• Feature

    Employer Self-Insurance Offers Opportunities for PTs

    As more employers opt for self-funded health plans, a growing number of physical therapists are finding ways to benefit.

    Feature Self Insurance

    Among the reasons for becoming a physical therapist (PT), the chance to work with self-insured employers likely is near the bottom of the list. After all, says Mike Horsfield, PT, MBA, ATC, the average PT in an outpatient clinic or typical owner of a physical therapy private practice "doesn't even know when a patient's employer is self-funded, because it doesn't change the way that person is billed."

    Self-insured plans are those in which employers use their own funds to cover associated costs and financial risks related to their employees' health care. Such plans require the employer to, for example, write a check to its employees' providers for all of their health care up to a certain point (minus any deductible and copays owed by the worker). Above that dollar amount—say $100,000—most employers turn to stop-loss coverage from a commercial carrier that protects them against expenses exceeding their budget.

    That patient's insurance card likely will look the same as any other, with the corporate logo of Blue Cross Blue Shield, UnitedHealthcare, or another major carrier on its face, notes Horsfield. The reason: self-funded companies often turn to health plans to act as third-party administrators. Furthermore, most patients have no idea where their employer-provided insurance comes from. "If you asked them," he says, "they probably couldn't tell you, because for them it doesn't make a difference." Horsfield is the chief executive officer (CEO) and 1 of 10 PT owners of Rock Valley Physical Therapy, with clinics in Iowa and Illinois.

    So, why should anyone other than employers care about self-insurance? "Because, if you're a PT, any company that self-insures represents an opportunity," Horsfield says. "If you can reach out to that employer and make the case that you can help them manage their health care costs, there's a good chance they're going to want to work with you."

    Horsfield speaks from experience.

    Rock Valley Physical Therapy, which comprises 31 clinics and nearly 300 employees, has worked with self-insured employers for nearly 2 decades. The practice's foundation is outpatient orthopedics offered in a traditional physical therapy setting, and Horsfield is a board-certified clinical specialist in orthopaedic physical therapy. But the practice also has revenue streams from direct contracting—it partners, for example, with industrial manufacturers to provide their workers with onsite physical therapy, occupational medicine, and wellness services. Rock Valley contracts directly with 25 self-insured entities in a wide range of business sectors, including financial services, construction, and transportation.

    "We interact with employers in this space in a few different ways," Horsfield says. "One is by sending a therapist directly to the jobsite to work with employees for a specified number of hours per week." Under that kind of contract, Rock Valley's team might provide care when workers have musculoskeletal injuries and, if no one is injured, might conduct a series of ergonomic assessments in collaboration with the company's risk-management professionals.

    In other cases, Horsfield says, Rock Valley provides physical therapist services the same way it does for its other patients and clients: in a treatment room at 1 of its practice sites. "One of our contracts is with a local municipality; they exclusively use our clinics," he says. "From the employer's perspective, a beauty of being self-insured is that they can create their own narrow network based on value. For any PT who can get into that network, the thing to keep in mind is that the employer is not necessarily looking for the lowest costs. What they want even more are predictable costs." Offer such predictability, Horsfield says, "and you can be a great partner—which can be rewarding both financially and professionally."

    The Self-Insurance Opportunity

    The other important reason to seek out contracts with self-funded employers? Recent studies of insurance trends in the United States suggest that not doing so means leaving money on the table.

    A 2016 report by the Employee Benefit Research Institute (EBRI)1 found that 30% of "midsized" companies (100 to 499 employees) now offer self-insured plans to their employees. Among "small establishments" (under 100 employees), the proportion is about half that (14%), but a full 80% of "large" firms (500 or more employees) self-insure. Overall, the report notes, the percentage of companies that self-insure "has been generally increasing since at least the mid-1990s," and the percentage of covered workers enrolled in self-insured plans increased from 46% in 1996 to 60% in 2015.

    Companies opt to self-insure both for the savings it can offer and because doing so can allow them to pick and choose the providers and services they prefer.

    On the cost-savings front, employers that self-insure can be exempt from certain minimum-coverage and tax requirements of the Affordable Care Act and state health insurance laws.2 They also can avoid the extra amounts commercial policies charge in order to be profitable—although many choose to "rent" a commercial carrier's network or some of its services (which is the reason "UnitedHealthcare" might appear on a patient's insurance card). Finally, because self-insured companies are free to shape their plans as they see fit, they can incorporate creative initiatives, such as customized wellness programs, that may further reduce their costs.

    "Being self-insured gives employers more control over their benefits package, so they can tailor it to their specific workforce," explains Elise Latawiec, PT, MPH, senior specialist in payment and practice management at APTA. "The challenge for physical therapists who want to contract with these companies directly is to really understand their particular needs and work environment," she says. "If you can do that, then it's all about showing through objective data how you can help the employer reach its goals."

    "Quantifiable Returns"

    One PT who well understands that imperative is Matthew VanderKooi, PT, MS. The founder and president of New Life Physical Therapy, now a 3-clinic practice in central Wisconsin, signed his first contract with a self-insured employer back in 2005.

    "At that point I had 1 clinic and 3 PTs. It was a big decision to go in that direction," says VanderKooi, a board certified specialist in orthopaedic physical therapy and a fellow of the American Academy of Orthopaedic Manual Physical Therapists (AAOMPT).

    Today, New Life works with 10 companies, ranging in employee size from 80 to nearly 1,000. The diverse list includes a glass manufacturer, a poultry-processing plant, and a company that uses thermoforming to shape plastics into products. "Given that variety, you can't just assume that once you've worked with 1 company you know how everything works at the next," VanderKooi notes. "You must go in and look at the tasks people are doing at each company and be attuned to that specific environment."

    Understanding the unique needs of employers also is critical to marketing, VanderKooi says. One mistake that a lot of providers make when they approach prospective self-insured clients is to "try to sell a service and leave it at that," he says. "That's a tricky proposition today, because the employer marketplace is becoming pretty crowded with all kinds of health care services—chiropractors, personal trainers, hospital systems, you name it. There's a lot of competition, so you need to set yourself apart."

    Toward that end, VanderKooi says, "you must be able to have conversations with key decision-makers—CEOs, chief operating officers, and plant managers—about quantifiable return on investment." New Life accomplishes this in part by using predictive-analytics software to identify the ways in which a company's employees are most likely to be injured.

    "Many providers take a reactive approach," VanderKooi notes. "They're just looking at where injuries have occurred. But that's like driving a car while looking through the rear-view mirror. It's more valuable to look ahead and try to prevent injuries in the first place." Analyses help New Life assemble the data it needs to show company leaders what they can expect.

    While conceding that the sales and business sides of contracting with the self-insured can be "really challenging," VanderKooi says the rewards of working outside the conventional reimbursement system tend to make the effort worthwhile. When he partners with these companies—most of which have employees who have struggled with the cost of health care and getting access to services they need—he feels as if he's making a difference. "There's also the fact," VanderKooi says, "that when I'm practicing in the workplace, I'm at the highest level of my license: I'm the primary-care provider of musculoskeletal services. There's incredible professional satisfaction that goes with that."

    A Way to Diversify

    The benefits that come with professional autonomy also were top of mind for Marc Guillet, PT, MS, when he made the decision to contract directly with employers. Guillet, owner of Agile Physical Therapy in Palo Alto, California, and a board-certified specialist in orthopaedic physical therapy, says he began to look for ways to diversify his business's portfolio about 8 years ago as a hedge against declining reimbursement rates. "We were a successful clinical operation, but we knew we could do better," he says. "We saw direct contracting as a way for us to provide the best care possible without the restrictions" of conventional reimbursement.

    Eventually, Agile Physical Therapy was approached by an Internet search-engine business in nearby Mountain View. The 2 businesses worked together to create a vendor agreement that clearly outlined the services his practice would provide.

    "First, we needed to prove to the employer that they'd see a return on their investment," Guillet says. "We had to show them that their employees would be healthier if they worked with us—that our outcomes are strong, our patient-satisfaction scores are high, and we are well-respected in the community." Guillet explained that, in addition to the "hard benefits" of lower health care expenditures, Agile offered "soft" savings, such as "creating an onsite clinic so their workers don't have to drive back and forth to their appointments."

    Agile developed a contract in which the employer pays it an hourly rate that matches the therapist's current salary and benefits package. "On top of that are incentive-based payments around outcomes and satisfaction scores, and they pay us a management fee that adds a little to the bottom line," Guillet says. Even better, Guillet says, the partnership presents "no risk" to his practice. "They provided all of the equipment we needed to start up, and we use their space rent-free."

    Michael Connors, PT, DPT, took a similar approach with an employer- client that brought him in to help reduce its workers' compensation costs. The board-certified specialist in orthopaedic physical therapy is an assistant professor in the physical therapy program at the Texas Center for Performing Arts Health in Denton, and a regional director of Dallas-Fort Worth's Greater Therapy Centers. Connor also owns Metroplex Performing Arts Medicine, which provides wellness services to the Texas Ballet Theater (TBT) and a growing number of other performing arts companies.

    TBT, Connors explains, offers its dancers workers' compensation through a local insurance carrier. "Their rates are based on utilization of services. If TBT can show over the course of 3 to 5 years it has decreased reported injuries, it can qualify for a lower premium."

    Texas has only limited direct access, so Connors' team of 11 PTs partners with a physician to provide onsite services at the theater and elsewhere on an "as-needed" basis. If a dancer has hamstring pain, for example, "once the physician gives us an order to treat, 1 of our PTs will work with her to bring her back gradually to full participation."

    Historically, the theater saw a spate of reported injuries near the end of the year, as its dancers performed "The Nutcracker" more than 40 times in less than a month. But in the 2 years that Connors' team has worked with the ballet company it has had no workers' compensation claims during the Christmas season—and its overall injury rate has dropped by 30% to 40%. "We're in year 3 of a 3-year evaluation," he says, "and it looks like TBT will be eligible to get that reduced rate."

    Challenging But Rewarding

    With PTs such as Connors and Guillet forging lucrative connections with employers, the question becomes, how can other practices emulate their success?

    A good place to start, APTA's Latawiec suggests, is with the association's Managed Care Contracting Toolkit (available at www.apta.org/Payment/PrivateInsurance/ManagedCareContractingToolkit/). While it covers contracting with health plans in general, "a lot of the same rules apply to insurers who happen to be employers," she says. Another valuable resource is APTA's Private Practice Section (PPS), she adds. "Especially when it comes to techniques such as marketing, which requires a different skillset from what most PTs are comfortable using, the PPS can get you off on the right foot."

    Gwendolyn Simons, PT, JD, agrees. An attorney who counsels PTs in private practice through Simons & Associates Law in Scarborough, Maine, she has written about the intricacies of direct contracting for PPS's membership magazine, Impact.

    "Providing onsite therapy, especially for work-related injuries, is something PTs have done for decades," notes Simons, who also is a board-certified specialist in orthopaedic physical therapy and an AAOMPT fellow. "But trying to contract directly with self-insured employers to do work outside the scope of a third-party administrator's network is relatively new, and it can get complicated."

    For instance, Simons says, it's important to know exactly what services you'll provide, because the laws for treating injured workers are different from those governing care for conditions unrelated to one's employment "And if you're doing both"—imagine a worker employed by a factory who comes in for an injury due to a car accident—"you've got to figure out how you're going to distinguish when your service is for one and not the other," she notes.

    Similarly, Simons says, there are a variety of legal concerns and potential pitfalls that pertain to everything from scope of practice to compliance with the Health Insurance Portability and Accountability Act. Take, for example, the thorny issue of patient privacy. "In self-insurance, the company is both the employer and the health plan, and there needs to be a wall between those 2 roles," she points out. "Therapists must, therefore, be careful that they know who they're talking to whenever they discuss a case, and that they know what information and records they're allowed to share."

    Mike Horsfield agrees that mastering the world of self-insurance can be challenging.

    "When you've seen 1 self-insured plan, you've seen exactly 1 self-insured plan," is the way he puts it. "They're all different, so you can't assume anything." Still, he says, he and his partners are adamant that direct contracting with self-insured employers can more than pay for itself. They're such believers in this segment of the market, in fact, that they partially self-fund insurance for their own employees.

    "From our employees' perspective, their health plan looks just like it did before we went self-insured," Horsfield says, "But from the company's perspective, it's helped us a lot." Previously, he says, Rock Valley's insurance premiums would rise by 15% to 20% annually. Now, with the help of a wellness program and what he describes as a "healthy workplace culture," the company has better control over those costs.

    What PTs should understand, Horsfield says, is that many employers have incentives to create their own networks of preferred providers they can trust to help rein in their health care expenses. "So, the upside is, if you can be one of those therapists or physical therapy practices, there's a good chance you can do well," he observes. Conversely, "If you're not having those conversations with employers and you don't make that effort to show them what you can do, you may be on the outside looking in."

    Chris Hayhurst is a freelance writer.


    1. Fronstin P. Self-insured Health Plans: Recent Trends by Firm Size, 1996-2015. Employee Benefit Insurance Institute. July 2016:37(7). https://www.ebri.org/pdf/notespdf/EBRI_Notes_07-no7-July16.Self-Ins.pdf. Accessed March 24, 2017.
    2. Pozen RC, Vinjamoori A. Incentives for Small Firms to Self-Fund Their Healthcare Plans. Brookings Institution. November 19, 2014. https://www.brookings.edu/research/incentives-for-small-firms-to-self-fund-their-healthcare-plans/. Accessed March 24, 2017.

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