feel for what an ACO is if you hear about one forming in your backyard in the coming months, and have justification for the headache that ensues.

Letter from the CA PT Board.

Yes, the CA Board for PT found me with the help of an old employee of mine.  He fingered me and 3 other therapists in my practice.  I of course can't prove it, but you know when you know.  Given that he took it upon himself to personally call one of my therapists a month ago during business hours to let her know that "she was working illegally and should quit her job or face repercussions."  I think my deduction is justified.  This idiot in the same conversation had the gall to ask her if she would consider working for him!  God help us if this is where we are going.  Hi, I'm going to report you to the board and then presume you'd consider working for me since you will be out of a job!   The logic is staggering.  It is however, the kind of story that makes you feel all warm and fuzzy inside doesn't it?
That being said, I can't say I was surprised.  This individual's character is exactly the kind of disappointment I highlighted in my last post.  And the CAPTA pretty much empowered him to do it.  It leaves the kind of taste in your mouth that makes you not want to ever give another penny to the APTA.  And in case you were wondering, I've been a member since I was a student, for over 14 years.
Nevertheless, life is going on.  I am in the process of submitting my "plan" to become compliant with the assistance of a lawyer or two.  I can't really get into specifics at this time, but all I can say to my whistle blowing adversary, there is a significant chance NOTHING is going to change for 2011 as I work on complying.  And if plan A doesn't pan out, there are plans B and C behind doors numbered two and three.  So I hope he doesn't get his hopes up just yet that a moving van will be backing up to my front door any time soon.  
As he and many other out patient PT's are going to find, many of these clinics are not going to vanish.  Many groups will arrange rent back agreements to satisfy leases, possibly even arrangements to handle billing services (all of which is completely legal) and as a result, will continue to carry on healthy referral relationships with their ex-employers.  Who knows, they might even grow.... but how?  Can you imagine that the docs might be a little vengeful against their neighbors that forced them to dump their PT clinics?  Maybe they wouldn't be disappointed, seeing those smaller clinics in the community that lobbied against them, continue to struggle given that they have hurt their own practices.  If you think I'm far off, ask Paul Gaspar how many referrals he is getting now a days from his neighboring docs after being the primary whistle blower for the CAPTA on the AB 783 debate. They aren't exactly wrapping their arms around him for his good work in Sacramento.  At this point, shouldn't we all know there is policy and then there is reality.  We shall see which one has a bigger impact on the field of PT.
Given how this thing is playing out and how this is being handled, it strikes a chord in me that makes me want to work even harder to put characters like my snitching ex-employee out of business.  I will look forward to checking in on him in about a year to see how much different his bottom line looks when this all shakes out.  Stay tuned, as I will fill you in first hand as this process unfolds over the upcoming months.

CA PT Board posts a deadline

• Physical therapists working for POPTS in California have been given a deadline of September 1, 2011 to submit a "plan" for compliance to the board.  All physical therapists working for a POPTS should either find new employment or submit your compliance timeline prior to this date or face penalties regarding your PT license.  A letter was sent out to 155 therapists on 7/22/11 that had been reported to the board for being involved with a POPTS.   A copy of the letter can be viewed at the following link:  stoppopts.org.
• It should be noted that the board is not doing a systematic review of all clinics in California, nor is it sending this letter out to all its licensees, which in my opinion would be the correct thing to do.  If they were to do so they could immediately take out the excuse "I didn't know" from every therapist in the state that is working for a POPTS and hasten their ability to have their new ordinance take effect.  Isn't that what they are shooting for anyway?  More importantly, from a governance standpoint, they would be taking control of this issue in a clear voice, instead of letting the private practice special interest group be their mouthpiece.  
• To get a feel for what I am referring to, see: http://cppsig.com.  The amount of rhetoric that has come from this group regarding the topic of AB 783 has been unparalleled to any other debated issue I've seen come down the pipe in my twelve years as a therapist.  Note, they are the entity that has lobbied to stop POPTS over the past 2+ years.
• Please note, at this time, the board has chosen to send out these letters to only therapists that have been reported to be in violation of current California law by either the public or other therapists.  Who do you think the vast majority of these "complaints" have come from?  Yes, your guess is probably the same as mine; the complaints are coming from the same disgruntled private practice PT's that feel they are loosing business from their accused brethren.  
• As a matter of fact, all POPTS PT's that testified in front of the state congress at the beginning of the summer in support of AB 783 were all conveniently added to this list of 155 by the special interest PT group sitting across the isle from them.  So much for first amendment rights!?  If you don't believe me, ask a person who went and testified what they found in their mailbox this week.  
• As a result of how this matter is being handled, it has turned into a campaign of back biting and betrayal amongst our own profession.  PT's snitching on PT's in hopes of putting competing clinics out of business to better their own practice.  A very unifying message.  Bravo.  I'm sure the doctors couldn't be happier as they watch us rip the unity of the CAPTA apart.
• A final note.  For those of you that have participated in this noble practice of reporting other PT's to the board, if you think this is going to solve your problems, please review the reimbursement rates of your major insurance contracts before you breathe a sigh of relief.  The reality is: they aren't going to get any prettier in the coming months, with or without a POPTS around the corner, and that is the real anchor around your neck whether you want to admit it or not.  

Are POPTS really dead?

I am frequently reading the word fair in articles referring to the landscape of out patient physical therapy practice and the matter of POPTS; as in "It isn't fair that POPTS exist and monopolize patient referrals."  Since when has business ever been fair?  The defeat of AB 783 has been purported to be the great equalizer in California out patient physical therapy.  It is supposed to once and for all put a stop to physicians employing physical therapists and thereby, leveling the playing field by eliminating POPTS and referral for profit in the state of California.... hooray!  Well I have news for those of you that think this is the case.  As with most complicated issues, it just isn't that simple.

• First off, let's review the history of this matter.   Business arrangements between MD's and PT's that were deemed completely legal by the California Physical Therapy Association in 1990, magically became taboo two years ago when the California Private Practice Special Interest Group stumbled upon a piece of legislature from 1968 that provided a loop hole to move the anti-POPTS movement forward.  They quickly lobbied to change the code of the California Practice Act and made way for its recent interpretation of the Moscone-Knox Professional Corporation Act which is what AB 783 was intended to amend, making it legal for medical corporations to employ PT's.  For those readers that might not know, AB 783 was hung up in a state senate subcommittee in June that effectively killed the bill through 2012.   
• 2010 The PT Board voted unanimously that they can independently enforce this matter on its licensed members.
• Now that there is no impediment to their interpretation of The Moscone-Knox Act, and the Board can threaten the licenses of its members, POPTS should be finished due to the fact that medical corporations can't employ PT's and if they do their PT's loose their licenses, right?  Maybe.  At least that has been the backbone for the rhetoric published over the past month. 

First the PT Board of CA has to defend why this was deemed to NOT be a problem since 1968 until about two years ago.  If they can make that argument in court, there has been little mention about how they are going to address the fact that physician groups have taken out leases, purchased practices, and made significant capital investment on PT departments over the past 20 years based on the LEGAL interpretation that has been on the books since Stark II re-opened the door for this type of business practice in the early 90's.  If AB 783 is to be enforced via the California PT board, there surely will be law suits to follow that address the financial losses that will result from its enforcement.    These cases will not be heard overnight, and this litigation will surely slow the implementation of any such enforcement.  That could take many months to even years for its impact to be significantly felt in the PT community.   So let's slow down a little before we raise the victory flag and pat ourselves on the back.  The PT board to date (7/19/11) is still taking the matter under review, which means currently there is no official change in the business of out patient PT from a legal standpoint in California, regardless of what is being shouted from the bleachers of the private practice special interest group in California.
And if that isn't fair enough, let us not forget there is more than ample wiggle room in the laws of California business structure to create contract scenarios and even PT corporations that can provide services to medical groups.  These arrangements could effectively hold many referral patterns in place while the next shoe drops (see ACO in future blogs), all of which will be be completely legal. This fight is far from over my friends, and even if this battle is won, we are about to get an ACO wake up call in Southern California that will literally make all this minutia irrelevant in the very near future.