By: Nancy Rothenberg, Vice President, PTPN
When looking for ways to reduce costs, payers – including carriers, employers and TPAs – often look first at the provider level. They may ask, “What provider will give me the lowest cost per service?” While cost is important, of course, we may be focusing on the wrong question. Instead, we should be asking, “Which provider will give me the best outcomes at the lowest total cost?”
In today’s world of value-based reimbursement and cost/quality concerns, we need to determine what payment model will best help manage spending while ensuring that patients receive the best care. That’s the critical question. That injured worker is going to be an employee for many years to come. Taking the steps to ensure his or her prompt return to work, limiting reliance on costly prescriptions and avoiding re-injury now will help to reduce costs later. It’s also the right thing to do for injured workers.
So let’s take a closer look at the financial side of PT, at how it can be structured to provide optimal outcomes and cost savings as well as the health outcomes injured employees need and deserve.
Why Quality Equals Savings
The most important component of a cost-effective PT program is the quality of your providers. Our company’s most recent analysis of outcomes data for orthopedic conditions found that physical therapists with the best functional outcomes save an average of 30% on therapy costs per case.
The problem is many networks today don’t position the quality of providers as the top priority for their programs. Instead, the emphasis is on the lowest possible cost per service. In fact, some carriers and employers spend hundreds of thousands of dollars on consultants and in-house management to get $5 to $10 off per visit, a strategy that does nothing to improve quality of care or reduce long-term costs. In addition, such low payments may force PT practices to use lower-level practitioners such as aides and assistants to manage per visit costs, which results in lengthening the treatment.
Even payers that compensate fairly need to exercise caution when it comes to payment of PT providers. Don’t assume the dollars you allocate for PT care are all going for that service. Many large PT and multispecialty networks today pay providers a significantly reduced portion of what they collect from payers. For example, a network may charge a payer 90% of the workers’ comp fee schedule but will reimburse physical therapists at only 70%, keeping the remainder as an administrative fee. This low reimbursement means that the highest quality providers – those who measure outcomes, who focus on one-on-one, hands-on care over less effective treatment methods, who minimize the use of aides and assistants to provide care and so on – are likely to not participate in those types of networks.
The best strategy to address this type of practice is to demand transparency from organizations providing worker’s comp PT networks. Ask how they select providers for their network. Look for:
- A history of measuring performance and comparing outcomes to national benchmarks.
- Providers who are accountable for efficiency and rewarded for performance.
- Outcomes data that focuses on the appropriate amount of therapy, which equals savings on total medical and indemnity costs, rather than the least amount of therapy.
Then look at how those providers are compensated. Your goal should be fair and reasonable medical costs as well as fair reimbursement for providers to ensure you are getting the high-performing, results-oriented programs you want.
New Payment Models Come to Comp
The good news is that there is movement within the PT industry to focus on quality to ensure better outcomes, as we’re seeing in group health.
Pay for Performance (P4P) programs in group health began to pop up about 10 years ago, and recently have started to give way to Pay for Outcomes programs (P4O). However, many physical therapists in standard networks are unfamiliar with the structure and requirements of this approach. Finding providers who do understand will help workers’ comp more readily adopt today’s value-based models. Physical therapists who are knowledgeable and already participate in these programs can more easily integrate into new workers’ comp programs, providing quality and cost savings.
Ensuring Quality through Independence
It’s obvious employers and workers’ comp carriers require new solutions and more innovative approaches to meeting their needs and those of injured workers. It’s time to abandon the old methods of focusing on small, short-term savings and instead invest in outcomes-based ancillary care to reduce the total cost of claims. Leveraging physical therapy to provide quality outcomes while reducing overall costs is a proven solution for payers.
Independent physical therapists have been supporting the efforts of workers’ compensation payers for decades. Many have taken steps to ensure they can provide the outcomes data necessary to work within value-based and bundled reimbursement systems. In addition, research shows that independent providers – who don’t have the financial conflicts of interest that corporate- and physician-owned therapists have – help keep costs and utilization down. For example, a 2014 study by the Government Accounting Office (GAO) found that in the year a provider began to self-refer to their own physical therapists, those referrals increased more than twice as much as independent physical therapists.
Because of their commitment, by collaborating with networks of quality independent physical therapists, payers and employers can ensure the lowest medical and indemnity spending while maximizing outcomes and the health and productivity of their workforces.
About Nancy Rothenberg
Nancy Rothenberg has played a key role in the development of PTPN for almost 30 years. In this role, she is responsible for overseeing the day-to-day operations of the company, including payer and provider contracting, marketing and sales, provider relations, systems, data processing, political action, and planning, budgeting and analysis of overall network performance.
Rothenberg has authored a number of articles on contract management and physical therapy and has been published in such journals as Workspan, ADVANCE for Directors in Rehabilitation, Risk Management, The PPO Letter, and the Journal of Health Care Benefits.
PTPN is the nation’s premier specialty network of rehabilitation therapists in independent practice. It has led the rehabilitation industry since 1985, pioneering innovative payer contracting, quality assurance, outcomes measurement, and pay-for-outcomes (P4O) programs. The network comprises hundreds of therapy office locations and thousands of physical, occupational, and speech therapists across the country. PTPN contracts with most major managed care organizations in the nation including insurers, workers’ compensation companies, PPOs, HMOs, medical groups, and IPAs. All members of PTPN must be independent practitioners who own their own practices. For more information visit ptpn.com.