What are the pros and cons of signing a managed care agreement?

By signing a managed care agreement, you could potentially see an increase in your patient volume. The amount of the increase depends on the location of potential patients relative to the location of your practice and the number of other chiropractors who are on this managed care panel. In addition, you may receive worker’s compensation or personal injury referrals from your managed care patients. Depending on the terms of your agreement, these patients might not be covered under the reimbursement terms of the agreement.

The arguments against signing a managed care agreement can be as varied as the questions in this section of the book. In exchange for a potential increase in patient volume, you must accept a reduction in your fees. If this discount is too large, it will not matter how many patients are added to the practice. If you lose money on every service, you cannot make up for it in volume.

Just because there are many potential risks in a managed care agreement, it does not mean that managed care agreements should be avoided. Quite the opposite is true. Some risks are easily overcome by professionally managing your practice. Other risks can be overcome by operating your practice in a more cost effective manner. Finally, a provider may always negotiate the terms of an agreement with the managed care company.

Is it true when a managed care company says that its “agreements are non-negotiable”?

If you were the negotiator for a managed care company and you wanted to make the best possible deal for your company, you might take the position that “everyone must accept your terms and they are non-negotiable”. The fact is, sometimes this statement is true and sometimes it is not. Determining the degree to which the statement is truthful will require good negotiating skills.

Terms are less likely to be negotiable when the managed care company has plenty of providers that are eager to belong to its organization. This is often the scenario in bigger cities where there are larger concentrations of chiropractors. When a managed care company has patients in an area where there are fewer chiropractors with whom to negotiate, the advantage shifts to the provider.

Confronting a managed care company over the terms it is offering you is rarely effective. A more productive method of negotiating is to go point by point through the contract and make a counteroffer on those points where you feel the financial or administrative risks are too high for your practice. Your goal is to keep the managed care company in a dialogue until you find common ground or you reach the point where you are sure that their terms are not acceptable for your practice.

I am interested in joining a managed care company. Where can I find a list of the companies that operate in Wisconsin?

There are two primary sources to determine managed care companies that operate in Wisconsin. The first is the website for the Insurance Commissioner’s Office (www.wisconsin.gov) that provides a list of all of the HMO’s that operate in the state. The second, and more practical alternative is to look up the “Health Maintenance Organization” and “Preferred Provider Organization” classification in the yellow pages. This will give you the listings of the HMO’s and PPO’s that operate in your part of the state.

I have sent in an application to be part of a managed care company and followed up the application with numerous phone calls. The managed care company refuses to tell me when, if ever, I will be accepted on their panel. Is this legal?

An organization is free to pick whomever they would like to serve on their managed care panels so long as they do not violate any of the discrimination laws. Just as you are allowed to hire your employees based on the criteria you develop, a managed care company is free to independently develop criteria for qualifications to serve on its panel subjective (based primarily on personal relationships) than objective. As long as they are not discriminating, they have not violated the law.

I have been part of a managed care company for 3 years. I have a number of problems with this company and I just want to quit. Is there any reason why I can’t walk away from this plan?

There are two way in which to leave a managed care agreement before its expiration date. The first is if the agreement allows for early termination. If so, the language controlling your departure in this fashion will typically be at the end of your agreement under a “termination” heading. Typically you have to give written notice of your departure in advance. Be sure that you send your written certified mail Return Receipt Requested to prove that you have complied with the notice requirement. You may also be required to continue care for a period of time to those patients that have not completed their treatment plans as of your departure date.

I finally got asked to join a managed care company I have been after for a number of years. On their application, they ask if I have ever had a malpractice action filed against me. I am afraid that they will blackball me because my malpractice carrier settled a claim against me a number of years ago. Is it safe to leave this information off the application?

No. Providing inaccurate/incomplete/false information on any application could expose you to a lawsuit from the managed care company when they discover your omission. It is better to be completely frank about the situation and explain why the settlement was made than to omit this information.

Who is responsible for selecting providers for a managed care company?

The law leaves this decision completely up to the managed care company. Chiropractors can be selected by a single individual or by a panel, and, as discussed in another question, the selection criteria used by the managed care company can be based on any combination of objective and subjective factors.

What problems are most likely to get a chiropractor terminated from a managed care panel?

The two problems most likely to result in termination of a provider are the quality of care the chiropractor renders and the access that a patient has to the provider’s services.

The access issue is the easiest to address. The managed care company wants satisfied subscribers. The quickest way to make them unhappy is for a potential patient to attempt to book an appointment only to find that the next available appointment is days away. The nature of a patient’s problem should dictate how soon the patient is seen. If there is some urgency to the patient’s condition, the doctor should be able to see them within 24 hours. Emergencies should be seen on the same day.

The quality of care provided to patients is under constant review. Naturally, if patients consistently complain about the quality of a chiropractor’s care, that chiropractor will not be on the panel very long. A more difficult issue concerns the providers who are terminated because they provide too much care. The a provider’s cost of care consistently exceeds the peer average, the provider will be expected to make changes in their treatment patterns. If they do not, their agreement is not likely to be renewed.

What is the purpose of the “satisfaction surveys” put our by managed care companies?

These surveys have a dual purpose. They identify problems with a particular provider, and they are used as a marketing tool for the managed care company to convince their subscribers that they are doing everything possible to provide the highest quality care.

What are subrogation rights?

Subrogation is the substitution of one person in the place of another with respect to a lawful claim against a third party, so that the substituted party “stands in the shoes of” the other, with respect to the claim against the third party. In the context of a managed care agreement this means that the managed care company “stands in your shoes” to collect from worker’s comp-ensation or personal injury carriers.

Why are subrogation rights important?

Subrogation rights are a key element in any managed care agreement; losing them can greatly increase your financial risks of providing care unless the risk is offset by adequate reimbursement. Subrogation rights involve care provided to patients involved in:

• Personal injury cases
• Worker’s compensation cases
• Any agreement where is coordination of benefits

When a managed care company calculates its premium, they do so based on the normal actuarial risks associated with the group of patients for which they are providing the insurance. This actuarial risk normally does not include work place injuries, car accidents, or other personal injuries. However, it is to the advantage of the managed care company if they can obtain your agreement to have care for WC or PI injuries covered under the terms of their agreement.

This is particularly important in a capitated reimbursement agreement where the provider receives a fixed amount of compensation in exchange for providing some or all of the chiropractic services needed by the patient. The definition of when a chiropractor is responsible for providing services under the agreement is critical to evaluating the financial risk. If you are responsible for providing services to WC and/or PI patients under the terms of your agreement, the managed care company will bill the WC or PI carrier for your services at your list price. They keep that reimbursement and pay you at your capitated rate.

A similar situation may occur when you have a patient who is covered under more than one insurance policy, each with different reimbursement levels. You might assume that you have the choice of where to bill for your services. However, depending on the language in your agreement, you may be forced to bill through the capitated plan with the managed care plan collecting from the other insurance policies.

The potential financial loss from subrogation rights is so significant that you should consult with your accountant /attorney to determine the impact on your practice before you sign a managed care agreement. They can help you assess the overall structure of the plan to determine if the capitated reimbursement rate mitigates the loss of the subrogation rights.

How can I calculate how their capitation offer compares to my usual charges?

The following step by step process will help you understand how your capitation rate compares to your usual prices. The process is important because you need to know the level of your clinical responsibility and whether the reimbursement offered to you is adequate to cover your costs.

Step One
Enter the number of initial subscribers assigned to you.

Example: 1,137 subscribers_______ initial subscribers

Explanation

When a managed care company uses capitation as its reimbursement method, they determine the amount they will offer doctors by:

1) estimating how many services their members will use
2) deciding how much each of these services is worth
3) multiplying the two of these factors together to obtain a budget
4) deciding how many chiropractors they want to service the needs of their subscribers
5) assigning each subscriber to a doctor
6) dividing the budget based on the number of subscribers assigned to each doctor

Naturally, this number changes each month because subscribers are constantly added or deleted from the pool. Your calculation should be based on the number of subscribers which are initially assigned to you. Beware, some managed care companies do not like you to have this knowledge. They do not offer doctors a “per subscriber per month” capitation rate. Instead, they offer doctors a monthly fee which looks bigger because they have multiplied the number of subscribers assigned to you by the monthly capitation rate.

As you continue completing this worksheet, you will be replicating the same mathematical process they use. To begin, you must ask them for the number of subscribers which are initially being assigned to you.

Step Two

Enter the amount (cap rate) the managed care organization is offering to pay you each month for each subscriber assigned to you.

$___________________ cap rate / month

Explanation

As we discussed above, the managed care company uses a defined mathematical process to determine the capitation rate they will offer you. It is important to remember that this is far from an exact science. Every step in the process has a number of variables which affect their budget and hence, the amount that is offered to you.

In this step, make sure that you get the amount of the capitation the managed care company is offering to pay you on a monthly basis for each subscriber assigned to you.

Step Three

Multiply the cap rate from step two by the initial number of subscribers assigned to you in step one.

$_____cap rate x______subscribers = cap fee/month

Explanation

By multiplying the number of subscribers assigned to you by the monthly cap rate for each subscriber, you will determine the amount of the monthly check you will receive from the managed care company.

Step Four
Multiply the cap fee / month from step three by 12.

$______cap fee / month x 12 = $______cap revenue

Explanation

By multiplying the amount of the capitation fee you receive each month from the managed care company by 12, you will determine your amount of annual capitation revenue from this plan.

Step Five
Enter the percentage of patients from this plan which utilized chiropractic services over the past 12 months.

Example: 8.93% utilization rate __________% utilization rate

Explanation

This number is absolutely critical to understanding your financial risk. When you accept capitation as reimbursement you are responsible for providing all of the chiropractic services needed by the subscribers assigned to you. The more care this group needs, the more cost you incur to provide their care.

Utilization rates vary widely. There is no such thing as an “average” rate of utilization. Many factors can contribute to higher or lower rates of utilization including: age, gender, job type, previous health history, previous chiropractic care, type of health coverage, or the co-payments or deductibles a patient is required to pay.

Utilization rates are sometimes difficult to get from managed care companies because providing that information makes it easier for you to analyze their offer. The utilization rate of a particular group of subscribers may not be important to them because they are looking at the group as a whole. They may arbitrarily decide on their reimbursement budget and divide that amount among the participating doctors. You, however, have an absolute need to know the utilization rate for the patients assigned to you.

Higher utilization means more patients are utilizing your services for which you are being paid a fixed amount. Because utilization is so significant, utilization data should be obtained to at least one decimal place although two would be better. Every tenth of a percent increase in utilization means higher costs for the provider.

The use of chiropractic services generally increases over time. For this reason, utilization rates should be obtained, if possible, for the previous two years so an estimate of future utilization can be made.

Step Six
Multiply the utilization rate from step five by the number of subscribers assigned to you in step one.

Example:

8.93% utilization rate x 1,137=102 estimated patients

______ utilization rate x _____ assigned subscribers

= ______ estimated patients

Explanation

Multiplying the utilization rate by the number of subscribers assigned to you will allow you to determine the estimated number of patients who will require care from the group of subscribers assigned to you.

Step Seven
Enter the average revenue you receive for each non-discounted group health case.

$_______________ per case

Explanation

This calculation is based on cases in which there was no discount for services. To calculate your average revenue per case, follow these steps:

1) Select six representative letters of the alphabet. Representative means letters like B, M and R, not unrepresentative letters like O, Q, or Z.

2) Select the patient files which had group health claims in which your fees were not discounted.

3) For each patient injury, add the amounts on each of your billing forms related to that case. The case began on the date of the initial examination and ended when the patient was discharged or ended treatment. Remember, some patients may have had only one problem or “case” during the year; others may have had several.

4) Review the claims for each of these patients that were filed over the last 12 months.

5) To keep track of your results, use these headings on top of a sheet of paper: Case Revenue per case
1 ______________
2 ______________
3 ______________
4 ______________
5 ______________
6 ______________

6) When you have finished listing all of the information, add the total amount of revenue for all cases.

7) Divide the total amount of revenue by the total number of cases. Your answer is the average amount of revenue per case for patients with non-discounted group health insurance.

Step Eight
Multiply the average revenue per case in step seven by the estimated number of patients in step six.

$________ per case x est. patients

= $________total case revenue

Multiplying your average revenue per case by the number of patients you expect to receive from this plan will tell you how much revenue you would have received from this group of patients if they were paying your usual and customary prices.

Step Nine
Divide the cap revenue from step four by the total case revenue in step eight and subtract the answer from 1.

1-_____ Total Estimated Revenue =__________

Estimated Case Revenue

You are finally ready to make the calculation that will tell you the amount of discount you will incur under this reimbursement plan. The numerator, the number on top, is the capitation revenue you expect to receive from the managed care company for the patients assigned to you. The denominator, the number on the bottom, is the amount of revenue you would have received had the managed care company paid your usual and customary prices for treating this group of patients. Subtracting your answer from the number “1” will show you the percentage discount they are asking you to accept.

Please remember that all of your managed care decisions must be made as an individual or as part of your service corporation. Making decisions as part of a group could be a violation of anti-trust laws. You have the right to negotiate any agreement or contract term. Reputable managed care companies want you to have complete information before you sign an agreement. Your agreement may vary substantially from the above example. It is very important that you, your attorney, or your accountant review each section of every managed care agreement to determine its potential impact on your practice.

I have received a complicated reimbursement offer from a managed care plan in which I received a capitated amount per month but I am also entitled to keep the co-pays and deductibles I received from the patient. What methodology can I use to calculate how this reimbursement plan compares to my usual prices?

The following worksheet will help you evaluate a reimbursement offer that involves capitation with retention of co-pays and deductibles.

Step One
Enter the number of initial subscribers assigned to you.

Example:

1,137 subscribers

________ initial subscribers

Explanation

When a managed care company uses capitation as its reimbursement method, they determine the amount they will offer doctors by:

1) estimating how many services their members will use
2) deciding how much each of these services is worth
3) multiplying the two of these factors together to obtain a budget
4) deciding how many chiropractors they want to service the needs of their subscribers
5) assigning each subscriber to a doctor
6) dividing the budget based on the number of subscribers assigned to each doctor

Naturally, this number changes each month because subscribers are constantly added or deleted from the pool. Your calculation should be based on the number of subscribers which are initially assigned to you. Beware, some managed care companies do not like you to have this knowledge. They do not offer doctors a “per subscriber per month” capitation rate. Instead, they offer doctors a monthly fee which looks bigger because they have multiplied the number of subscribers assigned to you by the monthly capitation rate.

As you continue completing this worksheet, you will be replicating the same mathematical process they use. To begin, you must ask them for the number of subscribers which are initially being assigned to you.

 

Step Two

Enter the amount (cap rate) the managed care organization is offering to pay you each month for each subscriber assigned to you.

$____________cap rate / month

Explanation

As we discussed above, the managed care company uses a defined mathematical process to determine the capitation rate they will offer you. It is important to remember that this is far from an exact science. Every step in the process has a number of variables which affect their budget and hence, the amount that is offered to you.

In this step, make sure that you get the amount of the capitation the managed care company is offering to pay you on a monthly basis for each subscriber assigned to you.

Step Three
Multiply the cap rate from step two by the initial number of subscribers assigned to you in step one.

$ _________ cap rate x_____________subscribers

= _________ cap fee / month

Explanation

By multiplying the number of subscribers assigned to you by the monthly cap rate for each subscriber, you will determine the amount of the monthly check you will receive from the managed care company.

Step Four
Multiply the cap fee / month from step three by 12.

$______cap fee / month x 12 = $_______cap revenue

Explanation

By multiplying the amount of the capitation fee you receive each month from the managed care company by 12, you will determine your amount of annual capitation revenue from this plan.

Step Five
Enter the percentage of patients from this plan which utilized chiropractic services over the past 12 months.

Example:

8.93% utilization rate
___________% utilization rate

 

Explanation

This number is absolutely critical to understanding your financial risk. When you accept capitation as reimbursement you are responsible for providing all of the chiropractic services needed by the subscribers assigned to you. The more care this group needs, the more cost you incur to provide their care.

Utilization rates vary widely. There is no such thing as an “average” rate of utilization. Many factors can contribute to higher or lower rates of utilization including: age, gender, job type, previous health history, previous chiropractic care, type of health coverage, or the co-payments or deductibles a patient is required to pay.

Utilization rates are sometimes difficult to get from managed care companies because providing that information makes it easier for you to analyze their offer. The utilization rate of a particular group of subscribers may not be important to them because they are looking at the group as a whole. They may arbitrarily decide on their reimbursement budget and divide that amount among the participating doctors. You, however, have an absolute need to know the utilization rate for the patients assigned to you.

Higher utilization means more patients are utilizing your services for which you are being paid a fixed amount. Because utilization is so significant, utilization data should be obtained to at least one decimal place although two would be better. Every tenth of a percent increase in utilization means higher costs for the provider.

The use of chiropractic services generally increases over time. For this reason, utilization rates should be obtained, if possible, for the previous two years so an estimate of future utilization can be made.

Step Six
Multiply the utilization rate from step five by the number of subscribers assigned to you in step one.

Example:

8.93% utilization rate x 1,137
= 102 estimated patients
______utilization rate x assigned subscribers
=______ estimated patients

Explanation

Multiplying the utilization rate by the number of subscribers assigned to you will allow you to determine the estimated number of patients who will require care from the group of subscribers assigned to you.

Step Seven
Enter the average number of office visits for your patients who have group health insurance.

Example: 11.3 average visits per group health patient ___________average visits per group health patient

Explanation

In this step, it is very important to focus only on your group health patients. Because of the requirements of worker’s compensation laws, patients injured on the job may require more intensive or rehabilitative care in order to return them to work. Likewise, personal injury patients are often involved in litigation. Because the doctor may have to justify each and every service years after it was provided, more extensive examination and documentation may be required. People insured under group plans are the only patients who receive “normal” care, i.e. treatment plans based on normal recovery patterns and relatively free of outside interference.

Determining the average number of office visits for patients with group health insurance is not difficult but the number is so important that it should be calculated - never guessed. The following steps will allow you to arrive at an accurate number without analyzing every group health file.

1) Select six representative letters of the alphabet. Representative means letters like B, M, and R, not unrepresentative letters like O, Q, or Z.

2) Select only the patient’s files which had group health claims.

3) For each patient injury or illness, count the number of office visits from the date of the initial examination until the patient was discharged or ended treatment. Notice we are using the term office visit, not adjustments. This is because patients may not always receive an adjustment on every visit. Some patients may have had only one problem or “case” during the year; others may have had several. Likewise, some patients may have needed dozens of visits, while others just a few. It doesn’t matter. Each injury or illness is counted as a separate case regardless of the number of visits required to resolve the patient’s problem.

4) To keep your study reasonable, review claims filed over the last 12 months or so. Maintenance care should not be counted.

5) To keep track of your results, use these headings on top of a sheet of paper: Case Number of visits

1 ______________
2 ______________
3 ______________
4 ______________
5 ______________
6 ______________

6) When you have finished listing all of the information, add the total number of visits for all cases.

7) Divide the total number of visits by the total number of cases. Your answer is the average number of office visits for a patient with group health insurance.

Step Eight
Multiply the estimated number of patients from step six by the average number of visits in step seven.

Example: 102 est. patients x 11.3 average visits
= 1,153 est. office visits
________ est. patients x _____average visits
=________ est. office visits

Explanation

Multiplying the estimated number of patients by the average number of visits per patient will give you the total number of estimated office visits from this particular group. This information is important because patient co-payments are based on an “office visit” not a particular service performed during the visit.

Step Nine
Multiply the estimated office visits in step eight by the per visit “co-pay” paid by the patient.

________ est. office visits x $_________ co-pay
=________ co-pay revenue

Multiplying the estimated number of office visits by the co-payment required for each visit will tell you the amount of revenue you will receive from co-payments for the entire year.

Step Ten
Multiply the estimated number of patients from step six by the “annual deductible” paid by patient.

Example: 102 est. patients x $100 deductible
= $10,200 deductible revenue

__________ est. patients x_______ deductible
=__________ deductible revenue

Multiplying the estimated number of patient visits by the annual deductible required for each patient will tell you the amount of revenue you will receive from deductibles for the entire year.

Step Eleven Add the cap revenue from step four plus the co-pay revenue from step nine plus the deductible revenue from step ten.
__________ cap rev.
+ __________ co-pay rev.
+ __________ deductiblerev
= __________ Total Est. Rev.

Explanation

In this step you are merely adding together all of the different types of revenue you will receive from this contract:

• capitation revenue from step four
• co-payment revenue from step nine
• deductible revenue from step ten

Step Twelve
Enter the average revenue you receive for each non-discounted group health case.

$__________ per case

Explanation

This process is similar to the one you went through in step seven, with two small difference. Instead of office visits you will be looking at the revenue each case generated; you only want to look at group health cases in which you did not discount your fees. Once, again follow these steps:

1) Select six representative letters of the alphabet. Representative means letters like B, M, and R, not unrepresentative letters like O, Q, or Z.

2) Select only the patient files which had group health claims in which your fees are not discounted.

3) For each patient injury or illness, add the amounts on each of your billing forms related to that case. The case began on the date of the initial examination and ended when the patient was discharged or ended treatment. Remember, some patients may have had only one problem or “case” during the year; others may have had several. Likewise, some patients may have needed dozens of services, while others just a few.

4) Review claims filed over the last 12 months or so.

5) To keep track of your results, use these headings on top of a sheet of paper:

Case Revenue per case
1 _______________
2 _______________
3 _______________
4 _______________
5 _______________
6 _______________

6) When you have finished listing all of the information, add the total amount of revenue for all cases.

7) Divide the total amount of revenue by the total number of cases. Your answer is the average amount of revenue per case for a patient with non-discounted group health insurance.

Step Thirteen
Multiply the average revenue per case in step twelve by the estimated number of patients in step six.

$_________ per case x est. patients
= $_________total case revenue

Multiplying your average revenue per case by the number of patients you expect to receive from this plan will tell you how much revenue you would have received from this group of patients if they were paying your usual and customary prices.

Step Fourteen

Divide the total estimated revenue from step eleven by the estimated case revenue in step thirteen and subtract the answer from 1.

1-_____ Total Estimated Revenue = ___________
Estimated Case Revenue

You are finally ready to make the calculation that will tell you the amount of discount you will incur under this reimbursement plan. The numerator (the number on top) is the capitation revenue you expect to receive from the managed care company for the patients assigned to you. The denominator (the number on the bottom) is the amount of revenue you would have received had the managed care company paid your usual and customary prices for treating this group of patients. Subtracting your answer from the number “1” will show you the percentage discount they are asking you to accept.

Please remember that all of your managed care decisions must be made as an individual or as part of your service corporation. Making decisions as part of a group could be a violation of anti-trust laws. You have the right to negotiate any agreement or contract term. Reputable managed care companies want you to have complete information before you sign an agreement. Your agreement may vary substantially from the above example. It is very important that you, your attorney, or your accountant review each section of every managed care agreement to determine its potential impact on your practice.

My managed care agreement requires me to provide coverage 24 hours a day, seven days a week. What exactly does this mean?

This provision is included in managed care agreements to insure that patients have access to insure that patients have access to care at all times. To comply may require you to wear a beeper or be accessible to an individual that answers your phone. Simply having someone leave a message on your answering machine probably would not be enough. If you have an associate cover for you, you would be responsible for their compliance. To ensure that there is no misunderstanding between you and the managed care company, you should determine how much time to have to respond to a patient’s call without violating this provision of the agreement.

The managed care agreement I received includes a fee schedule that lists obsolete CPT codes. Can I sign this type of agreement without violating state or federal law?

You would think that managed care companies would constantly review their agreements to make sure that all of the coding was current. From time to time this does not occur and it is important that you have coding errors corrected before you sign the agreement. Federal law (The Kennedy Kassebaum Act) requires a health care provider to use coding that is most appropriate to the services provided. If the CMT codes have been updated since your last agreement you are required to use the most current codes. You should inform the managed care company that they have listed an obsolete code and have them issue a new fee schedule before the agreement is signed.

 

Is my practice potentially being limited if my care must be approved by a medical doctor?

Your agreement requires that all care be authorized by written orders of a medical doctor. This means that a medical doctor is serving as gatekeeper for the plan. The impact on your practice will be determined by the degree to which the medical doctor believes in the efficacy of chiropractic. You might want to have an in-depth conversation with this person to under the circumstances under which chiropractic care will be allowed and his/her guidelines for medical necessity.

The managed care company I am interested in joining has an administrative fee to handle my application. It is normal for a company to charge this fee and what does it cover?

Managed care companies use administrative fees to offset the cost of credentialing their providers and/or the costs of running their network of providers. Many professionally run managed care organizations do not charge administrative fees. When this cost is shifted to the provider, it increases financial risk because the provider does not know how much business he or she will receive to offset this cost. If the managed care company is able to provide data regarding the number of patients likely to be seen by the provider, it would ameliorate this risk.

The managed care agreement I am considering requires me to “maintain a high standard of quality consistent with the ethical principles and standards of the American Medical Association”. Since I am a chiropractor, how can I be bound to medical standards?

The general terms of a managed care agreement are often written for all health care specialties. Normally, this should not pose a problem. However, if a chiropractor sells items such as nutritional supplements, supports, or pillows, they should check with the managed care company to make sure this is not an ethical violation.

Is a provider normally required to provide care to their patients if the managed care company goes bankrupt?

Logic would seem to indicate that a provider would have no obligation to a company that cannot reimburse them for their services. However, logic is not what governs managed care relationships. It is the language of the agreement that describes your responsibilities in the event of the insolvency of the managed care company.

While some agreements allow the provider to terminate coverage in the event the managed care company or a company with which it contracts becomes insolvent; other agreements require the provider to continue to provide care to the patient under a treatment plan for a period of time past the date of insolvency. This information is generally found in the termination clause.

Is it fair that my managed care company requires me to furnish care for up to 180 days after the termination date of the agreement?

This type of clause normally applies to patients that are under a treatment plan on the termination date of a managed care agreement. The requirement that you continue to treat these patients may be partially based on state or federal law. In addition, it protects the quality reputation of the managed care company as they do not have to be concerned about the patients transitioning to a new provider.

 

I have never negotiated a managed care agreement before. This agreement allows the managed care company to negotiate capitated fees on my behalf. Since they know the market better than I, isn’t it less risky if they do this work instead of me?

Before you allow another individual or organization to negotiate your reimbursement, you might ask yourself if they are working to protect your financial interests or theirs. When it comes to capitated reimbursement you can be accepting extraordinary risk if you do not completely understand the reimbursement plan.

This extraordinary risk comes from the fact that you are getting paid a fixed amount to provide all of the chiropractic care necessary for all of the individuals assigned to your care. As the number of patients assigned to you increases, the risks grow because you may need to hire additional chiropractors and/or staff to service the needs of these patients. The worksheets included in other questions can help you understand the mathematics of capitated plans. If you are not fond of math or, are too busy to understand the complexities of each plan, it is worth the expense to have your accountant or attorney do this work for you.

The managed care plan I am considering uses a “pool arrangement” to distribute reimbursement. Are there any special risks associated with this reimbursement method?

A good way of understanding reimbursement pools is to consider how you would feel if all of the members of your family decided that your earnings would all go into a common pool. Since this is your family, you might assume that you would be able to come up with a method to divide the pool fairly.

When a managed care company uses a pooled reimbursement method, your family is the other chiropractors participating in the pool along with the managed care company managing the plan. Each of those pool participants is trying to claim as much of the pool as possible for themselves. The first slice of this pie goes to the managed care company that takes a percentage of the pool for its administrative costs. You have the responsibility to determine if the percentage reflects its actual costs. If the percentage is higher than the actual costs, the additional amount is coming from the chiropractor’s portion of the pool.

You also have the responsibility to understand how the remainder of the pool is divided. For example:

? Some plans assign the same value to all exam codes for the purposes of distributing the pool. E/M codes have different relative values to differentiate the varying levels of complexity and work of the exam process. If the same values are assigned to all codes, doctors may have a disincentive to do their work properly. This risk can be offset if the plan has a quality assurance mechanism to insure that a chiropractor performs the level of exam necessary for the patient’s condition. This QA mechanism would also insure that chiropractors are not inflating the level of exam performed to obtain a higher share of the pool. ? Some plans base reimbursement on the percentage of adjustments performed by each chiropractor. They give no credit for the x-rays, exams, or physical therapy that then may have been provided. By not considering services other than the adjustment, the plan is applying a conservative practice philosophy to managed care reimbursement. If you routinely provide physical therapy services to your patients, your share of the pool will be less than those doctors that do not provide physical therapy. In addition, if x-rays and exams are excluded from the pool, doctors may have a disincentive to do their work properly. This risk can be offset if the plan has a quality assurance mechanism to insure that a chiropractor performs the level of exam necessary for the patient’s condition.

• Some plans divide the reimbursement pool based on new patient visits only. The intent is to divide reimbursement based on new patients with acute problems. But some chiropractors attempt to increase their share of the reimbursement pool by having their staff make calls to parents to bring their children in for care.

My managed care company requires me to take 12 hours of my continuing education from classes they approve. Why would they do this?

By telling you which continuing education programs you must attend, the managed care company hopes to influence the manner in which you provide care to your patients.

Some managed care agreements do not allow me to bill for an exam and an adjustment on the same day of service. Others do not allow me to bill for a spinal and extremity adjustments on the same day of service. If I am not paid for these services, am I required to provide them?

Absolutely, yes. A chiropractor has both a clinical and ethical responsibility to provide the level of adjusting services needed by the condition of the patient regardless of the reimbursement they are paid, or not paid, for providing the care.

How can a “non-compete” clause hurt me when I discontinue my affiliation with a managed care company?

A “non-compete” clause has the potential to have a significant economic impact on your practice because you may not sign an agreement with another managed care company to provide services to the same group of patients. Clauses like this can remain in effect for years after the termination of a contract, regardless of the reason for termination.

My managed care agreement states that I may not delegate the performance of any of the covered services. Does this mean my properly trained CA cannot assist in my work?

The way the agreement reads, it does not provide for any exclusions, including properly trained CAs. Before your sign this agreement, you may want to define the circumstances under which properly trained office staff or a substituting chiropractor is allowed to provide care to the patient covered under this agreement.

Are managed care companies requiring their participating chiropractors to submit claims electronically?

Electronic billing is one of the newer requirements of a managed care company. This could involve new technology and training for your staff. While electronic billing could result in new efficiency for your billing operation, be aware that implementation will involve technology and training costs.

 

What should I know about managed care plans that pay a flat exam fee regardless of the evaluation/management code I use?

The federal government, through the RUC process, has assigned relative value to each of the E/M codes based on the complexity of the work involved with their use. As you move up the E/M list the complexity of the work increases markedly, as does its relative value. A chiropractor has the clinical responsibility to provide the level of evaluation needed by the condition of the patient regardless of the reimbursement plan they accept.

An IPA recently sent me information that includes a list of their potential clients. Should I be influenced by the impressive looking list?

There is a big difference between a potential client and an actual client. New IPA’s frequently provide impressive lists of local and regional insurance companies to which they intend to market their services. It is easy to create these lists. All one has to do is copy information from the yellow pages to create an impressive list of potential clients. It is much more difficult to have the insurer sign an actual agreement. Your focus should be on the number of actual patients that are committed to this IPA. A legitimate company will have no problem in providing that information to you.

I have never dealt with “per diem” rates. What are they?

The “per diem” rate covers all modalities provided during an office visit. The fee paid is the same whether one modality or three is used. A chiropractor has a clinical responsibility to provide the services necessitated by the condition of the patient regardless of the reimbursement they accept.

The contract I am considering does not provide for any payment for physical therapy modalities. Can the managed care plan do this?

Unless the managed care plan excludes payment for physical therapy modalities from medical doctors, it is likely they are violating the anti-discrimination provisions of the law.

When a managed care agreement covers all of the care rendered to a covered individual regardless of the circumstances, does this mean I cannot bill an auto carrier if a patient is involved in an accident?

That is correct. When a managed care agreement covers all of the care provided to an individual regardless of the circumstance involved in the causation of the injury, this would include care rendered to worker’s compensation and personal injury patients. There is nothing wrong with this type of agreement as long as a doctor is satisfied that the reimbursement offered covers this additional risk.

The agreement I am considering requires me to pre-authorize all of my care. How can I be sure that the managed care plan will treat me professionally?

The best you can do is to try to understand how the preauthorization system might impact your practice before you sign the agreement. You might consider:

The agreement I am considering has numerous references to medical doctors, DEA licenses and admitting privileges at hospitals and references to chiropractors. Can I sign this agreement?

Managed care companies can get sloppy with their agreements, especially national companies. They forget that each state has laws that may preclude the use of certain terminology. You cannot sign agreements that require you to do something that is forbidden under your scope of practice, such as having a DEA license. The agreement must be redrafted for a chiropractor before it is signed selecting a sample of your difficult cases

- request that the managed care company allow you to test their preauthorization methods
- use their system to determine if they would have approved your care

Can a chiropractor sign a managed care agreement that designates him/her to be a primary care provider?

You are fully qualified to be a primary care provider.

Are plans that reimburse on a relative value basis more fair than other types of reimbursement?

Relative value reimbursement systems are complex because the plan has control over the “relative value units” (RVUs) they assign to each service and the amount that is reimbursed for each unit of care. The only way to determine exactly what your reimbursement will be is to submit a list of the CPT codes you use to the plan. Ask them to provide the actual compensation for each of these codes.

The managed care plan I am considering uses a different conversion factor for MDs than DCs for relative value units. Can they do this?

A managed care plan covered under Wisconsin law would violate the anti-discrimination provisions of the law if conversion factors for MDs were different than DCs.

What are the implications if I must transfer a copy of the patient records to another chiropractor when I leave a managed care plan?

The only implication is the cost of providing a copy of the records to the doctors chosen by the managed care company. Since you are required to have a complete set of records for seven years from the date of a patient’s treatment, you cannot simply give the new chiropractor the actual records. Each record, including x-rays, must be copied at your expense.

The agreement I received did not include reimbursement information. Can a managed care company have me sign before I know what I am going to be paid?

There is nothing in the law that requires a managed care company to give you a reimbursement schedule before you sign their agreement. You have the right to review and/or negotiate reimbursement terms before signing an agreement but it is up to you to insist on these rights.

Under the proposed terms of an agreement, I would be required to attend an educational program offered by the managed care company. Is there any risk related to this term?

Before you sign the agreement you might consider asking what charge, if any, there will be for the seminar. In addition, you may want to know what content was of past programs they have taught to understand if this is legitimate education.

I have never encountered a managed care agreement that requires me to cooperate with any special studies that might be done in the evaluation of the availability, accessibility and quality of services rendered to my patients. Is this a typical clause?

Some managed care plans are genuinely concerned with the quality of care received by their subscribers. You have the right to ask how much time these studies may take of you or your staff and to negotiate for limits on this time if necessary. In addition, you may have special obligations under HIPAA to protect the confidentiality of patient information.

This agreement I am looking at will only reimburse for their accepted techniques. Is there some risk in me accepting this term?

Most chiropractors use blends of techniques to insure that their patients receive the treatment most appropriate for their condition. There are hundreds of these blended techniques. By accepting these restrictions on your practice, you are forcing yourself into a box that can take away your right to make independent judgments on behalf of your patients. It is one thing for a managed care company to require you to demonstrate the necessity of your care; it is quite another when you might not have the ability to treat a patient effectively.

What does an agreement mean when it includes the language that the “provider agrees to promptly disclose to the plan any information regarding your professional capacity that may or could have a detrimental impact on the plan?

With this language, the plan is trying to protect itself from any circumstances where the provider ability to provide services is impaired. This could include:

• Drug or alcohol dependency.
• A finding by the chiropractic examining board 3-17 that restricts the license of the chiropractor in any manner.
• Any injury that restricts or limits the ability of the chiropractor to provide services.
• Structural damage to the clinic which forces the chiropractor to close their office.
• Any health condition which would require the chiropractor to limit the hours or availability of their services.

A chiropractor might assume that if any of these conditions occurred, their agreement would be terminated. Under this language, it is certainly a possibility. However, if the intent of the plan is to limit potential injury or to inconvenience the patient, they may, under some circumstances, allow the chiropractor some degree of flexibility to deal with the problem.

Are managed care companies required to hire the most qualified chiropractors to serve on their managed care panels?

No. A managed care panel may use any selection method they deem appropriate to fill their panel.

How can I get a clue if a managed care plan is running out of money?

You might be able to deduce there is a problem is:

• If you see a decline in the amount of care approved for your pre-treatment authorization requests.
• Payments begin to show up late.
• Fee for service or capitation payments have larger amounts withheld from them.
• The plans marketing efforts are reduced.

What is a self insured plan?

A self insured plan is a health insurance plan sponsored by an employer under which the employer acts as its own insurance company. Instead of paying traditional premiums to an insurance company, it pays claims directly out of its earnings. Very often a self insured employer will hire an insurance company to manage its claims process so it is not apparent that the employer is self insured. The only way to be sure is to contact the insurance company or the employer.

What company is likely to be self insured?

All of the following are likely to be self insured:
• Any company with over 500 employees.
• Any national company.
• Any company that does business in more than one state.
• Any city, town, or municipality.

Is it a violation of the law if a managed care plan does not have female providers on its panel?

No it is not. A managed care plan is not required under Wisconsin law to have female providers on its panel.

Are there any “general rules” that I should use as I review a managed care agreement?

Reading a managed care agreement can be a very tiresome process. Nevertheless, you must understand what is in an agreement before you sign. In general:

• There is no such thing as a “standard agreement”.
• Do not believe someone if they tell you that they do not enforce certain agreement provisions.
If they don’t enforce the provision, have them take it out of the agreement.
• Agreements are not “made to be broken”; they are made to be enforced.
• The person who offers you the agreement is probably not the person who wrote the agreement.

Do not depend on their promises.
• Your colleagues are probably very good chiropractors. That does not mean they have the ability to make business decision on your behalf. The anti-trust laws absolutely require you to make your own business decisions.
• Unless someone is qualified, do not ask their opinion on the meaning of a managed care term.
• Managed care plans often require you to make a decision on an agreement in a very short amount of time. You are subjecting yourself to enormous financial risks by signing an agreement that you do not thoroughly understand.

What is the best strategy for getting on a managed care panel?

There are three important points to guide your attempts to be included on a managed care panel. Stay positive You catch more bees with honey than vinegar.” Staying positive with all of your communication is the most important consideration when attempting to gain access to a panel. Showing anger or petulance when corresponding with the managed care company will never be a successful strategy. After all, they want partners with whom they enjoy being in business.

Stay informed The marketplace changes all the time. Providers leave the area, HMO’s add employer groups, and providers sell their practice which could mean the HMO needs new providers. Being on top of changes in the marketplace can give you a competitive advantage when applying for a vacancy on a managed care panel.

Be involved It cannot hurt, but it can certainly help your cause, if employers request that your name be added to their managed care panel. This is best accomplished by asking patients to write letters to their employer on your behalf. If you happen to be female and there are no female chiropractors on the panel.

Why do managed care companies have application forms that more difficult to fill out than IRS forms?

Managed care companies are businesses. They are looking to associate with doctors whose practice style will help them achieve their profitability and quality goals. They use the application process to weed out doctors whose treatment methodologies might harm their reputation or their profitability. For this reason you can expect detailed questions on past disciplinary, financial, and clinical problems.

The reimbursement schedule of a plan I am considering does not allow me to bill for upper level E/M codes. Can a managed care company deny me reimbursement for something I have a right and an obligation to do under my scope of practice?

The reimbursement you are offered is not related to the clinical responsibilities you have as a chiropractor. You have the clinical responsibility to provide the level of evaluation needed by the condition of the patient. If you accept a fee schedule that does not include the full range of E/M codes, you are still professionally responsible for providing all evaluation and management services that are needed by the patient. Shortcutting the care needed by the patient can subject you to disciplinary action by the chiropractic examining board and a potential malpractice action.

The managed care agreement I received requires a patient to make a co-payment. I like the idea of a co-payment because it increases the overall reimbursement I receive for the care of the patient. Is there anything I am not considering?

While receiving a co-payment may increase your reimbursement (depending on the total reimbursement offered), be aware that co-payments can significantly reduce the utilization of chiropractic services. Since co-payments must be paid on every visit, they serve as a disincentive for the patient to receive care. They force the patient to pay a larger portion of their health care costs. The more a patient is forced to pay themselves, the less likely they are to come in for care.

What does it mean when I give a managed care company the authority to act as my agent to secure managed care agreements for me?

Depending on how the agreement is written, delegating the authority for a managed care company to act as your agent can subject you to considerable risk. This is particularly true if you do not have the right to approve an agreement before you are subject to its terms. For example, the agent will completely control reimbursement terms, pre-authorization (including that of a medical doctor), quality assurance, and utilization review.

Some agreements allow you a period of time to review the terms of an agreement before it becomes effective. This review allows a provider to negotiate changes and/or reject agreements before they become becomes binding.

I am considering joining a Medicare+Choice plan. The agreement requires me “to provide plan members with services of the same quality and in the same manner as non-Medicare patients”. I think there might be some hidden meaning in this clause. Can you help me understand what it might be?

There are some chiropractors that do not provide Medicare patients with the same quality of care as non-Medicare patients. For example, Medicare patients might not get examined at the same frequency of non-Medicare patients because exams are not reimbursed by Medicare. This plan is requiring that Medicare and non-Medicare patients receive the same quality of care even though Medicare places arbitrary limits on care. You must provide all of the care that is clinically necessary, even if you do not receive reimbursement for the care.

My managed care plan negotiates agreements on my behalf. I like this because I do not have to do the work of finding new agreements. Is there anything I am missing with this logic?

The initial part of your logic is sound. If they are aggressive you could receive a lot of patients under this arrangement. However, there is a huge risk that you should consider. The agreement requires you to accept whatever reimbursement is negotiated on your behalf. Based on the structure of this agreement, the managed care company may negotiate any price they choose for your services. There is literally no minimum. This clause exposes you to extraordinary financial risk.

I am very upset. It is our policy to verify benefits before a patient is treated. We did so and I have the name of the person I spoke to confirming benefits. Now the managed care company is telling me that the patient was not entitled to all of the services she received and they want a refund. Can they do this?

Under the terms of your agreement, if the managed care company makes a mistake and tells you that a member is entitled to benefits when in fact they are not, you must return the money paid to you even though it was their mistake. This often happens when employer fails to tell the managed care company that an employee has terminated their employment. To protect yourself against this risk, you should always verify the current employment of your patient.

This managed care company wants me to pay a fee in order to participate in their program? How do I know if its worth the money?

While there is no guarantee, you can reduce your risk by negotiating the fee based on the numbers of insureds under contract to the organization. In addition, you should know how many other chiropractors are competing for those insureds. If the managed care company refuses to give you this information, it may be because they do not have any insureds under contract. If this is the case, you are being asked to underwrite the cost of developing their group. You have the option to negotiate the amount of the fee and/or the option to withhold the paying of any fees until the organization has contracts that will provide you with patients.

Do I have to worry about an under-capitalized managed care plan?

There are several concerns you may have with an under-capitalized plan. The assumption made by most providers is that managed cared plans have the expertise to make sure that the plan is financially sound. For larger insurance companies this is true; but, for smaller more entrepreneurial companies, there could be a flaw in that logic. Under-capitalization is a serious issue because it may do more than just reduce your reimbursement. It could bankrupt your practice. If the managed care company declares bankruptcy, you could be bound by the terms of your agreement to continue to provide service to the patients covered under the plan even though you will not be reimbursed. The requirement for care could extend to the end of the agreement. If your practice is totally dependent on this managed care plan, you could be providing services full time and receive no reimbursement for your services.

Is there any hidden risk when a plan uses the language “The plan and the provider each reserve the right to control the use of their own names, symbols, trademarks, and service marks presently existing or here after established, except that the provider authorizes the plan to use its name, address, and telephone number in a reasonable manner for the purposes of promotion and advertising?”

When you read this language, you may correctly assume that this means the managed care company will use your name, address, and phone number in their provider directories to inform their subscribers that you are a participating provider. This use is in your best interest and you should encourage the plan to include your name as quickly as possible.

What you may not realize is that this language also gives the plan the right to use your name in order to seek other managed care contracts. It uses the names of its providers to demonstrate the breadth and geographic coverage of its provider panel. When it comes time to selecting providers to service that new agreement however, you are not guaranteed that you will be part of that particular panel.

You can avoid that circumstance if you stipulate in your agreement that your name is to be used in provider directories only and that any other use would require your permission.

I am a little confused by some language in a managed care agreement. The managed care company states that they may deduct any amount we may owe them from our reimbursement. Once a claim is paid, can they do that?

If you agree to a clause like this, the managed care plan is allowed to recover any amount that they believe they have paid in error. For example, if they do an audit two years after claims have been paid and decide that you have used a CPT code improperly, they may deduct the amounts owed under the audit from payments that are due to you. To protect yourself, you may want the right to appeal their deductions just as you would an adverse “medical necessity” decision.