EVALUATING HEALTH PLANS AND MARKETING THE GASTROENTEROLOGY PRACTICE UNDER MANAGED CARE

MANAGED CARE ISSUES FOR THE GASTROENTEROLOGIST

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EVALUATING HEALTH PLANS AND MARKETING THE GASTROENTEROLOGY PRACTICE UNDER MANAGED CARE Robert S. Chang, MHSA, and Joseph E. Geenen, MD

Experts agree that managed care is here to stay. Although the number of health maintenance organizations (HMOs) in the United States has decreased since 1988, the enrollment in those HMOs has nearly doubled. The Group Health Association of America reports that there are 574 HMOs, down from 614 in 1988. Enrollment has increased to more than 51 million, however, up from 32 million in 1988. In addition, there are nearly 100 million people enrolled in preferred provider organizations. Employers are forming new business coalitions and buying groups every day. The cost of health care continues to rise for businesses, which have responded to these increases by shifting additional cost to the employees, increasing copayments and deductibles, and providing strong financial incentives to employees who use costeffective insurance plans or providers. The potential growth of Medicare HMOs will affect most gastroenterologists because of the high percentage of Medicare patients in these practices. Forty percent to 60% of a gastroenterologist’s patients have Medicare as their primary insurance. The Health Care Financing Administration projects that by the year 2000, more than 35 million people will be eligible for Medicare. Currently, 14% of Medicare patients are covered by a Medicare HMO, up from 10% in 1995.

From Gastroenterology Consultants, Ltd., (RSC, JEG); and Department of Medicine, Medical College of Wisconsin (JEG), Milwaukee, Wisconsin

GASTROENTEROLOGY CLINICS OF NORTH AMERICA

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VOLUME 26 * NUMBER 4 DECEMBER 1997

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Together, HMOs, preferred provider organizations, exclusive provider organizations (EPOs), and business coalitions can be grouped into a larger generic category called managed care organizations (MCOs). An MCO is defined as any organizational entity acting as a conduit between provider and patient that seeks to pay the provider a fee other than billed charges. Typically an MCO establishes a network of providers whom it employs or with whom it contracts to provide health care services to a defined group of patients, or enrollees. All MCOs have utilization review systems in place to manage the care provided to a patient. The criteria used to determine the amount of care provided to patients are becoming more restrictive. TWO APPROACHES TO MANAGED CARE CONTRACTING

There are two approaches that a gastroenterologist can take to managed care contracting. One approach is to sign all contracts that are available. Some physicians think that it is more difficult to eliminate a physician from a panel of providers once they have been admitted to the network. Therefore, the initial contract becomes the proverbial footin-the-door. This approach may offer a false sense of security. There is an abundance of gastroenterologists in most metropolitan areas. Today, MCOs can be choosy about which providers to allow into their networks and are limiting the addition of new physicians. In some cases, MCOs are eliminating providers and are working with smaller select groups of physicians in exchange for larger discounts and capitated arrangements. A second approach to managed care contracting is to be selective about the managed care contracts the group will accept. Some gastroenterologists limit the number of managed care patients they see so that they can see more patients with traditional indemnity insurance. Sometimes, groups limit their participation with managed care to include only the plans that have the most patients or plans with the most favorable financial statements. Whether a physician’s strategy is to pick and choose or to take all managed care plans, all physicians will need to work with managed care more in the future. HOW TO EVALUATE A MANAGED CARE PLAN

If you decide to be selective regarding the managed care companies that you contract with, you will need to decide how you will evaluate them. Data may be available through your state. The commissioner of insurance or another state regulatory agency has detailed financial information about each MCO (see Appendix 1). The state has information regarding membership, enrollment, profit or loss, and assets. Each MCO files an annual statement with this agency. Although it may be difficult for a gastroenterologist to evaluate these data, one may choose to contract with only those MCOs that appear to have a stable financial future. A referring physician or a local business

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may ask you to participate in a plan for the convenience of their patients or employees. It may be difficult to tell a referring physician that you do not want to see those MCO patients (Table 1). You may choose to contract with an MCO only if it can bring additional patient volume to your practice. Enrollment data are available from your state insurance regulatory agency. It may be difficult, however, to determine how many of those enrollees you already see and treat. Do not look just at the raw data. Just because an MCO has patients, it does not mean those patients will come to see you. Some questions to consider are listed in Table 1. It is becoming more important to evaluate MCOs based on their utilization management programs. Some plans make it difficult for a specialist to obtain authorization to see a patient. What is the procedure for a primary care physician to make a referral to a gastroenterologist? Review the referral requirements. Some plans use care protocols for authorizing care. Can you schedule a procedure if you think it is clinically necessary, or do you need to meet the MCO’s criteria? If so, make sure that these protocols are developed with physician participation and they are reviewed on a regular basis. Under capitated plans, you may want criteria in place to assure that all referrals are appropriate. Other critical factors in evaluating MCOs are their contract terms. Obviously, reasonable fee schedules and favorable contract terms influence the decision to sign a contract. Fewer MCOs are paying physicians a discount off of charges, and more are paying off a predetermined fee schedule. More are beginning to shift risk to physicians by paying a capitated amount. How easy is it to terminate your contract if you are not pleased with the MCO? What are your obligations in that event? Read the contract, and consult your advisors. Table 1. MANAGED CARE ORGANIZATION EVALUATION CHECKLIST Here are issues you may want to consider if you are evaluating a managed care organization and are trying to be selective about which managed care organization you are contracting with: 0 Review past financial performance of the managed care organization. [7 Who owns the company? 0 What is their reputation? Is the managed care organization accredited? By whom? What is their current enrollment and enrollment trend? Who are the major employers they represent? Where are the employers located? How long have they been in the market? Are there any outstanding state regulatory issues? Review the current list of providers. Is it acceptable? How many gastroenterologistsare there in the network? Do you have a relationship with their primary care physicians? Is patient satisfaction data available? What is their system for utilization management? Ask other providers for a reference. How are they to work with? a Review contract and contract terms.

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Lastly, ask other providers about the MCO. Your colleagues may be able to tell you if the MCO is easy to work with and is responsive to concerns of their providers. There has been a tremendous amount of consolidation over the past several years. Industry experts predict that trend to continue. If you are not in a particular managed care plan today, you might be in it tomorrow through mergers or acquisitions of MCOs. Even if you are selective, you may end up in an MCO that you did not plan on joining. HOW TO BE ATTRACTIVE TO MANAGED CARE

Marketing your practice to managed care is a long process of building a relationship with each MCO in your area. Your relationships with MCOs are some of the most important relationships that you will develop. There are three steps to marketing your practice to managed care. First, put yourself in their place. What would you look for in a provider? What would be your goals and objectives if you worked for the MCO, both personally and for your company? How would you try to achieve your goals and objectives? What would you try to accomplish every day? Second, think about what you and your practice can offer to the MCO. Why would a relationship with your group help them to meet their goals? How can you help them lower costs and provide a better product to their customers? Develop a practice profile that summarizes the best attributes of your group. Third, begin developing a good working relationship with the MCOs in your area. Meet with them regularly. If you follow these three steps, you will have laid the foundation for marketing your practice to MCOs. These three steps can be expanded as follows: 1. Know your customer. You need to put yourself in the place of the MCO. Understand their needs. Ask yourself the following questions: What does the MCO look for in a provider? How can you make its job easier? How can you help it achieve its goals? How can you help it meet its credentialing requirements? How can you make it attractive to businesses? How can you help lower costs? How can you help increase profits for the MCO? Who are the MCOs customers? What are its customers’ needs? How can you help the MCO serve its customers? 2. Market yourself. Do not be reluctant to tell them why you would be an asset to the plan. Tell why you are easy to work with. Explain how your group can help the MCO reach its goals. Tell how you can help lower costs. Tell how you can help increase the value of the product that they are offering to customers. Explain your credentials

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and your expertise. Develop a practice profile as a booklet or a binder that summarizes all of the attractive things about your practice. When one of your physicians receives an award, send the MCO an announcement. Take every opportunity to remind them why your group of gastroenterologists is the one to work with. 3. Maintain good relationships. Make sure that the MCO knows who you are. Meet with them regularly. Take every opportunity to meet with them in person rather than on the phone. The physicians should meet with the medical director. The administrator or office manager should meet with the contracting representatives on a regular basis. Personal relationships drive business relationships. Go to see them. Invite them to take a tour of your office or surgery center. Use these meetings to share your practice profile and to explain why you are important to their plan. If they like you and your office staff, they will return your telephone calls sooner and help you quickly resolve any problems that arise in the future. Be easy to work with. Let them know that you are open to suggestions. Let them know that you are willing to help them with projects that require physician participation. Be willing to participate on one of their committees. Show them that you want to be flexible and you want to help them achieve their goals. Make sure that you send through clean claims with few errors or resubmissions. DEVELOPING A PRACTICE PROFILE

A practice profile can be a booklet, brochure, or binder of information that describes your practice and emphasizes its strengths. A printed booklet or brochure is most attractive. It can be costly, however, and needs to be reprinted when any information changes. A three-ring binder is the most practical approach. Consider including the following information: I. Demographic information. Section I should include basic demographic information about your practice. Answer the following questions: Who are you? Where do you practice? Is it convenient to use your group? It should be easy and convenient to see your physicians. A. Title page. Include the basic information. 1. Name. 2. Address. 3. Telephone. 4. Contact person. B. Locutions. List your main and satellite offices. List your hospital affiliations. Tell the MCO about your endoscopy center. Show that your practice is accessible to the MCOs enrollees. List your hours. Highlight evening and weekend office hours if they are available. List which services you provide at each location. Are there any specialized services that you offer? What is the waiting time for an appointment for a patient?

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Ofices. List office hours, addresses, and telephone numbers. Hospitals. List addresses. Ambulato y surgery centers. List addresses. AccessibiZity. Does your office have ample parking? Is public transportation available? 5. Multiple languages. Do you have translators available for patients who do not speak English? C. Physicians. Explain why your physicians are better. Do any of your physicians have a specialized expertise? 1. Curriculum vitae. Make sure they are current and complete. 2. Board certification. This is an important criterion. 3. Specialized training. Highlight specialized skills of the physicians. 4. Teaching afiliations and academic appointments. These relationships usually add status to your physicians’ credentials. Tell the MCO that you are not just a practitioner; you are also a teacher of other practitioners. 5. Research and publications. Do your physicians stay active and current with the latest technology? 6. Awards. Have any of your physicians received any awards lately? 7. Personal information. What are the physicians’ hobbies and interests? 8. Photos. Photos can be a personalized touch that makes your practice portfolio easier to read. D. Stafl. What differentiates your staff from other offices? 1. Key stufmembers. List key staff members and their responsibilities. Let the MCO know who to contact in case of a problem. 2. Skill mix. Do you use a high percentage of registered nurses? Are physician assistants or nurse-practitioners used in your practice? 3. Training, orientation, and ongoing education. 4. Awards. 5. Credentials. 11. Ofice operations. Section I1 should describe the areas of office operations that the MCO believes are important. Highlight things that your practice does that might help the MCO meet credentialing requirements. A. Billing department. Let the MCO know that you have sophisticated systems that can handle a variety of billing situations. 1. Electronic claims. Do you send claims electronically?Electronic claims submission can reduce the MCO’s cost of processing claims. 2. Managed cure contracts. Do you have much experience with different managed care contracts? Provide a list of your managed care contracts. 3. Information systems. Is your computer new and updated? 8. Total quality management (TQM). If you do not have a formal 1. 2. 3. 4.

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TQM program in your office, you should set one up. Chances are that you have several pieces of a TQM program in place, but you do not call it TQM. Many of these items are required for the MCOs accreditation. 1. Accreditation or licensure. Is your office accredited or licensed? 2. Patient satisfaction suvvqs. Let the MCO know that you have high patient satisfaction and that you measure it regularly. 3. Referring physician satisfaction survqs. Tell the MCO that you maintain good relationships with your referring physicians. 4. Chart review. How often do you do it? What do you find? How do you make changes based on your findings? 5. Regular review of policies and procedures. 6. Established protocols or guidelines. Standardized protocols can ensure consistent quality of care and lower cost. This could include protocols for your physicians as well as your nurses. 7. Primary care physician education. Physician education should address the appropriate referral of patients. Teach primary care physicians to provide more of the patients’ medical care. 8. Patient education. Increased patient education can reduce cost of care. 9. Stafcontinuing education. Staff education helps maintain a high level of awareness of the most current methods of treatment. 111. Ambulatory surgery. An ambulatory surgery center can be one of a gastroenterologist’s most attractive features. Highlight the advantages of an ambulatory surgery center. Your surgery center can help lower costs and increase MCO profits. A. Price. Comparative pricing data may be available through your state. Show the MCO that you are more cost-effective than other providers in the area. Can you save the MCO additional administrative cost by global billing? B. Patient convenience. Stress the fact that your ambulatory surgery center has high patient satisfaction. There is no additional registration process. The patient returns to the same location as their office visit. C. Accreditation. Is your ambulatory surgery center accredited? If not, consider getting accredited by either the Joint Commission on Accreditation of Healthcare Organizations or the Accreditation Association for Ambulatory Health Care. Both of these organizations have been authorized by the Health Care Financing Administration to certify ambulatory surgery centers for participation in the Medicare program. IV. Pricing. Dedicate a section of your practice profile on how you can reduce costs. Let the MCO know how working with your group can save money by providing the most cost-effective care. A. Low cost. Emphasize that you are a low-cost provider. Have you developed clinical protocols with cost in mind? Do you consider cost when you prescribe medications? Show the MCO how YOU

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plan to educate patients and primary care physicians to use gastroenterology services more appropriately. B. Alternate pricing. You should tell the MCO that you are willing to take risk and consider alternate pricing structures. 1. Capitation. A capitation payment may or may not include an amount for your surgery center. 2. Global fees or package pricing. Try offering the MCO a fee schedule that includes the professional and facility component of the care. Package pricing can lower an MCO’s cost of processing claims. 3. Singlefee. Offer the MCO a flat rate for your surgery center, regardless of what procedure is done. WHAT TO DO WHEN MANAGED CARE SAYS “NO” A decade or more ago, large provider networks were more common in MCOs because these were more popular with patients, employers, and providers. Selecting a managed care plan did not mean major limitations on choices of providers. MCOs concentrated their efforts at reducing costs by lowering the fee schedules paid to the providers. MCOs soon discovered, however, that providers had a wide range of practice patterns. These variations often led to higher uncontrolled costs. In an attempt to control these costs, MCOs responded by implementing utilization review. Today, almost all MCOs have some type of utilization review in place. Referrals are required through primary care physicians, preauthorization is required for certain procedures, or the MCO uses predetermined guidelines and protocols. MCOs have learned that cooperative providers can help manage the amount (and thereby the cost) of the care provided. They have discovered that fewer providers are more easily managed and more easily controlled. With fewer providers, it is easier to carry out changes in policies, procedures, and protocols. Fewer providers also result in lower administrative costs. Costs are lower if there are fewer contracts to manage. MCOs must meet the requirements for accreditation with the National Committee for Quality Assurance. These requirements include close monitoring of each provider and the patient care provided in each care setting. Having fewer providers helps reduce the burden of this large responsibility. Fewer providers mean lower costs to the MCO. MCOs have found that utilization of gastroenterology services can be lowered, reducing the need for gastroenterologists. In addition, because of declining fees, gastroenterologists have become more willing to see more patient volume. An oversupply of gastroenterologists has prompted some gastroenterologists to approach MCOs requesting a reduction in provider panels to provide additional volume. The trend of fewer providers will continue. MCOs will continue to reduce their provider networks.

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If it has not already happened, an MCO will someday say ”no” to your group. When that happens, you should have a planned response. Assuming that you have already developed a practice profile and have met with the MCO to try to persuade it that your group is necessary for its plan, continue to call regularly and let them know of your continuing interest. If you have not met with the medical director in the past, try to meet now. Be persistent but not annoying. Emphasize all of the things that you summarized in your practice profile. Concentrate on how you can help them reach their goals. Enlist your primary care physicians to call the MCO to give you an endorsement. Have them write a letter to the MCO to request that your group be added to the plan. Have your local hospital call the MCO to tell them how important you are to the hospital. Use your surgery center data. Show the MCO how much you can save it by using your surgery center. Remind the MCO you are the low-cost provider. Offer alternative pricing schemes. Tell the MCO about your high patient satisfaction. With persistence, you may be able to convince the MCO to reconsider. If you must try this hard to receive a contract offer, however, it most likely will be nonnegotiable. POINTS TO REMEMBER

Managed care is here to stay, and gastroenterologists who work well with managed care will have successful practices. Evaluating MCOs and marketing your practice will help ensure continued access to patients. Review data that are available through your state regulatory agencies to determine an MCO’s long-term viability. After you have selected the MCOs that you want to work with, build strong relationships with them. Meet with the MCOs often. Assess their need. Explain the benefits of working with your group. Tell them how you can help them achieve their goals and objectives. Particularly, tell them how you can lower costs. Develop a practice profile that summarizes the good things about your practice. References 1. Bonney R The art of negotiation: Getting what you want out of a managed care contract. Healthcare Executive 1012-16, 1995 2. Caesar N: How to gain leverage with a health plan. Medical Economics 71:3241, 1994 3. Group Health Association of America National Directory of HMOs Database 4. Glossary of Terms Used in Managed Care 1996: Managed Care Assembly. Englewood, Colorado, Medical Group Management Association 5. Gosfield A: Due diligence: Evaluate a plan before you sign up. The Physician’s Advisory 94:l-2, 1994 6. Terry K: Managed care participation and income keep rising. Medical Economics 73196206,1996 7. National Healthcare Expenditures. Baltimore, Health Care Financing Administration, Office of the Actuary, Office of National Health Statistics, 1996

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8. Patterns of HMO enrollment growth. In The Interstudy Competitive Edge: Part 11. Industry Report. St. Paul, Minnesota, Interstudy Publications, a division of Decision Resources, Inc., 1996 9. Population Statistics Update. In The Interstudy Competitive Edge: Part 111. Regional Market Analysis. St. Paul, Minnesota, Interstudy Publications, a division of Decision Resources, Inc., 1997 10. Rehnwall P: Building Successful Managed Care Relations. Nashville, Business Network, and West Orange, NJ, Polly Rehnwall Health Care Business Development, 1994 11. Teplin R A guide to evaluating managed care companies. Physician Executive 20:3539, 1994 12. Vogel D Gastroenterology and Managed Care: Preparing to Meet the Challenge. American Society for Gastrointestinal Endoscopy, 1994 13. Wieland J: The Internist’s Guide to Negotiating Managed Care Contracts and Capitation Rates, Gastroenterology Edition. American Gastroenterological Association and American Society for Gastrointestinal Endoscopy, 1996 14. Wisconsin Insurance Report. Madison, Wisconsin, Office of the Commissioner of Insurance, State of Wisconsin, 1996

Address reprint requests to: Robert S. Chang, MHSA Gastroenterology Consultants, Ltd. 2901 West Kinnickinnic River Parkway, Suite 570 Milwaukee, WI 53215

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