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Evidence-Based Payment: Why Data is the Key to Pay-for-Performance Success

If I challenged you to find a rehab therapist who didn’t believe in the power of evidence, you’d be searching for a while—forever, hopefully. After all, PTs, OTs, and SLPs are steadfastly dedicated to evidence-based clinical practice, because they know it gives their patients the best possible chances for success. On the business side of therapy practice, however, the application of evidence—a.k.a. data—is something many rehab therapists have yet to fully embrace. Payers, on the other hand, have been on the data train for years, using the information they collect to determine fee schedules—which, in turn, determine how much you’re paid for the services you provide.

That’s not to say providers have no influence over the contracts they sign. There’s always room for negotiation, and we here at WebPT have always encouraged therapy professionals to lobby for the terms they want. (For a primer on effective negotiation strategies, check out this blog post and this follow-up post.) But without hard facts to support your demands, your push for higher rates will be an uphill trek of Mount Everest proportions. Rehab therapy industry leaders know this, and that’s why they’ve put so much effort into providing therapists and practice owners with the data they need to obtain the payment rates they deserve.

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One such effort: the Milliman Project, led by the APTA’s Private Practice Section (PPS). According to information presented in a recent PPS webinar, the project involved analysis of “commercial insurance and Medicare data” to come up with “cost per unit benchmarks for physical therapy services.” Essentially, the goal was to establish the average allowed amount—broken down by geographic region—for a variety of individual CPT codes. The data set also includes dollar amounts marking the 50th and 90th percentiles for payment of each code. This information allows therapists across the country to:

  1. compare their rates to the average payments in their regions of practice, and
  2. nail down data-backed starting points for insurance contract negotiations.

PPS has yet to release the full Milliman data set, but during the webinar, presenters reported that the average allowables for commercial payers typically fell between the 50th and 75th percentiles, a range that is 33% to 50% higher than Medicare’s average allowables. Of course, rehab therapists must take all of these figures with a grain of salt, because the study did not exclude non-therapist providers from the data set. In other words, some of the payments—though linked to therapy CPT codes—actually were received by other types of providers (physicians, for example).

Furthermore, while I applaud the APTA’s efforts to provide therapists with real, solid data to back up their contract negotiation efforts, I can’t help but wonder how applicable this information will be in the coming months and years. After all, with the entire US healthcare system moving toward a value-based payment environment—and fast—it’s only a matter of time before the current fee-for-service (FFS) payment paradigm is a thing of the past. Soon, pay-for-performance will be the name of the game. (And when I say soon, I really mean it; as noted in this post, the US Department of Health and Human Services plans to base 30% of all Medicare FFS payments on alternative payment models by the end of 2016, with that proportion increasing to 50% by 2018.)

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