Surviving Managed Care^© Newsletter

Volume 2, Number 1 Spring, 2000

Vision and Eyecare Business Information For The Millennium

Objectives:

To examine and understand an effective, cost-efficient means to grow a practice's profitable patient base; to examine some common referral problems and understand how to resolve them.

  Increasing Practice Profitability: Growing An Already Viable Referral Base vs Pursuing New (Possibly Marginal) Contracts

Managed care certainly has changed the dynamic of how patients come to be your patients. With restricted provider panels and limited choices, in many cases you're not so much "chosen" as "designated," and that can and does impact on patient loyalty.

In many cities total managed care market penetration is such that there really are not that many untapped lives health plans can capture. As a result the plans end up cannibalizing each other for new members, at the same time collecting premium rates from some employers (or HCFA) insufficient to allow viable reimbursements. Physicians seeking to grow their patient bases and profitability in this environment face a difficult situation.

Typically physicians adopt the flawed position that things will be OK if only they can sign more contracts, get additional patients in the door, and put the resulting cash flow in the bank. If you're in the middle of this or a similar scenario — considering adding new (and likely financially-marginal) contracts to generate additional patient flow and dollars — then it's time to take a step back and reconsider alternative options for building profitable patient volume. Surviving managed care is predicated on working smarter, not just on working harder. Remember that you must not depend on taking market share to the bank; you can only bank profitable patients.

I asked Dr. Antonio Bolet how he dealt with profitably increasing a practice's patient base in South Florida, perhaps the nation's most onerous managed care market. He offered some insight on techniques that made a difference for his physicians:

We're on nearly every HMO and PPO plan in South Florida. It simply didn't make sense to grow our patient base by going to healthplans and trying to capture other providers' patients by underbidding existing contracts. I chose to focus on our contracts that were already making us money.

Every month I pull 10 charts at random from each plan we serve. I look at the codes, the charges, and the reimbursements. Then I chart the time it takes us to get paid by each plan and I monitor the "hassle," the claims returned for whatever reason.

If a plan goes past 45 days I'll get on the phone and make some noise. In some cases that fixes the problem; in others it's only a temporary patch. But eventually I built a profile on the best paying and the fastest paying plans (which may not be one and the same). Those are the plans whose members I really wanted to see in the office.

Dr. Bolet then tracks those patients from the better paying plans to see which PCPs or optometrists referred them. Simultaneously, he started a program to cultivate those referral relationships and increase the numbers of patients received from the best plans. He does that, in part, by providing the best possible communication to the referring doctors, by helping them to provide the best possible care in or out of their offices, and by always remembering whose patient it is. He continued:

For example, we've started a telemedicine consult service over the internet for our community optometrists. They can dial up our office and send us digital photos. Then, via mini-cameras on each terminal, we can do real-time consults with the doctor or even speak directly with the patient. We're also very careful to return patients to the referring optometrist or physician. It helps solidify referral relationships in a part of the country where optometrists and physicians have practically unlimited choices as to where to send their ophthalmology referrals.

Suggestion:  Start with a financial and encounter analysis of each contact. Determine which contracts allow an acceptable profit margin on a per-patient or per-service basis. Then you'll need to do an encounter (referral pattern) analysis. Hopefully your computer system can tell you which PCPs, other physicians, or optometrists refer to you, how many referrals each sends, and the number of those referrals by plan.

With that information initiate a campaign to cultivate and strengthen those referral relationships. Understand that the doctors who send you a few referrals are probably happy with your services — otherwise they wouldn't send you any. But appreciate that the doctors who send you many referrals are more than happy; they're delighted. And in that difference lies the key to capturing more referrals from any or all of your sources.

Suggestion:  After you've finished this initial "numbers" analysis send a referring physician survey to every physician and OD in your active data base. It's critical that you write the survey questions to discover what's actually important to your referral sources — not what you think should be important to them. No matter how you script and format the survey your questions should extract answers to the following key points:

1. Why do the doctors who send me lots of referrals happily refer to me? (i.e., What am I doing right?)
2. What could I do to increase each of those doctors' trust in me and generate still more referrals?
3. Why do the doctors who send me few (or no) referrals not send me more? (i.e., What am I not doing exactly right that causes them to send so many referrals elsewhere?)
4. What could I do to increase their trust in me and generate more referrals?

Armed with the results of the survey you'll be positioned to effect change in your practice and attract more referred patients from plans known to pay a viable fee. And if you use the information effectively your costs to attract more and better referrals should be nominal. And that's what surviving managed care is all about.

On the other hand, you can invest a fistful of money and lots of sweat pursuing new contracts which, in many cases, particularly capitation, simply won't make financial and/or administrative sense. You can "win" the battle and capture the patients but, ultimately, lose the war when the dollars going out the door exceed those coming in.

Think smart. Build on success and known quantities. Cultivate successful referral relationships and bolster weaker ones. Narrow your downside risks by avoiding or limiting exposure to questionable contracts which do promise volume but don't back that up with a reasonable chance at profitability.

Designing An Effective Referring Provider Survey

Here are some important points to keep in mind when designing and implementing a referring physician survey:

1. Keep it short — preferably one page to encourage replies,
2. Keep it simple — Write concise questions; solicit revealing answers,
3. Provide a pre-addressed, postage paid envelope or a fax number for replies.

You'll also want to include some, perhaps all of the following in your survey instrument. Ask the referring doctor or practice administrator:

1. How does your staff perceive interfacing with ours?
2. Are our physicians available when you call?
3. Is it easy for your staff to schedule appointments for your patients?
4. Do you get good feedback on our physicians from your patients?
5. Do you get good feedback on our staff from your patients?
6. Do you receive prompt reports from our office, and how would you rate the quality of those reports?
7. Are there any additional services we can provide to help you care for your patients?

It's especially helpful if you can solicit explanations for any response, favorable or unfavorable. Simple numerical ratings (e.g., 1-5) really don't tell you much.

Finally, leave adequate space at the bottom for this crucial question: Is there anything else you'd like to tell us that we didn't think to ask?

  Incorrect Or Incomplete Referrals: Are You Trapped In A Snarl Of Preventable Problems?

One of managed care's most common and frustrating problems occurs when specialists are caught in a snarl of incorrect or incomplete referrals as paper work moves (or doesn't move) between PCP, specialist, and payor. These snarls can leave your staff dealing with irate patients. Further, if you're facing the prospect of not getting paid, your practice administrator will be fuming.

Unfortunately, many managed care plans provide little or no help with your legitimate concerns about problematic referrals. Since most patients can only come to you with a healthplan-mandated referral this failure to act and effect a "fix" can result in continuous problems for your practice. Let's look at two typical scenarios.

Scenario 1  Assume your group is contracted to provide medical and surgical eye care but not routine vision exams with refractions. In a bifurcated delivery system created by healthplan managers who probably don't understand ophthalmic care, those services are contracted to a different network.

A number of PCPs refer numerous patients to you for medical consults, but during your examination you find that the suspected problem isn't medically related. It's strictly refractive error. Those patients should have been referred to the other network for routine vision exams. But they weren't, and whether the referrals were careless or mistaken, the patients are in your office expecting service. Now what do you do?

1. Provide the refractive exam and bill for the complete visit even though this service is outside your contract? (Result — patient is happy but you've probably worked for free on that portion of your claim.)
2. Stop the exam, inform the patient that you can't provide the refractive service, and refer her to the other network? (Result, patient goes away mad, PCP probably also mad when his patient complains about what you did, but at least you have not provided services for which you won't be compensated.)
3. Stop the exam and inform the patient that she has to pay part of the cost for her visit? (Result: patient is mad at you, doesn't understand why the referral isn't covered in full other than the office visit copay, and probably is a patient lost forever.)
4. Provide the refractive service for free and never raise the financial issue to the payor, patient, or PCP? (Result, patient is happy, PCP is happy, healthplan doesn't know the difference, but you've worked for free.)
5. Call the PCP and point out his/her on-going stream of referral errors, possibly destroying a referral relationship? (Result: nobody is happy.)

Obviously none of these are good solutions. The best tactic is to preclude the problem so that patients don't present with faulty referrals. (Actually there is a second alternative — becoming a provider for the vision care network so that you can bill for the refractive exam in addition to the medical consult. But for various reasons that may not be an option you're able to exercise.)

Unfortunately, far too many ophthalmologists choose to provide the non-contracted service for free rather than go through the effort of taking action. That may keep the patient and PCP happy but doesn't address the on-going problem with the PCP or healthplan. As long as the problem remains unaddressed your financial "hit" will only become more costly. And without specific protocols or directives from the payor you're left to fend for yourself.

Suggestion: Assuming this mis-directed referral problem is not addressed in your provider agreement, provider manual, or other plan document, I recommend that the best place and time to start on the road to a "fix" is with the PCP's office on discovery of problematic referral number one. The first call can be initiated by your practice administrator to the PCP's administrator. A friendly and supportive "heads-up" explanation of the problem should stop it then and there. You'd want to clarify the differences between routine vision care and med/surg, and be certain to emphasize the fact that your office is not contracted to provide routine vision care.

You might offer the PCP (or administrator) one or two recommendations to providers on the vision care panel. That's a positive step for supporting the PCP's office and not making him (or his staff) feel as if you're being critical or petty.

I think it's essential that you reinforce the positive aspects of your referral relationship when you're calling (in truth) to complain about something the PCP is doing. Don't dig yourself a hole by focusing only on the problem.

Suggestion: If a friendly discussion doesn't seem to cure the problem, or if there are wholesale referral problems from several PCPs, then you must go directly to the healthplan or network administrator. Again, be supportive, but be firm. Your practice is being disrupted, your patients are upset, and you're caught in the middle of contracting and referral protocols the plan created but which are not working at the PCP end of the pipeline. Since only the plans can force compliance on PCPs it's their responsibility and they'll have to do the dirty work.

Ask the plan to distribute a letter to each PCP explaining that there are two different entities responsible for eye care, and that each is contracted to provide specific services not provided by the other. Offer to produce a simple, one page document explaining and differentiating routine vision care and med/surg. You could offer to provide a thumbnail sketch of common conditions that should be referred to the ophthalmologist and those that can and should be referred into the routine vision care provider panel. You might even offer to speak at a PCP meeting.

Suggestion: Assuming you're not able to join the routine vision care panel, your bottom line objective is to get someone (most likely the plan) to assume financial responsibility for referrals which turn out to be non-medical and outside your contract. The plan will balk and give you all sorts of reasons why it can't or won't cover the costs. A healthplan may point to its agreement with individual PCPs and tell you that financial responsibility for incorrect referrals rests on the PCP's shoulders. Obviously you'd like to avoid being caught between plan and PCP, but your battle may, in fact, be with the PCP.

Still, the referral protocols and the bifurcated delivery system are creations of the plan, and that's where you initially need to push for financial accountability. Be polite but firm. Insist that the plan fix its problem, for you can't continue absorbing the loss and suffering the collateral damage.

Get on this quickly — don't wait until you've had so many mis-directed referrals that it's become chaotic. Bring data to the discussion. You'll want to show the number of incidents, the names of the affected patients, the dates of service, the names of the PCPs who consistently send problematic referrals, and the reasons PCPs wrote on referrals which turned out to be simple refractive error. With data demonstrating the magnitude of the problem you'll be better positioned to enter into a discussion of how to resolve the logistical and financial nightmare.

Remember that any approach must be expressed in terms of a cooperative effort. Come to the plan (or PCP) with a "What can we do together?" perspective and you stand a better chance of satisfactory resolution.

Scenario 2  You may have encountered a second, vexing referral nightmare when a patient presents with a proper referral but your claim is not paid due to paperwork follow-up problems between PCP and healthplan. While some plans will pay the specialist's claim when it's accompanied by a PCP authorization, others won't pay until they get a PCP authorization separate from and in addition to the referral carried by the patient to the specialist. That requirement can create delay, frustration, and confusion for everyone involved.

Another physician wrote to me describing his problems dealing with claims examiners and authorizations: I now receive paper referrals before I see patients. This because of the fact that the PCPs may want me to see the patients on the basis of a phone request. Now a new twist. Even if I receive a paper referral by fax or by mail, the insurer will not pay if the claim for the services arrives before the PCP can get his or her copy of the referral sheet to them so they can "authorize" it. I have called the Medical Director of the culprit insurer and he has agreed to pay some claims but he is getting tired of my calls. It was easy to get him on the phone last month. It is not so easy now.

So, in this scenario the ophthalmologist has done everything to the "letter of the law" and cooperated with the PCP to get patients seen in a timely manner. Yet the PCP has not followed through on his responsibility to send in the mandatory paperwork which allows the specialist to be paid.

Suggestion: This one should be a "no-brainer" — easy to resolve. Yet, as this physician found, solutions are not always simple.

Your first call should be to the PCP's administrator. Perhaps there was a legitimate reason why last month's confirming paperwork was not sent in a timely manner. A friendly "heads-up" on the problem that referral confirmation delays create for you should set things right with that PCP's office.

Suggestion: But if it does not then you need to go straight to the healthplan's Provider Relations department or Medical Director. Each plan will delegate resolution responsibilities differently. Only the plan has the power to lean on PCPs or, if everything else fails, to drop the confirmation requirement before making payment.

If your efforts with the plan don't resolve the problem (as seems to be the situation with the physician quoted above) then you need to take a more forceful approach. Go to your local or state medical society and get it involved. Quite certainly you're not the only physician having this problem, and it's likely not limited to ophthalmology.

Arm yourself with data: dates, names, amounts, efforts to resolve, etc. That information should go to your elected representatives and to the state's healthplan regulators. If they don't know about your problems they may be under the mistaken notion that all is well — particularly if you're in a state with prompt payment laws (which, in reality, don't have a lot of teeth).

The bottom line? You should not and cannot provide care for free. And you cannot be held hostage to referral and payment protocols which disrupt your practice, frustrate and infuriate your patients and staff, and are easily preventable with a little effort from those responsible for the mess.

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These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.

The materials are not intended as legal advice, nor is the author engaged in rendering legal services. The materials are not intended as a replacement for individual legal or professional advice. Information contained herein is presented only for illustrative purposes, and it should not be used to establish any fees or fee schedules, nor is it intended and it should not be construed as encouraging any user of the materials to take any actions that would violate any state or federal antitrust laws, tax laws, or Medicare or Medicaid laws.

Copyright © 1997, Gil Weber, MBA. No part of this newsletter may be reproduced or distributed in any form whatsoever without the author's prior written authorization.

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