Progressive Focus© Newsletter
|Volume 7, Number 3||Fall, 2006|
|Helping You Manage the Expectations of Managed Vision Care|
In This Issue:
Consumer Directed Health Care:
Is your practice prepared to deal with some major changes in the delivery of, and payment for, health care services?
I first wrote about Consumer Directed Health Care for Progressive Focus© in the Spring 2004 issue. In the two+ years since then a wave of change has started to wash over the health care scene. At this point it's certainly far from a Tsunami, but it's definitely something more than a ripple.
In growing numbers payers and employers are taking a position that the most effective way to clamp down on runaway health care costs is to involve patients directly in the financial management of their care -- in deciding exactly how, when, and where the healthcare dollars will be spent.
Since the mid-1970s, managed care beancounters have relentlessly wrung-out their costs at the expense of providers. 35+ years later things have reached a point where there simply is nothing left to wring-out from those providers. And so those who have paid for the care for so many years now seek a fundamental change -- a redefinition of who is the purchaser of health care, and who ultimately must assume responsibility for managing the spending.
Today, most involved in health care agree that for a multitude of reasons medical costs have spun out of control. Consumer-Directed Health Care (CDHC) is the latest attempt to save the healthcare system by reining in costs while, at the same time, increasing overall quality of care. CDHC makes consumerism the primary focus of the spending equation, with patients assuming responsibility to manage a pool of healthcare dollars funded by employers and their own contributions.
Under traditional managed care benefit plans patients were responsible only for nominal co-payments on office visits and drugs, plus relatively small amounts for coinsurance or deductibles on certain diagnostic testing, procedures, and surgeries. Now under CDHC programs, they will have to dig more deeply into their own wallets to cover a significantly larger share of healthcare costs. The fundamental thought is that until patients feel the financial "pain" resulting from their own healthcare spending, no significant changes in addressing runaway costs are going to occur.
CDHC: Miracle cure or a potentially risky can-of-worms?
If patients are put in control of where and how health care dollars are spent, and if they are given sufficient, understandable information on quality and costs, then they will apply all the powerful elements of consumerism and become more conscientious, aware patients. And lower health care costs will be the natural consequence of such consumerism and awareness. At least that's what's supposed to result according to those backing CDHC.
But many don't see CDHC as a "cure-for-what-ails-'ya." Rather, they see complicating factors that could create many new and troubling problems for those who deliver the care.
Some critics worry that putting so much more financial responsibility onto a patient's shoulders will inevitably lead to some amount of delayed or deferred care, creating situations where patients conserve spending to their own detriment. It's easy to see how this concern could manifest itself.
For example, a patient might stockpile some of a prescription medication so as not to incur another, possibly significant out-of-pocket cost if the condition reoccurs. Or a patient referred to a specialist, might not follow through on the referral. These actions certainly would save a patient on out-of-pocket costs, and save overall costs to the health care system, but it's also clear that such actions could put the patient at increased risk.
And CDHC certainly raises significant financial worry for some practitioners who are used to a managed care system in which patients are seen regularly for both preventive and condition-specific care. If patients in CDHC programs suddenly stop coming in as often simply because they have to cover more of the costs, then the financial ramifications for practices are ominous. And if patients start to select their caregivers based not on any legitimate understanding of clinical qualifications but, rather, simply on who's "cheapest," then the financial fallout could be profound.
CDHC -- It's here and it's likely to grow
No matter how one might feel about CDHC it's here, it's likely to grow in the short term, and it's unlikely to go away in the long term. We don't know yet if in the long term CDHC will be widely embraced by a large percentage of patients, and if it will become an 800-pound gorilla among health benefit plans. But some or many of your current patients will be switching to these high-deductible programs that are coupled with an HSA (health savings account) or HRA (health reimbursement arrangement). And some number of patients you would hope to gain in the future will come to the practice not because you are on a plan's provider panel but, rather, for other reasons of importance to the individual patient.
To ignore or discount these emerging trends in health care delivery and payment risks putting your practice at a competitive disadvantage. Consumerism in health care will require that your practice adjusts to a new set of requirements, and you'll have to make changes in some key operational policies. Now is the time to think through these changes so that your practice has a structured, patient-focused response to change driven by increasingly price-sensitive consumers.
You are young, my son, and, as the years go by, time will change and even reverse many of your present opinions. Refrain therefore awhile from setting yourself up as judge of the highest matters.
How much impact will CDHC have on my practice?
The "oomph" will depend on the practice setting. For example, optometrists who work in some commercial settings and provide only routine vision exams with refractions will experience less complicating impact than their colleagues in private practice who also provide more advanced and expensive medical eye care. And all optometrists will be challenged less by CDHC than ophthalmologists whose surgical fees (for both the professional and facility components) surely will be closely scrutinized by patients footing much of the bill.
ODs in commercial settings might actually see a rise in both exam volume and revenue if CDHC patients in large numbers perceive that these practitioners are less expensive, and if price is their primary consideration for selecting providers. Conversely, private practice ODs and physicians will grow their appointment volumes and revenues by differentiating their practices from their community colleagues.
When patients are no longer limited to traditional closed panels, suddenly your practice will be but one choice in a much larger competitive pool. Patients will want to know why they should come to your practice rather than Dr. "X's" or Dr. "Y's." They'll also want to know if they should see an optometrist or an ophthalmologist.
Particularly in the context of medical eye care, patients paying more out of pocket will be fussy and selective, so differentiating the practice will be an essential requirement for success. This will be true not only for elective/cosmetic services and procedures paid entirely by the patient, but also for non-elective procedures that previously were paid for the most part by insurance.
Do you offer something newer or better that could impact on the patient's choice of providers? If yes, you'll want to make that known.
Questions, questions, questions
CDHC will put new concerns on your patients' radar screens. And they'll be asking you (and themselves) questions not typically discussed under traditional health benefit plans. For example:
- Do I really need the recommended care?
- Can I afford the care, and are there less expensive alternatives?
- Do I need the care immediately, or can I defer it for some period of time?
- Is the potential outcome worth the cost, or will my quality of life be pretty much the same whether or not I get the recommended care?
- What difference will it make in my life after the expense?
Issues, issues, issues
Let's consider some of the most important of many issues sure to crop up as your practice gets on the CDHC learning curve. If you're to compete successfully for CDHC patients, you must have an action plan that addresses these matters.
How will you get patients to come to (or return to) your practice?
One of the first operational areas you'll need to review is appointment scheduling. To that end I suggest a practice policy that staff tries to reschedule all follow-up appointments before patients leave your office. In the past it might have been OK for staff to say to the departing patient something along the lines of: The doctor would like to see you back in six months. Do you want to call us back to make the appointment?
Unfortunately that "old-school" way of doing things likely will mean that many patients forget to call back. And it also gives other patients an easy excuse for not calling to schedule and, thereby, to "slip off the hook." Either occurrence will result in more patients than ever not coming back for the follow-up appointments. Ultimately this leads to lost revenue.
Instead, office policy should be that staff tries to schedule all follow-up appointments with the patient standing at the checkout desk. It takes only a minute or two to offer a selection of days and times, and patients who leave the office with the next appointment scheduled for them are more likely to show up than those told to call back sometime later.
It will also be beneficial for staff to confirm appointments not less than two days in advance for all patients. The will require some staff resources, but the payback resulting from fewer no-shows and late cancellations can be considerable.
And more sophisticated practices will use their electronic medical records (EMR) systems to "data mine" lists of patients with specific conditions. Those practices will reach out to bring the patients in for monitoring and follow-up of specific, potentially problematic conditions.
Make the telephone work for, rather than against the practice.
Patients with lots of choices will expect exceptional customer service. Your telephone is the entry point to the practice, and the first opportunity to demonstrate exceptional levels of care and concern. Proper telephone protocols then become an obvious way to help the practice win over choosy patients.
Protocols must be reviewed and modified so that they are patient-friendly. Calls should always be answered by a live person, and answered within the first couple of rings. They should not rollover into a phone tree or voice mailbox system during business hours. To do so is a sure way to turn off some current or prospective patients, and cause them to look elsewhere for care. (Think about how much you hate seemingly endless phone trees, or being dumped into voice mail when you call a business. Choosy patients will feel equally annoyed.)
The telephone also is the focus of a new and potentially problematic trend. Increasingly, patients in CDHC plans may start calling the office (perhaps often) in the hope of securing free advice from the doctor, a nurse, or a technician and, thereby, avoid the cost of an office visit. This can be viewed as an incredible annoyance, or it can be used as an opportunity to "sell" the practice's services to the patient.
To that end you'll want to pay attention to how the phone is answered, how patients are transferred and, particularly, to whom they are transferred. The first transfer must be to someone who has the knowledge to provide correct, useful answers and, thereby, instill confidence in the patient that the practice is the one they should select for their care. This means that those who answer the phone must be trained to correctly triage calls, and there should be a policy in place to determine when patient calls go directly to a doctor or if they can appropriately be directed to staff.
What will this cost?
One of the buzzwords mentioned most often in CDHC discussions is "transparency." When patients in CDHC plans face significant out-of-pocket expenses for your services they're going to be increasingly concerned about the costs. In the past patients really didn't care what your U&C charges might be, or what HMO "Z" or PPO "Q" might have paid you. But now pricing is going to be a huge issue.
It will be important to review your fee schedule(s) and get them in logical order. Whether you structure those fees on some multiple of Medicare allowable or, as in the case of eyeglass frames, some scheduled mark-up over cost, it will be important to have a fee structure that is consistently applied across all of the services you provide.
With a logical fee schedule in place, it will then be important to train key staff in how to present that pricing information to patients when asked. You'll want to put limits on which staffers are authorized to discuss pricing with patients, and what they're allowed to say. This is not something that should be done capriciously or without regard for potential consequences. (Think: Loose lips sink ships.)
Note also that it is possible you might encounter some requirements in certain managed care contracts specifying how or what information needs to be made available to patients. If so, be sure that staff responsible for discussing fees with patients understand that they can reveal prices but should not expose practice costs.
The point in all of this is that with increased pricing transparency a "shopping" environment will be created where some patients will be making their practitioner and care selections with little or no regard for quality but, rather, based on the bottom line. Unless you want to play the low price game and actively pursue the bottom-feeders, remember that cheap does not necessarily equate to value -- and that's a message patients need to hear over and over again.
What is a cynic? A man who knows the price of everything, and the value of nothing.
Lady Windermere's Fan
Can I get a discount?
Some of your patients are going to try to wheel and deal for your services. Count on it.
Already some consumer groups are advising the public to ask physicians for discounts. People who would not think of asking their plumber or car mechanic for a special deal are being told to ask the doctor for a deal.
Insulted? That's understandable, but let the immediate sense of indignation lessen, and then consider that there might be a benefit to offering some sort of nominal discount when requested. Remember that except for documented hardships you should never waive co-payments since collecting those is almost certainly a contractual obligation. But, for example, a modest discount offered in exchange for up-front, full payment of charges might result in good word of mouth to other patients.
If you do choose to offer a discount then be certain that the amount of the discount makes sense in the grand scheme of your fee schedule(s) for all of your plans. In no case should you offer a discount that would drop the amount collected below your lowest paying third party plan.
When can we collect from the patient? Up-front or afterwards?
Under the "old school" ways of third party care the practice collected most of the reimbursement from the payer. Accounts receivables typically were manageable, and most payers did meet their obligations even if sometimes the payments did not arrive quite as quickly as one might wish.
Now, under the "new school" of CDHC, patient A/R accounts will take on much greater significance. Keep in mind that unlike traditional arrangements where health plans are regulated by prompt payment laws, with CDHC you won't have those same protections since prompt payment regulations don't apply to amounts owed by patients. And you'll want to avoid the costs of billing and rebilling patients. So your practice must have a written policy on how much to collect from the patient, and when to collect those dollars.
The key phrase to remember in all your dealings with patients in CDHC plans is: Show me the money! Get as much as you can up-front.
In some cases your policy will be influenced by plan protocols and claims processing requirements. Some requirements will be problematic -- particularly from those plans that would insist on adjudicating your claims before you can collect the patient's co-payment, co-insurance, or deductible. This is surely going to complicate collecting from some patients, particularly as a patient's financial responsibility increases.
So you'll either want to negotiate the right to collect patient-owed amounts up-front or, perhaps, consider not participating in a plan whose protocols or benefit structure(s) would cause you to face possibly unacceptable A/R risk. And consider implementing a policy of collecting all, or at least a considerable part, of surgical co-payments or co-insurance prior to the date of service. Certainly a patient who has pre-paid is far less likely to no-show or become a collections problem after the fact.
Accounts Receivables policy: Think and rethink and rethink again.
With patients responsible for a greater part of the reimbursement it will become essential that every practice examine and refine its A/R policy. To that end you might consider creating a patient promissory (patient financing) system. If you do this then a concise written policy must be put into place. And if staff is to implement that policy effectively then it must be applied consistently.
A patient promissory system should require the patient (or financially responsible party) to sign some sort of promissory note that would include at a minimum:
- the patient's name and that of the financially responsible party (if different),
- the total amount of the patient's debt,
- a payment schedule.
Other data elements will need to be included, and you're advised to seek the guidance of a qualified financial (loan) advisor to create an appropriate and binding legal agreement establishing both the debt and consequences of failure to service that debt.
Also, don't forget to think through and implement a policy for addressing the needs of patients who return for additional care but who have fallen behind on their outstanding debt service obligations.
For most patients it's not an issue to be asked for a $10 or $15 copayment at the checkout window, even if another patient is standing nearby and can overhear. But what if that patient is being asked for $500 or $1000, and he doesn't have it with him? Surely a public airing will put the patient into a very uncomfortable situation.
So you're advised to set up a quiet, private area where a staff member well versed in matters such as setting up a patient payment plan can discuss these issues out of the hearing of others.
Final thoughts (for now, anyway)
To succeed your practice must formulate strategies that recognize and appropriately respond to where this new health care consumerism is likely to be going. Those strategies must reflect your practice's core values and capabilities to deliver patient-oriented, patient-friendly care.
Effectively planned and executed strategies in response to Consumer-Directed Health Care can make your practice stronger and more competitive vis-à-vis other ophthalmic practices in the community.
Education is what you get when you read the fine print.
Experience is what you get when you don't.
Copyright © 2003-2007, Gil Weber, MBA. No part of this newsletter may be reproduced or distributed in any form whatsoever without the author’s prior written authorization.
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.