Cash May be King...but Don’t Forget the Queen!
FEATURE
Are You Going All-Cash For All The Wrong Reasons?
Dr. Ray Foxworth
As I have attended state conventions around the nation, I’ve talked with literally hundreds if not thousands of you about your practices and the challenges you face. It seems more recently that the conversation turns to the benefits of going to an all-cash practice. It becomes clear that the benefits many perceive from being an all-cash practice may be anything but.
No doubt, much of the frustration you experience in practice has to do with dealing with insurance companies. However, many of you may be under the false impression that if you went all-cash, all of the craziness with the insurance world, as well as the rules and regulations, would just disappear. Unfortunately, that is simply not the case. Becoming an allcash practice simply means you are changing the primary payer source and often limiting your market share to those who can and will pay cash for your services. Do these people exist? Absolutely. There are hundreds if not thousands of very successful cash practices in the United States, and the number is growing.
However, if you go all-cash, the reality is that other than eliminating the aggravation of dealing directly with the insurance companies, nothing else really changes. You still have to document correctly, code correctly, bill correctly, and collect correctly. What do I mean? Even if you are allcash, most states have rules and regulations promulgated by boards of examiners that dictate the minimum standards for documentation, billing, coding, and/or the requirements to establish medical necessity. Moreover, if you are treating insured patients, even if they do choose to pay cash, you should follow, at a minimum, the standards for documenting medical necessity because many of these patients will choose to submit their claims to their insurance companies.
While I personally don’t have a horse in this race, I would like to share with you some things that you might want to consider before shifting to an all-cash practice. First, let’s look at the financial considerations. Making an abrupt change in your case mix and payer source can create havoc in your life and in your practice. Most consultants will tell you to make sure you have at least six months of revenue saved, advise your existing patients about six months in advance, and plan on the process taking about a year.
Next, if you do go all-cash, then it typically does not mean that you will only see “cash patients.” Most cash practices routinely see insured patients as out-of-network providers. If you choose to see these patients, you surely understand that they will take your superbill or receipt and attempt to submit it to their insurance carriers for reimbursement. Just because you choose not to participate in the health plan does not mean you are relieved of the duty to follow, at a minimum, your board’s rules and the need to establish medical necessity, or to have treatment plans or goals like any other in-network provider. Even if you were relieved of all of those duties, think about this scenario for a moment. You treat an out-of-network patient, and he follows your treatment recommendations getting great results. However, because you’re all-cash, you don’t feel the need to “play the insurance game” and fully document medical necessity or outline a treatment plan or goals. What do you think is going to happen if the patient submits your superbill or the receipt to his insurance company and the company requests your records and then
denies payment for incorrect documentation? Who do you think will be the “bad guy?”
Simply being out-of-network doesn’t relieve you of any of your clinical responsibilities or your responsibilities to document, code, and bill correctly. While you may not have a direct contract with an insurance company, the patient does, and if that patient’s policy only reimburses him for treatment that is documented as medically necessary, you are going to increase the likelihood of having one angry patient and increase the likelihood of complaints to your board.
Also, don’t forget that if you go all-cash, that doesn’t mean you can see Medicare patients without being part of the Medicare program. You have the option of being a participating or nonparticipating provider, and if you are “nonpar,” the patient can pay you directly. But, you do not have the option of opting out of Medicare and having all of the patients pay you directly. To be clear, par or nonpar, you must still follow the Medicare guidelines for documentation and medical necessity.
In addition to the potential financial impact of going allcash, let’s look at some statistics on our market share and patient behavior. According to the National Institute of Health, only about 8% of the US population currently sees a doctor of chiropractic. Other sources say 10 to 15%. Combine that with the following information:
Multiple surveys indicate the number of uninsured has fallen due to expanded Medicaid eligibility and health insurance exchanges established due to the Patient Protection and Affordable Care Act, also known as PPACA or “Obamacare.” These changes took effect January 1, 2014. The Commonwealth Fund reported in July 2014 that an additional 9.5 million people aged 19-64 had obtained health insurance, roughly 5% of the workingaged population.1 Gallup reported in July 2014 that the uninsured rate among adults 18 and over fell from 18.0% in Q3 2013 to 13.4% by Q2 2014.2 Rand Corporation had similar findings.3
If these figures are accurate, it means that about 86% of adults in the US are now covered by some type of insurance. Why is this important? As you start looking at the population who actually uses chiropractic care (8 to 15% depending on whose numbers you use), and you look further at how they make their decisions when selecting healthcare providers, then there are some really challenging, if not troubling, numbers to consider for those who choose to go all-cash and choose not to participate with any health plan.
Of the 86% of the population with health insurance, most have provider panels, booklets, or online resources they use to find their doctors. They are penalized financially if they go to an out-of-network doctor. I’ve often said in my lectures that if you’re not on the list, you don’t exist. I’ve also made the argument that the only thing worse than being on the list was being on the list of a panel that does not reimburse you for at least
the cost of delivering care. I’ve had to modify that opinion. Unfortunately, the reimbursement for chiropractic services has gone down over time. Now the decision to participate has to be made based not just on the level of reimbursements, but also whether you want or need the “traffic” in your office. If you don’t have the traffic, you have further limited the potential market share of people you have to tell the chiropractic story to, hope they get it, and stick with you for treatment, wellness, and prevention. While being on a provider list may not make sense to you, and while you may not want to deal with all the aggravation of dealing with insurance companies, the reality is that patients clearly make decisions based on their insurance coverage.
Here is just one example. As part of my research for this article, I actually conducted a poll of the general public, specifically asking if network participation is a deciding factor when patients choose a provider. More than 200 people from a wide range of socioeconomic backgrounds completed the survey. While this is not a “scientific survey,” it is clearly an indication of how patients think and make decisions.
According to the survey, 77% of respondents said that they absolutely would pick an in-network provider over an out-ofnetwork provider. Their comments made it clear that while their health care is important and they want the best doctors, they clearly have a propensity to go with an in-network rather than out-of-network provider. What does this mean for your practice and how does it affect your decision to go all-cash? It means that if you are not on a provider list, unless you have some type of marketing plan or other tactics to get you in front of the patients, you may not exist in their minds. The old saying “out of sight, out of mind” comes to mind.
While I’m not making an argument for provider network participation, I am looking at the statistics on how people make decisions and how your participation in health plans and networks could affect your market share. So, if you follow this thought process, if 8 to 15% of the population is seeing chiropractors and then you potentially take 77% of those out of the mix because they typically will choose an in-network provider, you can see how making this choice can significantly diminish the pool of patients that might choose you as an all-cash practice.
While cash may be king, don’t forget the “queen!” The “queen” is the patient, and more often than not, the wife or mother who makes most all of the purchasing and healthcare decisions. If you look at this informal survey, when the “queen” makes the decisions whether to go in-network or out-of-network, more than 80% will choose in-network.
Part of the drive to prepare this article wasn’t just about the doctors I’ve met who are in practice today, but about the students who are soon to be our colleagues. As I interact with more of these students, many are saying they hope to go all-cash and never have to deal with insurance. While I understand that sentiment, my concern from a business perspective is how they are going to pay off debts of tens to hundreds of thousands of dollars if they are limiting their market share to those who can and will pay cash. As I said, there are many very successful cash practices and I applaud their determination and ability to make it work. Although that may be what’s in the best interest ofthat doctor, many patients want to use whatever insurance they may have, even if it’s a high-deductible plan.
Let’s face it. If you pay hundreds and hundreds of dollars a month in premiums, do you want to have to pay up front? Taking it from another angle, how many of y ou who’ve been involved in an auto accident were willing to take your car to a body shop that required you to pay up front and then submit your bill to your insurance company? After recently hearing Bill Esteb, one of the profession’s most prolific authors and chiropractic proponents, there is no doubt the insurance model doesn’t work well with chiropractic. With proper patient education and a strong commitment to changing patient perceptions, many doctors can and will succeed in an all-cash practice. While I wish all patients paid cash and that we didn’t have to fool with the insurance game, the reality is that we’re not there yet. And even if we are, 77 to 80% of patients aren’t.
Finally, take this out of the chiropractic realm for a moment. Consider the advice of investment brokers and consultants. Most will tell you that you should never put all of your money or savings in any one vehicle. That means don’t put eveiything in a money market account, don’t put eveiything in a CD, and don’t put eveiything in one company stock. Why do they tell us this? Because they know that eveiything can disappear in a moment, which is why they advise us to “diversify” our investments. Such investing creates the most stable types of investments for our future. I would argue that same approach should be taken when you look at your practice. A practice that is all insurance or all workers’ comp or all personal injury can be on the brink of disaster with a change in laws, rules, or regulations. We have seen that happen in Florida, California, and several other states. Those practices with all of their eggs in one basket were devastated and many disappeared.
A much more stable practice model would be a well-diversified practice. A good, healthy case mix of group health, Medicare, workers’ comp, personal injury, and absolutely a growing percentage of cash would make for the most stable practice. I would even say that it makes more sense to transition to a higher percentage of cash patients for even greater stability over time.
One of the repercussions of insurance reimbursement for chiropractic is that patients bought the lie that insurance companies could determine what they needed in the way of care. Patients began to embrace the idea that if insurance doesn’t cover it, then they probably don’t need it. Unfortunately, many doctors also bought this lie and stopped recommending the care the patient actually needed and would only recommend what insurance covered. Many of us allowed insurance to weaken us and we stopped delivering the best consults, exams, and reports-of-findings to fully tell patients what they needed and settled for recommending what insurance covered. Many of us stop telling the story about chiropractic and it’s true benefits. The reality is that all of what we perceive as “negative” changes in the insurance world may ultimately be what drives the profession to greater success in the future.
If the decisions you are making about your practice’s style are driven by thoughts of freedom from aggravation, worry of insurance companies, and rules and regulations, then you may be in for a disappointment. If none of that “stuff’ really goes away, then what you’re really doing is limiting your potential market share, and you sure don’t need to do that if the share is already limited to 8 to 15%.
With all of the previously mentioned factors in play, the most stable practice model as you move into the future is likely the one that is well diversified and that gets back to the roots of chiropractic and what it can do for your patients. This means taking the time to educate your patients not only about the effectiveness of chiropractic care for neuromusculoskeletal problems, but also about prevention, wellness, and the many other conditions you can help.
If you are considering an all-cash practice, just make sure you’re doing so for the right reasons rather than the perception that it means full freedom and “no problems.” Yes, cash is king, but don’t forget the “queen!”
References:
1. Commonwealth Fund-New Survey-July 10, 2014.
2. In U.S., Uninsured Rate Sinks to 13.4% in Second Quarter-July 10, 2014.
3. Rand Corporation-Changes in Health Insurance Enrollment Since 2013.
Dr. Foxworth is a certified Medical Compliance ^ Specialist and President of ChiroHealthUSA. You i can contact Dr. Foxworth at F888-719-9990, [email protected] or visit the ChiroHealthUSA website atwww.chirohealthusa.com
