Sanjay M. Patel is founder and chief executive officer of Practice Pro, a leading developer of therapy practice management software that helps clients develop more efficient practices, engage effectively with patients and therapists, maximize billing and collections, and access unparalleled insight into their physical therapy practices.
Just as physical therapists (PT) or occupational therapists (OT) help patients overcome barriers to increased mobility, referral challenges can be overcome with the right people, processes, and technology.
When does a physical therapy (PT) or occupational therapy patient episode begin? You may think it begins when patients show up for the first session, but to maximize patient volumes and revenues, you need to think earlier—at the time of referral. Any referred patient who doesn’t show up represents lost volume and revenue.
To gauge the financial impact on your PT practice, multiply the number of prescribed sessions by each patient who fails to show up. You’ll likely discover that the impact of these missed opportunities adds up quickly.
The answer to converting a higher rate of referrals can be dedicated staff who track referrals and maintain relationships with referring physicians and facilities. However, the final answer is not that straightforward.
Federal regulations prohibit quid pro quo relationships with referring providers, so there are fine lines that must be tread to stay on the right side of the law when accepting Medicare and Medicaid reimbursement.
The proliferation of alternative and value-based payment arrangements means that providers are demanding more accountability from upstream and downstream providers. Consequently, a PT practice must have a robust practice management system to demonstrate proven outcomes as well as to manage referral relationships. The Merit-based Incentive Payment System (MIPS) also is bringing heightened awareness to value-based payments in the PT industry.
Just as you help patients overcome barriers to increased mobility, these referral challenges can be overcome with the right people, processes, and technology.
Who wants more patients?
Converting a higher percentage of referrals should be low-hanging fruit for any PT practice. The practice should have a referral workflow for employees to follow. As soon as a referral is received, the patient should be contacted to set up an appointment.
Practice management software that includes a referral management module is helpful to ensure that each referred patient is contacted in a timely manner. Referral management software also can track the source of all referrals, valuable information if the practice uses sales reps to solicit referrals and manage those relationships.
If your practice is not using sales reps (also called marketing reps or field reps), determine whether it should. First, consider the current state of your business. Could you use more patients? Most practices would answer with a resounding “yes!”. Then determine your current conversion rate. The calculation is simple: the number of referred patients who begin therapy, divided by the total number of referrals the practice received. If 6 patients out of 10 show up, that’s a 60% conversion rate.
Now determine the impact of more business on the practice. Let’s say a 10-point improvement in the conversion rate (60% to 70%) would equal 5 more patients a month. If those 5 patients need 10 sessions of therapy each at $100 a session, that’s $5000 additional per month, or $60,000 annually. Can your current therapy staff handle the increased workload or would you need to hire an additional therapist?
Depending on your conversion rate and your growth goals, you may want to hire a field rep to publicize your practice among potential referring providers. Even if your conversion rate is high, a field rep can expand the pool of referral sources.
Fully understand the rules
But you must ensure that all employees fully understand and comply with the Stark Law and the Anti-Kickback Statute, both of which govern referral relationships for federally funded payment programs.
The Stark Law marks its 30th anniversary this year and prohibits physician self-referral to a facility where the physician or an immediate family member has an ownership stake or a compensation arrangement.1 While a physician can get paid to consult with a PT practice, for example, any payments must be for specific services. A practice could not “contract” with every physician that refers patients.
The Anti-Kickback Statute (AKS) covers both those who offer renumeration and those who accept it. “Each party’s intent is a key element of their liability under the AKS.”2
An Alabama-based orthopedic surgery and physical therapy practice recently agreed to a $1.2 million settlement with the federal government for alleged violations of both rules as well as the False Claims Act. A whistleblower complaint accused the practice of using unauthorized personnel to deliver PT services and of using an internal compensation plan that rewarded physicians for the volume of patient referrals to its own PT services and imaging. The practice did not admit wrongdoing in the settlement.3
Value-based care muddies the waters
The definition of self-referral can be murky and has become more so as value-based payments proliferate.
CMS is conducting several pilots of bundled payments. In such an arrangement, a provider group or health system receives one payment for an episode of care — regardless of where that care takes place. But few health systems encompass every aspect of care, from primary and specialty care to skilled nursing, home health and physical therapy services that might be involved in an episode of care.
Therefore, bringing in partners is necessary, and health systems want to partner with providers who can demonstrate outcomes, rather than wherever the patient might want to go. But specific arrangements between providers can potentially violate the Stark Law.
As part of the annual physician fee schedule update for 2020, CMS signaled its intent to simplify the process for requesting advisory opinions about potential Stark Law violations, including speeding up the advisory timeline.4
Value-based care has arrived for PT practices that serve a certain number of Medicare payments in the form of MIPS.5 Even if your practice doesn’t qualify to participate, you may want to consider joining anyway to better understand the requirements and start rethinking your business practices.
Practice management system can track referrals
A practice management system with an embedded referral management module can help you track the source of each referral, the conversion rate, top referral sources, and more. Referral tracking ensures that each patient is contacted promptly, which will help conversions.
Any software system must also track patient outcomes. Especially in this age of value-based payments, you must be able to tell the story of your practice through metrics. This information is critical not only to the proper running of your practice, but it’s also vital data that potential referral sources will want to know.
Compiling such metrics can be accomplished by building a spreadsheet, but a practice management system can easily roll up that data into a dashboard, providing insight by time period, by therapist and more.
If you want to grow your PT practice, monitoring your referrals and conversion rates is a good start, as is reaching out to the provider community either directly or through marketing staff. To make the process as easy as possible, a robust practice management system can track both referrals and patient outcomes, critical metrics for the health of your business and the health of your patients.
1. Office of Inspector General, U.S. Department of Health & Human Services. A Roadmap for New Physicians:
Fraud & Abuse Laws. https://oig.hhs.gov/compliance/physician-education/01laws.asp.
3. Nashville Business Journal. Settlement by orthopedic group provides 1.2 million reasons for healthcare providers to ensure compliance with fraud and abuse laws. October 4, 2019. https://www.bizjournals.com/nashville/news/2019/10/04/settlement-by-orthopedic-group-provides-1-2.html.
4. Policy & Medicine. CMS proposes changes to the Stark self-referral anti-kickback rules. September 22, 2019. https://www.policymed.com/2019/09/cms-proposes-changes-to-the-stark-self-referral-anti-kickback-rules.html.
5. American Physical Therapy Association. Merit-based Incentive Payment System (MIPS). May 15, 2019. http://www.apta.org/MIPS/.