Episode 228 | Beyond Coverage: Exploring the Influence of Insurance Companies in Group Practices

Maureen Werrbach (00:00:01) – You’re listening to the group Practice Exchange podcast where the business development resource for group practice owners, where we talk candidly about business ownership and leadership from practice building tips to live coaching to real talk episodes with other group practice owners where the resource you’ve been looking for to help you grow your group practice. I’m your host, group practice owner and entrepreneur Maureen Werrbach. 

 

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Welcome back to another episode. So today we’re going to be talking about how we can explore the influence of insurance companies in group practice. Because if you haven’t noticed, insurance companies are really presenting themselves in a different way when it comes to group practice work. So I want to talk specifically about two things one, values based care and values based reimbursement. But then I also want to talk a little bit about something that’s been coming up lately, which is the idea of intercompany eliminations and what that means and why we see insurance companies getting into the group practice world through something called intercompany eliminations. So for those of you who don’t know what values based care is, the idea is not new. And it’s something that’s been around in the medical world for a long time. We just have not seen it in the mental health space. So values based care or VBC, it really emphasizes the quality and air quote value of care being delivered to a patient rather than the amount of care being delivered.

 

Maureen Werrbach (00:02:40) – Right now, we don’t engage in values based care. When you think about it from an insurance perspective, we get paid for the minutes, right? We built a 937 and that is 53 plus minutes. So it’s based on the amount of care we deliver, the amount of time that we’re providing therapy. Whereas values based care emphasizes the quality and the value of it rather than the time frame. So it’s only about 20% of providers in the mental health world use some form of measurement in their therapeutic treatment, and that is what insurance companies are going to be looking at when they think of values based care, is they want to see, how do I know that you’re doing or you’re providing care. And again, when I use the word care for insurance companies, they are quoted because they’re going to be dictating what they view care as. And that’s where the problematic part of values based care is coming in, in our world, is how the insurance companies are going to categorize what care means. And right now, only 20% of providers are using any sort of measurement in their therapy sessions.

 

Maureen Werrbach (00:03:48) – And you might have noticed different companies coming up in the past year or two, and who are adding measurement tools inside of the or companies that provide measurement based tools to give to your clients. This is all coming up for a very specific purpose, which is that they know what’s coming down the pipeline for our industry with this idea of values based care. So essentially it’s emphasizing quality and value of care to a patient. And that is going to be something that the insurance companies each measure themselves. They’re going to dictate what they view as care or quality. And it’s up to us as therapists to be able to advocate for how we view how measurement should be based, because it’s not something that’s not going to happen. I don’t know exactly how it’s going to look. My assumption it’s going to be a mix of different things related to session time will be a part of it. Clinical outcome measures might be a part of it. Client satisfaction might be a part of it. There will definitely be a focus on prevention and a reduction of services.

 

Maureen Werrbach (00:04:56) – And the issues with that is that mental health is not easy to objectify. It’s very hard to make objective. There’s a ton more administrative work involved in it. There’s going to be higher financial cost of technologies and clinical and administrative work to engage in values based care in order to be reimbursed. So values based care is one way that insurance companies can provide reimbursement through ensuring that therapy sessions or medical sessions are being done the way they want to, which essentially is to reduce the amount of time spent. So in a medical form, an easy way to look at values based care would be that if someone falls and breaks their arm, that the different providers that are apart from nurses to doctors to anyone else, that might be a part of treating this person who breaks their arm is very easy to say whether or not that there was a value in their care. If the person’s arm is no longer broken after seeing the doctor, right. It’s very hard to do a mental health world. And so the likelihood. Hood of values based care.

 

Maureen Werrbach (00:06:05) – What it will do for us is it translates into what’s called values based reimbursement, meaning will be reimbursed based off of the care that is going to be written up by insurance companies, what care means and will be reimbursed accordingly. So rather than being paid as an example, a flat $100 for a session and no 837 we might be paid $50 for a 937, and then for every unit of measurement or clients, has factions form being completed after sessions, or a clinical outcome measure of some sort being completed after each session. Those will each have a monetary value, a tied to it, which could bring you back up to that $100. If you’re providing some measurement tools for the client to share to the insurance companies. Otherwise our reimbursements are going to be likely much lower. And that’s just the point of values based reimbursement. We’re reimbursed based off of the value, and it’s not based on a fee for service model, but instead based on clinical outcomes that insurance companies will dictate. And so I’ve already seen it going in this direction with a couple of insurance companies, and you might as well.

 

Maureen Werrbach (00:07:12) – And although this feels like a very scary again, another way for insurance companies to have their hand in dictating how we do our work, we do have a voice. And I think where we’re at right now, where it’s not ingrained yet in the insurance companies, in the mental health realm, is to advocate for what we think values based care can be reimbursed as, or how it could be reimbursed, because I do know that it’s the direction we’re going to be going. Values based care and in turn, values based reimbursements with insurance companies is going to be coming down the pipeline. And so the more that we have a hand in dictating what that looks like, the less likely it is that it’s going to disrupt our work and disrupt just the way clients come in to see a therapist. So that’s the first thing that I’m seeing coming down the pipeline when it comes to the insurance playing a role or a bigger role in how we provide therapy. The second thing that I wanted to talk about is how insurance companies are getting into the group practice world, and just some of the things I’m noticing so far, as well as what my kind of predictions are, or what I see forecasting wise in the future.

 

Maureen Werrbach (00:08:29) – So big businesses this is not new have been getting into the mental health world for years now because they have unlimited amount of money to dive deep into our field and disrupt sort of the structure of private practice. Anything from compensation to standards of care are affected by big companies coming into the group practice world. But one of the things that you might not have realized is that a lot of these bigger companies that are getting into the group practice world, owning group practices, a lot of them are actually owned by insurance companies. And what the reason is for that is that they have this ability to sort of double dip and reimburse themselves if they’re a group practice owner as well. And a client is using their insurance essentially being able to, you know, double dip in that sense. And they also are able to then control the compensation of therapists. So right now, as an example, if you’re in network with an insurance company reimbursed at $100 an hour, let’s say the more group practices that they own where they’re paying their own clinicians less, let’s say 75 or $50 per session, the less it is that they need us external providers to be in their networks to provide therapy to clients.

 

Maureen Werrbach (00:09:44) – And it drowns out the visibility of smaller outpatient practices like ours. And so there’s some things to look at when it comes to that. So I’m going to use the example for UnitedHealthCare. And there’s data out there on Google. This is where I got this information was from a UnitedHealthCare company document that they have that they give to their teams. And I want to talk specifically about something called intercompany elimination. The idea of that is that for taxes, you can’t report income to yourself. You can’t report income that you’re paying yourself. So when they pay your practice or my practice, if we’re in network with Aetna or United or Blue Cross, they list that as an expense with no profit, right? If they’re paying us, they’re not making a profit. Them paying us is an expense. But when they own their own outpatient practice, they essentially are paying themselves. Right? Because they own the practice and the people that they are hiring to be therapists work for them. And if someone is using their insurance, they essentially are paying themselves back.

 

Maureen Werrbach (00:10:49) – Right. But that can’t be reported as income. When you pay yourself like this, it’s just a law. You can look up intercompany eliminations and see what that means. So in a normal sense, if me or you as a provider. Is seeing a United or Blue Cross or Aetna, Cigna, whatever, insurance, whatever. They pay us to see a client, they can write as an expense on their taxes. But if they own their own group practices, they essentially list them as sister companies, right? They’re not going to be labeled as United Healthcare Blue Cross. It’s going to be named whatever they want to name it, but it’s a sister company of theirs. And so any expenses that are paid to providers that are owned by insurance companies, then are part of this intercompany eliminations that they don’t have to report as income. So it doesn’t show as income that they’re making the government caps profit by insurance companies at around 15 to 20%. Not sure this might not be something you guys have known, but insurance companies themselves are not able to profit beyond between 15 and 20%.

 

Maureen Werrbach (00:11:58) – And it’s just a legal thing. It’s capped by the government. But if they own a group practice and it’s a separate business, a separate entity, there is no limit to how much profit they can make. So they can profit 30% or 20% paying clinicians in their group practices less. And that’s how those insurance companies are able to use what’s called intercompany eliminations to be able to make a larger profit beyond the 15 to 20% that the government is limiting them on when it comes to just their insurance company. But by owning all of these different group practices, they can set their profit margins to be however high or low they want. There’s no cap in their profit. And so they also then have opportunities to streamline their operational costs, lower benefits costs, and be able to increase their profits. And so I just urge you to Google things like intercompany eliminations in the mental health world, start to familiarize yourself with that, as well as googling values based reimbursement and values based care in the mental health realm. As a visionary, you know I talk a lot about this.

 

Maureen Werrbach (00:13:07) – It’s important to spend some time in your visionary role. And one of these things that visionaries do is forecasting what is the future of our industry like what is coming down the pipeline that we might need to pivot for or prepare for? Spend some time in your visionary role looking up intercompany eliminations, insurance companies owning group practices, and then also values based care and values based reimbursement. Even if you’re a private practice, this is going to impact you. Because what I envision is as this comes down, the pipeline and values based care and reimbursements are put into these insurance companies is that there’s going to be a mass exodus of those that are in-network wanting to be out of network because they don’t want to share more client data, they don’t want to add more administrative work and costs to their workload. And it’s going to sort of tip the scales of how many in-network to how many out-of-network providers there are, which will play a role in how easy it is to get private paid clients. And so this is something that impacts all of us and is important for us to be looking into and understand what this means for each of us based on how we run our businesses.

 

Maureen Werrbach (00:14:22) – And so make some time to look those two things up. I hope this was a helpful episode for you. I know it’s just a snippet of a much larger conversation, but I’m hoping that it gets you started on talking about what values based care, values based reimbursement, and insurance companies getting into the mental health group practice world. What it means to you. 

 

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