For the third time in the last few weeks, a payor has described significant increases in profits during this third quarter. Aetna reports that their net income jumped 53% over the same period last year. Wellpoint, the parent of Anthem, profits rose to 739 million. Humana reported a 30% rise in earnings.
While increases to employers are part of the reason for such juicy profits, the biggest reason reported is the reduction in utilization. As David Lazarus reports in the LA Times, “Did we all suddenly become healthier? Not likely”. There actually has been a recession in healthcare for several months. The reason is simply that while insurance companies have socked it to employers, there has also been a concomitant change in plans to high deductibles which has put a major burden on folks to the point where they “stay sick’ and simply don’t access services. The price of health care treatment has reached too high a point for many. Unfortunately, routine, rehab, and preventive treatment are the most adversely affected.
This later point is what most payors including medicare just don’t understand as it relates to physical therapy. The impetus for that whole debacle was the 17% annual increase in PT that Michigan Blue Cross was trying to address. The kneejerk and shortsighted reaction is to cut fees to PT’s, create a network that makes PT’s jump thru all sorts of additional paperwork, add disruptive pre-authorization processes, and make it less convenient for patients to access (in many cases thru an “exclusive” provider network consisting of PT’s who sign to take such hits out of fear). This tried and true formula has been used by Medicare for years. MPPR is recent example but rules that negate practice acts by limiting provider autonomy, administrative technical compliance, illogical edits, and plan of care processes that are to say the least antiquated. You have to give insurance companies credit in one regard-they now even find a fall guy to do the details. It is the sole reason why companies like Network Synergy Group, Orthonet, Medrisk, OptumHealth (formerly named American Chiropractor Network), and American Therapy Administrators (ATA) exist and are universally hated by PT’s-particular independent PT’ practices. Each one has their flavor of arbitrary guidelines, payment policies, pre-authorization processes, additional documentation/paperwork, and network contracting. In some geographies, a PT provider may have to deal with several of them on the same day!
PT’s in Texas were just notified by Aetna that their contracting agent is transitioning to ATA. According to ATA’s website:
We will recontract with a comprehensive network and guarantee savings, allowing plans to identify network and cost savings priorities. We have developed a compensation approach to physical therapy that aligns the incentives for all parties for appropriate care. Provider compensation is weighted most heavily on a severity adjusted “case” basis, for each patient actually treated. While fee for service therapy is characterized by extensive “churning” of visits and excessive unit billing, under our typical approach the incentive is to achieve the clinical outcome efficiently. No amount of traditional utilization management in a feee for service setting can approach the results attained with aligned incentives.
Quite a mouthful isn’t it? Sifting thru materials found all over the internet, their adjusted case rate includes $600 for catastrophic or level 5 which is for severe attributes. Example is a recent major stroke requiring intense intervention (by the way, level is determined by ATA consultant on a case by case basis). Don’t worry though, they don’t want to burden providers and guarantee at least $24 per visit.
While I really don’t know, in my opinion I don’t think ATA will find many Texas therapists rushing to become part of their “comprehensive network” . While in the past, many PT’s would sign anything out of fear, the harsh economic realities of contracts that don’t cover cost is now a learned lesson. While I am sure there are unscrupulous providers out there, PT’s generally give a hoot and will not undertreat patients just because it is in their economic advantage in this type of case rates. Providers who do sign up will falsely conclude that lower payments in exchange for higher volume is a good tradeoff. The best providers will likely conclude that such incentives do not achieve “the clinical outcome efficiently”.
Physical Therapy is not a zero sum game in healthcare. In fact, increase in spending for PT can be shown to decrease current and downstream costs in imaging, pharmacy, and surgery. Instead of looking at details of why therapy costs are increasing (like self-referral) most private insurance payors simply see therapy inflation as something that has to be dealt with thru benefit management firms who are highly incentivized to cut PT’s thru process and rate reductions.
Fortunately, there are a few enlightened payors studying this very issue. Until we get others onboard to look at the details and cause and effect of physical therapy spending, you can look forward to the same old tactics by benefit management firms.
larry@physicaltherapist.com
My opinions expressed in this blog are a product of my own conclusions.
