Carol (same first name, different last name) was classified as a traction patient - she had all the traction predictor variables:
- non-centralizing leg pain
- pain made worse with extension, better with sitting
- altered reflex findings in the painful leg
- altered sensory findings in the painful leg
Her neurosurgeon always ordered NO lumbar spinal traction because he had a bad experience with a chiropractor's Spinal Decompression unit last year.
The other problem?
Carol had commercial insurance that paid using the Episode of Care payment model which puts physical therapists at risk for the cost of care that exceeds a predetermined amount.
In Carol's case the predetermined cost of care was $375 for the whole episode.
Her clinical presentation, however, implied that her case needed to be 'risk adjusted' - based on the physician's orders to avoid the evidence-based, best treatment option. Instead, we had to use less-than-optimal treatments such as modalities and exercise.
The Episode of Care.
As part of the current administrations health care financing reform efforts Medicare is considering a 'bundled episode of care payment model' for all post-acute care providers such as doctors, physical therapists, ambulatory surgery centers and skilled nursing billing Medicare Part B.
The acute care hospital would be the 'banker' and would be responsible for distributing the episode payments (note: acute care hospitals usually bill Part A).
The episode of care is not quite like capitation (a single, annual fee for all care to a patient) and it is definitely not fee-for-service. It's a mix that is most appropriate for "isolated acute care episodes" (p.7). Usually, physical therapists treats acute episodes of ongoing, chronic conditions.
The Network for Regional Healthcare Improvement provides this useful graphic to explain the two types of risk providers and insurance companies 'trade off' under capitation and the episode of care model.
Capitation places all insurance and performance risk on the provider. The episode of care places some insurance risk on the provider - how much is uncertain.
So, what does an episode of care look like?
I recently analyzed the contract I have with a major, US commercial insurance company that switched me from fee-for-service to an episode of care model.
My analysis might give PTs some insight as to what a Medicare episode of care payment would look like for private practice physical therapy.
| Patient | Fee Level | Fee | Visits | Co-pay | Total Fee | Per Visit Fee |
|---|---|---|---|---|---|---|
| Ronald Reagan | 3 | $225.00 | 1 | $50.00 | $275.00 | $275.00 |
| Bugs Bunny | 3 | $225.00 | 4 | $50.00 | $425.00 | $106.25 |
| Felix the Cat | 3 | $225.00 | 2 | $50.00 | $325.00 | $162.50 |
| Anakin Skywalker | 2 | $135.00 | 12 | $25.00 | $435.00 | $36.25 |
| Joe the Plumber | 2 | $135.00 | 2 | $50.00 | $235.00 | $117.50 |
| Shakira | 2 | $135.00 | 6 | $50.00 | $435.00 | $72.50 |
| Carol Burnett | 2 | $135.00 | 12 | $20.00 | $375.00 | $31.25 |
Note that a Level 2 pays $135.00 and a Level 3 pays $225.00.
My average reimbursement for this contract, according to this sample, is $64.23. Our average per-patient cost to provide PT is about $65.
We are keeping a very close eye on this one.
Also, our experience indicates that high co-pays ($50) tend to discourage patient visits. Patients ration their physical therapy - especially in these tough economic times.
Patients with low co-pays attend all of their prescribed treatments which, as you can see, leads to below-average-cost reimbursement.
Medicare Episodes of Care
Medicare co-pays tend to be the lowest out-of-pocket across the spectrum of private and public payers. I believe that any new Medicare payment system would most likely try to be sensitive to patient out-of-pocket costs, if only for political reasons.
This suggests that Medicare episode of care patients would tend to resemble Carol Burnett more than they resemble Ronald Reagan.
What is 'risk adjustment'?
Outpatient physical therapists are at risk for the number of visits beyond some expected average for a given condition, such as lower back pain.
Risk adjustment is usually needed for factors known to increase the number of visits such as...
- depression
- fear-avoidance beliefs
- anxiety
- coping strategies
- health locus of control
- previous surgeries
- obesity
- clinical complexities and co-morbidities (Carol's situation)
- social factors (eg: caregiver support, patient is a caregiver, etc.)
The Minnesota Health Reform Initiative created 'baskets of care' that describes suggested clinical scope and care components for an episode of care for lower back pain.
Baskets of care seek to...
"bundle payments for a set of health care services together in ways that will create incentives for health care providers to collaborate and develop innovative ways to deliver effective, high quality, and lower-cost health care services."The Minnesota evidence-based approach gives us an idea how a Medicare episode of care might be structured from a clinical standpoint.
I hope Episodes of Care for outpatient physical therapy do not come to pass but the current administration has the 'bully pulpit' and is motivated to accomplish significant legislation in 2009.
Action points for physical therapists to prepare for Episodes of Care
- Learn to measure baseline factors that increase 'risk' to physical therapists, like:
- Fear-Avoidance Beliefs
- Depression
- Private practice PTs - know your costs to deliver care.
- Divide annual revenues by number of visits to get average cost per patient
- Learn to treat Fear Avoidance using a 'cognitive behavioral approach utilizing graded exposure' to the fearful activities in order to reduce your risk for longer episodes of care.
- Learn how to 'upgrade' Episode Levels based on valid predictor variables and risk factors
Hang in there with patience, persistence and the same caring attention to detail that originally made you successful in practice - change is in the air
