If you’ve ever negotiated a payer contract, you probably focused on convincing that insurer to simply bump up your rates. However, with healthcare reform moving full steam ahead, this might not be the best—or most lucrative—approach. Rather, therapy practices may want to put risk-based proposals on the table (i.e., those that allow for larger or smaller payments based on outcomes). After all, value-based payment models will soon be the new norm, and it could pay—literally—to be ahead of the curve. Looking for a new angle to negotiate—or another way to combat shrinking reimbursements? Keep reading to learn more about implementing a risk-based payment model. Then, be sure to reach out to a healthcare attorney who specializes in these types of arrangements before you embark on any negotiations—or sign a new deal. After all, risk is in the name for a reason.

Occupational Therapist Salary Guide - Regular BannerOccupational Therapist Salary Guide - Small Banner

The New Rules of the Game

Healthcare spending is out of control.

As we wrote in this whitepaper, “healthcare spending in the US has already reached a staggering $3.8 trillion per year. By 2021, that amount is projected to skyrocket to $4.8 trillion—a sum equal to roughly one-fifth of the nation’s gross domestic product (GDP).” If those figures weren’t frightening enough, consider this: “According to this report, ‘Wasteful spending likely accounts for between one-third and one-half of all U.S. health care spending.’ That means Americans are spending somewhere in the neighborhood of $1.5 trillion on health services they don’t need.”

The shift toward pay-for-performance has begun.

So, it’s no wonder that the healthcare powers that be are doing everything possible to curb this out-of-control spending before it gets worse. And that just isn’t possible in a fee-for-service healthcare paradigm—which is why we’re all moving in the direction of a pay-for-performance environment, specifically one where providers are compensated for the quality, rather than quantity, of their services. In other words, the rules of the game have changed, and those providers who can demonstrate that they know how to play—by putting their compensation where their performance is—may very well be in a profitable position.

Outcomes Tracking

Without quality outcomes data, you risk negotiating blind.

But, in order to negotiate a payment model where your compensation is based on your performance, you must first know your, well, performance. Otherwise, you’ll be negotiating blind, and that could lead you into a deal that doesn’t go in your favor. And the only way to know your performance is to establish a comprehensive outcomes tracking program that produces enough objective data about the quality and efficacy of your services that you not only know your own strengths and weaknesses, but also can use that information to support your negotiation efforts.

Outcomes data can prove your value.

As WebPT’s Lauren Mulligan wrote in this post, before this push toward payment reform and comprehensive, provider-initiated outcomes tracking, “...there’s never been a way to tell which providers are higher quality—and thus, worthy of a higher cost.” And WebPT’s Brooke Andrus explained here that payers “measure cost and value using their own data indicators,” which Mulligan said results in “most payers see[ing] physical therapy as a cost to be reduced rather than a valuable treatment option to be leveraged.” But that’s all changing, because with consistent outcomes tracking, PTs can now “indisputably prove that they deliver great results, low cost of care, and high patient satisfaction levels.” If that’s not worth a reimbursement bump, I don’t know what is.

The sooner you start collecting that data, the better.

So, how do you go about implementing a solid outcomes tracking program in your practice? Here are a few tips:

  • Start tracking outcomes now, if you haven’t done so already. Soon enough, your reimbursements will be inextricably tied to your outcomes, whether or not you’re proactively negotiating a deal that works in your favor. In this post, Andrus quotes a Graham Sessions attendee as saying “the providers who will be successful in the new payment environment will be ‘not just those that can adapt, but those who have adapted.’”
  • Opt for standardized tests that providers across the healthcare continuum can use and understand (as opposed to using industry-specific outcome measurement tools). That way, the data you’re collecting remains applicable within the rehab therapy community and beyond.
  • Adopt software that enables you to compare your clinic’s data against national numbers—software such as WebPT Outcomes. As Mike Manzo, PT, MPT, wrote in this post, “The functionality of WebPT Outcomes is incredible. We have 13 outpatient PT offices, and we are now measuring our outcomes as a company against the outcomes of the nation. Each clinic gets a report card and a ranking against the more than 1,200 clinics around the country that are collecting data through this database.” While Manzo uses his clinic’s “strong ranking as a marketing tool when [they] meet with referring physicians, as it illuminates to them the fact that their outcomes will be significantly better (statistically and subjectively) when their patients come to our company versus the competition,” you can also use this type of data—as well as patient satisfaction levels—to negotiate better-than-standard terms with your payers. After all, it’s likely that their beneficiaries will have better outcomes with you than they would with the competition—and thus require less future care (i.e., spending).

The Negotiation Table

Your optimum, minimum, and target goals should drive your negotiation efforts.

Once you’ve collected enough data to know where your clinic stands in terms of its performance, you’ll be in a better position to not only make any necessary improvements internally—such as implement additional training or target your marketing efforts to patients with a specific diagnosis—but also decide on the contract terms you’d like to work toward. In this post, Andrus quoted a Journal of Oncology article in which the author recommends providers establish “an optimum, minimum, and target goal. The optimum is your starting point...the terms you consider ideal...the minimum is the point that must be met for you to sign, and the target is the point at which you would like to end up after negotiation.”

Practice makes perfect.

Then, practice your pitch with a trusted colleague—a pitch solidly backed by the outcomes data you’ve been collecting. If you can demonstrate to a payer that your services are more valuable than those provided by other therapy practices in that payer’s network—and thus, that you will save the payer money in the long run by producing better outcomes and reducing overall healthcare spending—then you’re in a much better position to ask for commensurate compensation. Just remember that a “risk-based proposal” inherently involves risk—as I pointed out at the beginning of this post. So, while you may earn more money for positive outcomes, you may also lose money if your patients’ outcomes don’t stack up. That has to be a gamble that you, your practice, and your practice’s legal counsel are willing to take.

Here’s an example.

Curious as to what a risk-based proposal might look like? According to this resource, it could go something like this: A payer knows that the Affordable Care Act and rising healthcare costs have shot its financial risk through the roof, and it can’t continue to shoulder that burden alone. Instead, the payer wants to share that risk with its providers. As a result, the company may “agree to pay you a base amount for delivering care. If you achieve a higher outcome, [it] will pay you a bonus.” However, “if you achieve a lower outcome, you will only get your base payment. On top of that, if you can show you helped reduce [its] total cost of care relative to last year, [the payer] will share some of that savings with you.” To receive that benefit, though, “you must provide measurable value to [the payer’s] enrollees and [the payer].”

Whether you proactively push for this type of payment model now or wait until it becomes standard, pay-for-performance is coming, and that should be all the motivation you need to get your outcomes collection efforts—and actual patient outcomes—in top form. Sooner or later, your bottom line will reflect the quality of your care.

Have you successfully negotiated a risk-based payment model with a payer? Would you consider doing so? Tell us your thoughts in the comment section below.

  • Suppressing Sticker Shock: How to Handle Your Patients’ High-Deductible Health Plans Image

    webinarFeb 23, 2017

    Suppressing Sticker Shock: How to Handle Your Patients’ High-Deductible Health Plans

    Copayments, coinsurances, unresolved balances—oh my! Any one of these can cause headaches for healthcare providers, but as healthcare reform efforts shift more and more financial burden to insurance beneficiaries, today’s practitioners are increasingly facing all three. And these challenges are not only hurting their patient acquisition and retention rates, but also their bottom lines. Tired of spending time verifying benefits only to lose those patients to copay sticker shock? Stuck in a constant cycle of pursuing past-due …

  • Common Questions from Our Patient Sticker Shock Webinar Image

    articleMar 31, 2017 | 33 min. read

    Common Questions from Our Patient Sticker Shock Webinar

    From copays and deductibles to payer contracts and benefits verification, understanding all the nuances of third-party insurances is tough enough for healthcare providers—let alone their patients. In WebPT’s most recent webinar— Suppressing Sticker Shock: How to Handle Your Patients’ High-Deductible Health Plans —co-hosts Heidi Jannenga, PT, DPT, ATC/L, the cofounder and president of WebPT, and WebPT CEO Nancy Ham provided a lot of great advice on how to have productive conversations about healthcare costs with your patients—without …

  • WebPT + Outcomes: A PT Software Love Story Image

    articleMar 7, 2016 | 7 min. read

    WebPT + Outcomes: A PT Software Love Story

    Developing and launching WebPT Outcomes has been a labor of love—one that’s lasted about 15 months. At times, it felt more like the kind of love you’d have for a sibling—after he or she pushes you off the bunk bed and you split your lip open. You know, that kind of love. But, after lots of triumphs—and just as many fat lips—it’s been wonderful seeing the fruits of our labor come to life. Hello, WebPT Outcomes: the …

  • The PT Patient's Guide to Understanding Insurance Image

    downloadApr 3, 2017

    The PT Patient's Guide to Understanding Insurance

    Patients are shouldering a greater portion of their healthcare costs than ever before. But when they don’t know the specifics of their coverage, they can end up with much bigger bills than they bargained for—and that often leads to unpaid balances and unfinished treatment plans. Bring them up to speed—and improve your practice’s collections and patient retention—with this guide. Patients will learn: What it means for a service to be “covered.” How to define common insurance terms. …

  • Outcomes and OMT FAQ Image

    articleApr 26, 2016 | 11 min. read

    Outcomes and OMT FAQ

    In January, we hosted a webinar focused on the importance of outcomes tracking in physical therapy. In addition to explaining why it’s absolutely critical that therapists collect objective data on patient progress, we highlighted a few of the reports available in WebPT Outcomes . With the move to a value-based payment environment already in full swing, outcomes tracking is a hot topic in the physical therapy space, and that meant lots of thoughtful question from our webinar …

  • Founder Letter: Why I’m Betting on Outcomes Image

    articleFeb 4, 2016 | 5 min. read

    Founder Letter: Why I’m Betting on Outcomes

    I’m not much of a gambler. Some folks enjoy the rush that comes with putting all their chips on the table and risking everything on a single roll of the dice. Well, no offense to all you card sharks out there, but if I’m going to go all in, it better be on something I’m pretty darn sure of. So, when I say I’m betting on outcomes, you know I’m not bluffing. In fact, I’m 100% confident …

  • Channeling Your Inner Chuck Norris: How to Master the Art of Outcomes Image

    articleFeb 17, 2016 | 6 min. read

    Channeling Your Inner Chuck Norris: How to Master the Art of Outcomes

    When I was growing up, I stayed at my grandparents house after school. This meant I spent the better part of my youth tuning into whatever my grandpa watched on TV. And because he watched a lot of Walker, Texas Ranger, I watched a lot of Walker, Texas Ranger. Chuck Norris was basically my afterschool nanny. (Don’t tell him I said that.) Each afternoon, I watched this karate-kicking cowboy fight off bad guy after bad guy. He …

  • How to Stay in Business in this Uncertain Healthcare Environment Image

    articleJun 29, 2017 | 17 min. read

    How to Stay in Business in this Uncertain Healthcare Environment

    Health care as we know it is changing. But that’s nothing new, right? Health care has been in a state of flux for a while now—what with ever-changing payer regulations and the steady push toward more patient-centric, value-based collaborative care. And while putting patients first is surely good for everyone, increasing regulations—and decreasing reimbursements—can make it challenging for providers to keep up, let alone keep the lights on. That’s why we’ve spent much of this quarter discussing …

  • Luck o' the Outcome: Which OMT Are You? [Quiz] Image

    articleMar 8, 2016 | 1 min. read

    Luck o' the Outcome: Which OMT Are You? [Quiz]

    Whether you’re Irish or simply Irish-at-heart (hey, even St. Patrick himself didn’t hail from the Emerald Isle), March 17 is reserved as a day to bust out your best jig; don every imaginable shade of green; and partake in some delicious food and drink—even if only for nostalgia’s sake. So, in honor of St. Patrick’s Day, we’ve decided to combine two—no, three—of our favorite things: OMTs, holidays, and quizzes. So, plant a smooch on the ol’ Blarney …

Achieve greatness in practice with the ultimate EMR for PTs, OTs, and SLPs.