Dermatologists, it seems, face a paradox, which is reflected in the Galderma Quality Report for Dermatology & Managed Care. Because dermatology deals less with emergent, life-threatening issues than other specialties, it often isn’t taken seriously enough by cost-conscious managed-care decision-makers and employers.
Yet the specialty offers practitioners the opportunity to work alone, with the flexibility to set their own schedules and supplement their income at will, by adjusting their workload and even the balance of acceptable payment plans and types of procedures. And by increasing the number of cosmetic procedures they perform, they can reduce or even sidestep the managed care constraints and headaches detailed in the report.
Clearly, such an exodus would not be in the best interests of patients whose quality of life is profoundly affected by many dermatology treatments.
The challenge, the report concludes, is to make the powers that be aware of just how dermatology issues affect their bottom line.
Parts 1 and 2
Part 1 of our coverage of the Galderma Quality Report for Dermatology & Managed Care presented survey results revealing how dermatologists were balancing their frustrations with managed care policies and procedures with hope for improvements that will aid their ability to offer their patients appropriate treatments in addition to dealing with the opportunities offered outside managed care that impact their speciality.
Here, in part 2, employers, coding and re-imbursement professionals, as well as physicians offer a deeper perspective on managed care now and in the future.
Results from the Physician Survey
As with the 2004 Galderma Quality Report for Dermatology & Managed Care, the 2006 follow-up presented a snapshot of dermatological care including information about dermatology and dermatology practices.
Most Common Diagnoses
The 10 diagnoses made most often by dermatologists are shown in Figure 1. These were the same “top 10” reported in the 2004 data, although some changed position in the table (but none by more than two places).
Figure 2 displays the 15 drugs most often prescribed or recommended by dermatologists. Seven of the 15 are for treating acne vulgaris (and other conditions). Again, there was some movement up or down from the previous report, with Doxycycline and Lidex showing considerable change — the former moving from 10th to third on the list, and the latter moving from 13th to fourth.
Practice Characteristics
Running diametrically opposite to what is occurring in many other specialties, dermatology seems to be one niche within medicine that continues to be an attractive option for the solo practitioner. The 2006 survey data indicate that 53% of dermatologists are in solo practices, 36% in dermatology group practices, 9% in multi-specialty groups, and 2% in university, hospital, and other settings.
In part, the nature of a dermatologist’s practice may account for some of this perceived lack of strong pressure to form the larger group practices so common with other specialties such as neurology. The Galderma Report cited several physicians’ opinions on this interesting phenomenon, including those from Steven Feldman and Noah Steinberg.
Forty-four percent of dermatologists reported that their incomes had risen over the past 2 years, 24% reported that their incomes had remained stable, while 32% reported a decrease. (See Figure 3.)
The sources of income for dermatologists are gradually shifting. For example, with increased downward pressure on reimbursements coming from third-party payors, 11% of physicians reported that their primary income source was from cosmetic procedures or consultations (services not covered by insurance). But the primary revenue sources for most practices still are medical consultation/E&M (48% of practices) and procedures (38% of practices). And 2% of practices indicated that their primary revenue source was the in-office sale of dermatology products.
An interesting and revealing response resulted from the question: “What changes do you anticipate in your practice during the next 12 months?” Fully 45% stated that they would increase the number of cosmetic procedures performed. (See Figures 4 and 5.)
The Insurance Environment and Physician Perceptions
The second Galderma Report data reveal a lot about how third-party care is impacting the administrative routines of dermatology practices, and also how managed care impacts the ways physicians practice medicine.
Physicians were asked a series of questions: “How satisfied are you with…” Results are shown in Figures 6a through 6g.
Some of the results indicating “poor” (the lowest rating) are truly disheartening. Two examples:
46.8% re: ease of paperwork,
48.9% re: the procedure to obtain prior authorization.
And at least in the minds of physicians responding to the survey, administratively things are getting worse with managed care, not better. The same questions on the 2004 survey generated much lower “poor” responses:
30% re: ease of paperwork,
31% re: the procedure to obtain prior authorization.
But it would be premature to jump on this apparent wrong-way trend as clear evidence that things are totally upside- down in the managed care world. The surveys also indicate that in some practices there might be a “disconnect” between physician perception and business office reality. For example, I would be remiss not to point out an interesting incongruity in the answers collected from physicians and business office staff on the matter of payment timeliness.
Whereas 53.4% of physicians responded that payment timeliness was “poor,” 73.6% of coding and reimbursement professionals in dermatology practices indicated quite the opposite -- that managed care plans pay in a timely fashion per the terms of the third-party contract. (See Figure 7.) Perhaps this is an indication that additional data analysis is necessary or, at a minimum, there needs to be more and better communication between the physician and key staff.
Given the irritation and palpable stress generated by some managed care protocols, if in fact most plans are now paying claims on time, then at least that critical issue should not continue to be wedge between most physicians and many/most payors.
Cost of Medications and Co-payments
Another area of great concern to dermatologists is patient access to and out-of-pocket costs for certain medications and therapies. Managed care formulary restrictions and co-payments are big issues.
For example, the Galderma Report notes that while biologics are often safer and better tolerated than traditional agents (e.g., methotrexate and cyclosporin), they also typically cost from $13,000 to more than $30,000 per year per patient. At such costs, even a 10% to 20% co-pay for biologic therapy is often beyond affordability for many/most patients who need it. And dermatologists are rightly concerned that patients may suffer as a consequence, especially given the negative impact psoriasis exerts on quality of life. (See Figure 8 below.)
Other data from the Galderma Report show further evidence of this physician concern and their worries balancing the effectiveness of treatment against the cost incurred by the managed care patient. (See Figures 9, 10 and 11.)
Results from the Coding and Reimbursement Survey
Dermatology practices across the country received a 100-question survey focused on coding and reimbursement issues. The respondents indicated some modest progress over the past 2 years dealing with third-party payors, but also several lingering concerns. Much still needs to be done to firm up the working relationships between dermatology practices, particularly the business office, and those responsible for adjudicating claims.
Changing Revenue Sources/Revenue Streams
Practices were asked if income had increased in the previous year, and if yes, why. The new data showed some interesting trends, particularly as to changing revenue sources. (See Figure 12.)
Not surprisingly, the most often cited reason for income growth was working longer hours and/or increased patient load. But adding cosmetic procedures to a practice’s armamentarium was the second most cited reason. The percentage of practice revenue derived from cosmetics increased by 42.5% compared to 2 years ago, and the percentage of patients seen exclusively for cosmetic purposes increased by nearly 40%. (See Figures 13 and 14.)
The new Galderma Report data show that many practices still have a lot of work to do if they are to be profitable in a world increasingly dominated by third-party care. Sixty-eight percent of respondents reported that most of their managed care contracts are profitable. Another 14% reported that they are not. But a frightening 18% reported not knowing if their managed care contracts are or are not profitable. In today’s environment of increasing costs and decreasing reimbursements, not knowing is a sure path to financial chaos and disaster.
Contrary to popular myth that it is impossible to negotiate with third-party payors, just over 40% of practices reported that they have been successful. The foci of negotiations and magnitudes of success are shown in Figures 15 and 16.
More than 60% of respondents indicated that they were able to negotiate reimbursements equivalent to Medicare + 10% to 25%. On the other hand, 23% of respondents indicated that they had dropped a managed care plan in the past year, with the top reason (50%) being that the fee schedule was below Medicare. (See Figure 17.)
The data also revealed that most practices dropping a third-party plan did not replace it with another. And shooting down yet another common myth, most practices that dropped a managed care plan did not suffer adverse financial aftereffects. To the contrary, dropping an under-performing plan turned out to be a good financial decision. (See Figure 18 above.)
Close to 20% of practices reported that their overall revenues went up after dropping a bad plan, and almost 67% reported seeing no financial impact. (The unstated truth, however, is that even those “neutral” practices did better financially since they no longer incurred the costs connected with seeing patients from the under-performing plans.)
Of course the next thought that comes to mind is, “How, then, did practices make up for the lost revenue?” The answer was surprisingly simple. Most (68%) said they saw the same total number of patients, but that their appointment schedules were filled with more patients from better-paying plans.
Customer Service Gaps
One aspect of managed care administration that clearly has not gotten better and, in fact, increasingly causes problems for the business office staff is poor payor customer service. Sixty-eight percent of respondents said that staff frequently is on-hold for 15 minutes or longer when trying to speak with a representative from third-party plans. Only ten percent indicated that it is easy to get someone on the phone to answer questions.
But the problem getting an answer from a health plan staff member is compounded by the fact that once the answer is obtained its validity may be (often is) questionable. An incredible 42.9% indicated that, “We cannot reply on the information given on the phone because it is frequently wrong.”
And as to payment, although the situation appears to be getting better, many practices report having little or no idea if they are correctly reimbursed for services. Forty-eight percent reported in the current survey that they had great difficulty or were unable to obtain a current fee schedule (58% in 2004). But of those 48%, half have no idea what the allowables are, and the other half do know what the allowables are but don’t know if they are being paid correctly.
As a practice management consultant I find this staggering. There is simply no way any practice could be growing and profitable to its full potential without knowing both how much it is to be paid for each and every service, and also being confident in the knowledge that it is paid correctly.
Coding Challenges
Although about 25% of the increased practice revenue reported in Figure 12 was the result of better billing processes, coding issues continue to be major concerns for those in the business office. For example, a practice’s use of modifiers remains in frequent conflict with the standards applied by many payors. Almost 27% of practices reported third-party payors not even recognizing the -25 modifier. (See Figure 19.)
And in answer to the question, “Which of the following E/M modifiers is most frequently ignored by payors?” the data showed:
• modifier 25, 67.2%
• modifier 24, 16.8%
• modifier 57, 16.0%
Results from the Employer Survey
Finally, The Galderma Report presented some rather disappointing survey data collected from employers. As discussed in the first story on the original Galderma Report, dermatology and dermatological conditions are not on most employer’s radar screens.
The results of this recent survey indicate that, “…employers believe that neither the cost of treating dermatological conditions nor their impact on employee morale and productivity is significant.”1 And it’s clear that today employers are focused on frying bigger fish. “…[t]he largest cost and productivity loss drivers – diabetes, cardiac problems, asthma, and hypertension – are getting the most attention.”1
The Galderma Report also notes that the emergence of consumer-directed health care has the potential to change employer perceptions and interest. As employees start to foot a larger portion of the health care bill they will demand benefit programs that reflect their needs and address their concerns on quality, availability, and affordability. Almost by default, employers will be forced to pay more attention to issues that concern their employees
The Participants
Those returning surveys included chief operating officers, corporate medical directors and nursing staff, health and wellness managers and staff, human resource executives, and benefit managers. They served in a variety of industries including, but not limited to, manufacturing, transportation, wholesale and retail, financial services, government, and health care services. The number employed ranged from just a few to some companies with more than 25,000.
In order to influence change it is essential for dermatologists to understand as much as possible about these employers who, after all, are the ultimate decision-makers on what is and is not covered. Most respondents (57%) use a health care database to learn about, understand, and manage costs. The type of data employers track most often are shown in Figure 20.
Level of Concern about Derma Matters
While one cannot say that employers totally discount dermatological care as a cost concern, it’s abundantly clear they’re not worried that anything financially earth-shaking is coming along in the near future. Seventy-seven percent replied that their approach to dermatological cost-control is “passive,” while only 20.5% indicated an “active” approach, and a mere 2.4% described their efforts as “aggressive.”
Their opinions on specific conditions are enlightening and, at the same time, somewhat dismissive. For example when asked whether acne is a key contributor to employee absenteeism, approximately 82% disagreed (54%) or strongly disagreed (28%). Considering psoriasis as a key contributor to employee absenteeism, 39% disagreed and 37% neither agreed nor disagreed. And when considering disability claims, 74% disagreed (41%) or strongly disagreed (33%) that dermatological conditions are a key driver.
When Do Derma Conditions Get Attention?
In light of these almost “Who cares?” responses, dermatologists must wonder when employers do pay attention to dermatological concerns. The Galderma Report answers that clearly: when there is the potential to be life-threatening.
Figure 21 (above) shows the relative levels of employer concern for managing the drug costs of five dermatological diseases. Fully 41% of employers rate skin cancer as a major concern. But none of the other four diseases came close to registering at the upper level of the cost-concern scale.
Covered Therapies
Employers were asked a series of questions on what dermatological coverage they offer through their health plans. The data revealed that many employers simply are unaware.
• 24.7% cover light therapies (PUVA), 21% do not, and 54.3% don’t know,
• 42.9% include biologics on formularies, 13.1% do not, and 44% don’t know,
• 29.8% require step therapy before approving biologics for psoriasis, 34.5% do not, and 35.7% don’t know,
• 12.0% cover lifestyle/cosmetic treatments, 79.5% do not, and 8.4% don’t know.
The Galderma Report offered a possible explanation for this overall lack of employer awareness: an apparent minimal concern about future dermatology drug costs – or at least as it applies to biologics. For example, when asked about their level of concern for the costs of managing care with biologics, more than half (53.4%) indicated “low“ (1 or 2 on a 5-point scale; 5 highest). (Figure 22)
Thoughts for Advancing The Quality Of Patient Care and Repositioning the Profession
In the summary to the employer survey section, the authors noted some realities about employers, namely that they “…are driven by business issues – the direct costs of health care, prescription, and disability benefits as well as indirect costs like impact on productivity and employee morale. Dermatological conditions are not perceived as having a significant impact on key drivers of business success.”2
It’s clear that those same thoughts could easily be applied to the health plans, even those designated “not-for-profit.” Further, the authors opined that if dermatologists and industry are to make any changes to the current lack of awareness and/or indifference they must,
• “Demonstrate through valid studies that dermatological conditions have a significant impact on productivity and profitability,
• Educate employers and other benefit plan decision makers about the cost/benefit of early and comprehensive treatment of dermatological conditions,
• Provide evidence of the underlying science and efficacy of a range of treatments including biologic, light, and other less-well-understood strategies.”2
In my story on the first Galderma Report (Skin and Aging, March 2006, pg. 40) I wrote about this reality. “You need only to look at psoriasis and biologics for an obvious example of the truth in those words. If a dermatological condition unquestionably can be treated faster and to a better resolution with new technologies then it’s incumbent upon dermatologists to provide conclusive evidence that such modalities should be encouraged rather than discouraged by the payors. Conceptually the payors are on-board when it comes to better and faster treatment, but there is always that nasty little complication – cost.”
That was the bottom-line yesterday and today, and it will always be the bottom-line with both health plans and employers. And with the emergence of consumer-directed health care (see Skin and Aging, November 2006, pgs. 34-38) these realities will increase in importance to those patients who’ll be footing a much larger share of the cost of care.
And so in addition to the promotional and advocacy efforts put forth by industry, it is incumbent upon every dermatologist, young or old, in solo, group, or university practice to get on board with a much-needed educational effort. It must target all of the diverse constituencies involved in decisions as to who will get care, and exactly what sort of care, and when, and at what cost. Everyone involved in this complicated decision tree knows intuitively that cheapest does not always result in the lowest total cost or the best outcome. But moving decision-makers to grant more than lip-service to this obvious fact is a challenge that every physician must accept as his or her own personal responsibility.
Copies of the Galderma Report can be requested on-line at www.galdermausa.com. Click on “For Professionals,” and then on the Galderma Report button (blue-green) on the left side.
Dermatologists, it seems, face a paradox, which is reflected in the Galderma Quality Report for Dermatology & Managed Care. Because dermatology deals less with emergent, life-threatening issues than other specialties, it often isn’t taken seriously enough by cost-conscious managed-care decision-makers and employers.
Yet the specialty offers practitioners the opportunity to work alone, with the flexibility to set their own schedules and supplement their income at will, by adjusting their workload and even the balance of acceptable payment plans and types of procedures. And by increasing the number of cosmetic procedures they perform, they can reduce or even sidestep the managed care constraints and headaches detailed in the report.
Clearly, such an exodus would not be in the best interests of patients whose quality of life is profoundly affected by many dermatology treatments.
The challenge, the report concludes, is to make the powers that be aware of just how dermatology issues affect their bottom line.
Parts 1 and 2
Part 1 of our coverage of the Galderma Quality Report for Dermatology & Managed Care presented survey results revealing how dermatologists were balancing their frustrations with managed care policies and procedures with hope for improvements that will aid their ability to offer their patients appropriate treatments in addition to dealing with the opportunities offered outside managed care that impact their speciality.
Here, in part 2, employers, coding and re-imbursement professionals, as well as physicians offer a deeper perspective on managed care now and in the future.
Results from the Physician Survey
As with the 2004 Galderma Quality Report for Dermatology & Managed Care, the 2006 follow-up presented a snapshot of dermatological care including information about dermatology and dermatology practices.
Most Common Diagnoses
The 10 diagnoses made most often by dermatologists are shown in Figure 1. These were the same “top 10” reported in the 2004 data, although some changed position in the table (but none by more than two places).
Figure 2 displays the 15 drugs most often prescribed or recommended by dermatologists. Seven of the 15 are for treating acne vulgaris (and other conditions). Again, there was some movement up or down from the previous report, with Doxycycline and Lidex showing considerable change — the former moving from 10th to third on the list, and the latter moving from 13th to fourth.
Practice Characteristics
Running diametrically opposite to what is occurring in many other specialties, dermatology seems to be one niche within medicine that continues to be an attractive option for the solo practitioner. The 2006 survey data indicate that 53% of dermatologists are in solo practices, 36% in dermatology group practices, 9% in multi-specialty groups, and 2% in university, hospital, and other settings.
In part, the nature of a dermatologist’s practice may account for some of this perceived lack of strong pressure to form the larger group practices so common with other specialties such as neurology. The Galderma Report cited several physicians’ opinions on this interesting phenomenon, including those from Steven Feldman and Noah Steinberg.
Forty-four percent of dermatologists reported that their incomes had risen over the past 2 years, 24% reported that their incomes had remained stable, while 32% reported a decrease. (See Figure 3.)
The sources of income for dermatologists are gradually shifting. For example, with increased downward pressure on reimbursements coming from third-party payors, 11% of physicians reported that their primary income source was from cosmetic procedures or consultations (services not covered by insurance). But the primary revenue sources for most practices still are medical consultation/E&M (48% of practices) and procedures (38% of practices). And 2% of practices indicated that their primary revenue source was the in-office sale of dermatology products.
An interesting and revealing response resulted from the question: “What changes do you anticipate in your practice during the next 12 months?” Fully 45% stated that they would increase the number of cosmetic procedures performed. (See Figures 4 and 5.)
The Insurance Environment and Physician Perceptions
The second Galderma Report data reveal a lot about how third-party care is impacting the administrative routines of dermatology practices, and also how managed care impacts the ways physicians practice medicine.
Physicians were asked a series of questions: “How satisfied are you with…” Results are shown in Figures 6a through 6g.
Some of the results indicating “poor” (the lowest rating) are truly disheartening. Two examples:
46.8% re: ease of paperwork,
48.9% re: the procedure to obtain prior authorization.
And at least in the minds of physicians responding to the survey, administratively things are getting worse with managed care, not better. The same questions on the 2004 survey generated much lower “poor” responses:
30% re: ease of paperwork,
31% re: the procedure to obtain prior authorization.
But it would be premature to jump on this apparent wrong-way trend as clear evidence that things are totally upside- down in the managed care world. The surveys also indicate that in some practices there might be a “disconnect” between physician perception and business office reality. For example, I would be remiss not to point out an interesting incongruity in the answers collected from physicians and business office staff on the matter of payment timeliness.
Whereas 53.4% of physicians responded that payment timeliness was “poor,” 73.6% of coding and reimbursement professionals in dermatology practices indicated quite the opposite -- that managed care plans pay in a timely fashion per the terms of the third-party contract. (See Figure 7.) Perhaps this is an indication that additional data analysis is necessary or, at a minimum, there needs to be more and better communication between the physician and key staff.
Given the irritation and palpable stress generated by some managed care protocols, if in fact most plans are now paying claims on time, then at least that critical issue should not continue to be wedge between most physicians and many/most payors.
Cost of Medications and Co-payments
Another area of great concern to dermatologists is patient access to and out-of-pocket costs for certain medications and therapies. Managed care formulary restrictions and co-payments are big issues.
For example, the Galderma Report notes that while biologics are often safer and better tolerated than traditional agents (e.g., methotrexate and cyclosporin), they also typically cost from $13,000 to more than $30,000 per year per patient. At such costs, even a 10% to 20% co-pay for biologic therapy is often beyond affordability for many/most patients who need it. And dermatologists are rightly concerned that patients may suffer as a consequence, especially given the negative impact psoriasis exerts on quality of life. (See Figure 8 below.)
Other data from the Galderma Report show further evidence of this physician concern and their worries balancing the effectiveness of treatment against the cost incurred by the managed care patient. (See Figures 9, 10 and 11.)
Results from the Coding and Reimbursement Survey
Dermatology practices across the country received a 100-question survey focused on coding and reimbursement issues. The respondents indicated some modest progress over the past 2 years dealing with third-party payors, but also several lingering concerns. Much still needs to be done to firm up the working relationships between dermatology practices, particularly the business office, and those responsible for adjudicating claims.
Changing Revenue Sources/Revenue Streams
Practices were asked if income had increased in the previous year, and if yes, why. The new data showed some interesting trends, particularly as to changing revenue sources. (See Figure 12.)
Not surprisingly, the most often cited reason for income growth was working longer hours and/or increased patient load. But adding cosmetic procedures to a practice’s armamentarium was the second most cited reason. The percentage of practice revenue derived from cosmetics increased by 42.5% compared to 2 years ago, and the percentage of patients seen exclusively for cosmetic purposes increased by nearly 40%. (See Figures 13 and 14.)
The new Galderma Report data show that many practices still have a lot of work to do if they are to be profitable in a world increasingly dominated by third-party care. Sixty-eight percent of respondents reported that most of their managed care contracts are profitable. Another 14% reported that they are not. But a frightening 18% reported not knowing if their managed care contracts are or are not profitable. In today’s environment of increasing costs and decreasing reimbursements, not knowing is a sure path to financial chaos and disaster.
Contrary to popular myth that it is impossible to negotiate with third-party payors, just over 40% of practices reported that they have been successful. The foci of negotiations and magnitudes of success are shown in Figures 15 and 16.
More than 60% of respondents indicated that they were able to negotiate reimbursements equivalent to Medicare + 10% to 25%. On the other hand, 23% of respondents indicated that they had dropped a managed care plan in the past year, with the top reason (50%) being that the fee schedule was below Medicare. (See Figure 17.)
The data also revealed that most practices dropping a third-party plan did not replace it with another. And shooting down yet another common myth, most practices that dropped a managed care plan did not suffer adverse financial aftereffects. To the contrary, dropping an under-performing plan turned out to be a good financial decision. (See Figure 18 above.)
Close to 20% of practices reported that their overall revenues went up after dropping a bad plan, and almost 67% reported seeing no financial impact. (The unstated truth, however, is that even those “neutral” practices did better financially since they no longer incurred the costs connected with seeing patients from the under-performing plans.)
Of course the next thought that comes to mind is, “How, then, did practices make up for the lost revenue?” The answer was surprisingly simple. Most (68%) said they saw the same total number of patients, but that their appointment schedules were filled with more patients from better-paying plans.
Customer Service Gaps
One aspect of managed care administration that clearly has not gotten better and, in fact, increasingly causes problems for the business office staff is poor payor customer service. Sixty-eight percent of respondents said that staff frequently is on-hold for 15 minutes or longer when trying to speak with a representative from third-party plans. Only ten percent indicated that it is easy to get someone on the phone to answer questions.
But the problem getting an answer from a health plan staff member is compounded by the fact that once the answer is obtained its validity may be (often is) questionable. An incredible 42.9% indicated that, “We cannot reply on the information given on the phone because it is frequently wrong.”
And as to payment, although the situation appears to be getting better, many practices report having little or no idea if they are correctly reimbursed for services. Forty-eight percent reported in the current survey that they had great difficulty or were unable to obtain a current fee schedule (58% in 2004). But of those 48%, half have no idea what the allowables are, and the other half do know what the allowables are but don’t know if they are being paid correctly.
As a practice management consultant I find this staggering. There is simply no way any practice could be growing and profitable to its full potential without knowing both how much it is to be paid for each and every service, and also being confident in the knowledge that it is paid correctly.
Coding Challenges
Although about 25% of the increased practice revenue reported in Figure 12 was the result of better billing processes, coding issues continue to be major concerns for those in the business office. For example, a practice’s use of modifiers remains in frequent conflict with the standards applied by many payors. Almost 27% of practices reported third-party payors not even recognizing the -25 modifier. (See Figure 19.)
And in answer to the question, “Which of the following E/M modifiers is most frequently ignored by payors?” the data showed:
• modifier 25, 67.2%
• modifier 24, 16.8%
• modifier 57, 16.0%
Results from the Employer Survey
Finally, The Galderma Report presented some rather disappointing survey data collected from employers. As discussed in the first story on the original Galderma Report, dermatology and dermatological conditions are not on most employer’s radar screens.
The results of this recent survey indicate that, “…employers believe that neither the cost of treating dermatological conditions nor their impact on employee morale and productivity is significant.”1 And it’s clear that today employers are focused on frying bigger fish. “…[t]he largest cost and productivity loss drivers – diabetes, cardiac problems, asthma, and hypertension – are getting the most attention.”1
The Galderma Report also notes that the emergence of consumer-directed health care has the potential to change employer perceptions and interest. As employees start to foot a larger portion of the health care bill they will demand benefit programs that reflect their needs and address their concerns on quality, availability, and affordability. Almost by default, employers will be forced to pay more attention to issues that concern their employees
The Participants
Those returning surveys included chief operating officers, corporate medical directors and nursing staff, health and wellness managers and staff, human resource executives, and benefit managers. They served in a variety of industries including, but not limited to, manufacturing, transportation, wholesale and retail, financial services, government, and health care services. The number employed ranged from just a few to some companies with more than 25,000.
In order to influence change it is essential for dermatologists to understand as much as possible about these employers who, after all, are the ultimate decision-makers on what is and is not covered. Most respondents (57%) use a health care database to learn about, understand, and manage costs. The type of data employers track most often are shown in Figure 20.
Level of Concern about Derma Matters
While one cannot say that employers totally discount dermatological care as a cost concern, it’s abundantly clear they’re not worried that anything financially earth-shaking is coming along in the near future. Seventy-seven percent replied that their approach to dermatological cost-control is “passive,” while only 20.5% indicated an “active” approach, and a mere 2.4% described their efforts as “aggressive.”
Their opinions on specific conditions are enlightening and, at the same time, somewhat dismissive. For example when asked whether acne is a key contributor to employee absenteeism, approximately 82% disagreed (54%) or strongly disagreed (28%). Considering psoriasis as a key contributor to employee absenteeism, 39% disagreed and 37% neither agreed nor disagreed. And when considering disability claims, 74% disagreed (41%) or strongly disagreed (33%) that dermatological conditions are a key driver.
When Do Derma Conditions Get Attention?
In light of these almost “Who cares?” responses, dermatologists must wonder when employers do pay attention to dermatological concerns. The Galderma Report answers that clearly: when there is the potential to be life-threatening.
Figure 21 (above) shows the relative levels of employer concern for managing the drug costs of five dermatological diseases. Fully 41% of employers rate skin cancer as a major concern. But none of the other four diseases came close to registering at the upper level of the cost-concern scale.
Covered Therapies
Employers were asked a series of questions on what dermatological coverage they offer through their health plans. The data revealed that many employers simply are unaware.
• 24.7% cover light therapies (PUVA), 21% do not, and 54.3% don’t know,
• 42.9% include biologics on formularies, 13.1% do not, and 44% don’t know,
• 29.8% require step therapy before approving biologics for psoriasis, 34.5% do not, and 35.7% don’t know,
• 12.0% cover lifestyle/cosmetic treatments, 79.5% do not, and 8.4% don’t know.
The Galderma Report offered a possible explanation for this overall lack of employer awareness: an apparent minimal concern about future dermatology drug costs – or at least as it applies to biologics. For example, when asked about their level of concern for the costs of managing care with biologics, more than half (53.4%) indicated “low“ (1 or 2 on a 5-point scale; 5 highest). (Figure 22)
Thoughts for Advancing The Quality Of Patient Care and Repositioning the Profession
In the summary to the employer survey section, the authors noted some realities about employers, namely that they “…are driven by business issues – the direct costs of health care, prescription, and disability benefits as well as indirect costs like impact on productivity and employee morale. Dermatological conditions are not perceived as having a significant impact on key drivers of business success.”2
It’s clear that those same thoughts could easily be applied to the health plans, even those designated “not-for-profit.” Further, the authors opined that if dermatologists and industry are to make any changes to the current lack of awareness and/or indifference they must,
• “Demonstrate through valid studies that dermatological conditions have a significant impact on productivity and profitability,
• Educate employers and other benefit plan decision makers about the cost/benefit of early and comprehensive treatment of dermatological conditions,
• Provide evidence of the underlying science and efficacy of a range of treatments including biologic, light, and other less-well-understood strategies.”2
In my story on the first Galderma Report (Skin and Aging, March 2006, pg. 40) I wrote about this reality. “You need only to look at psoriasis and biologics for an obvious example of the truth in those words. If a dermatological condition unquestionably can be treated faster and to a better resolution with new technologies then it’s incumbent upon dermatologists to provide conclusive evidence that such modalities should be encouraged rather than discouraged by the payors. Conceptually the payors are on-board when it comes to better and faster treatment, but there is always that nasty little complication – cost.”
That was the bottom-line yesterday and today, and it will always be the bottom-line with both health plans and employers. And with the emergence of consumer-directed health care (see Skin and Aging, November 2006, pgs. 34-38) these realities will increase in importance to those patients who’ll be footing a much larger share of the cost of care.
And so in addition to the promotional and advocacy efforts put forth by industry, it is incumbent upon every dermatologist, young or old, in solo, group, or university practice to get on board with a much-needed educational effort. It must target all of the diverse constituencies involved in decisions as to who will get care, and exactly what sort of care, and when, and at what cost. Everyone involved in this complicated decision tree knows intuitively that cheapest does not always result in the lowest total cost or the best outcome. But moving decision-makers to grant more than lip-service to this obvious fact is a challenge that every physician must accept as his or her own personal responsibility.
Copies of the Galderma Report can be requested on-line at www.galdermausa.com. Click on “For Professionals,” and then on the Galderma Report button (blue-green) on the left side.
Dermatologists, it seems, face a paradox, which is reflected in the Galderma Quality Report for Dermatology & Managed Care. Because dermatology deals less with emergent, life-threatening issues than other specialties, it often isn’t taken seriously enough by cost-conscious managed-care decision-makers and employers.
Yet the specialty offers practitioners the opportunity to work alone, with the flexibility to set their own schedules and supplement their income at will, by adjusting their workload and even the balance of acceptable payment plans and types of procedures. And by increasing the number of cosmetic procedures they perform, they can reduce or even sidestep the managed care constraints and headaches detailed in the report.
Clearly, such an exodus would not be in the best interests of patients whose quality of life is profoundly affected by many dermatology treatments.
The challenge, the report concludes, is to make the powers that be aware of just how dermatology issues affect their bottom line.
Parts 1 and 2
Part 1 of our coverage of the Galderma Quality Report for Dermatology & Managed Care presented survey results revealing how dermatologists were balancing their frustrations with managed care policies and procedures with hope for improvements that will aid their ability to offer their patients appropriate treatments in addition to dealing with the opportunities offered outside managed care that impact their speciality.
Here, in part 2, employers, coding and re-imbursement professionals, as well as physicians offer a deeper perspective on managed care now and in the future.
Results from the Physician Survey
As with the 2004 Galderma Quality Report for Dermatology & Managed Care, the 2006 follow-up presented a snapshot of dermatological care including information about dermatology and dermatology practices.
Most Common Diagnoses
The 10 diagnoses made most often by dermatologists are shown in Figure 1. These were the same “top 10” reported in the 2004 data, although some changed position in the table (but none by more than two places).
Figure 2 displays the 15 drugs most often prescribed or recommended by dermatologists. Seven of the 15 are for treating acne vulgaris (and other conditions). Again, there was some movement up or down from the previous report, with Doxycycline and Lidex showing considerable change — the former moving from 10th to third on the list, and the latter moving from 13th to fourth.
Practice Characteristics
Running diametrically opposite to what is occurring in many other specialties, dermatology seems to be one niche within medicine that continues to be an attractive option for the solo practitioner. The 2006 survey data indicate that 53% of dermatologists are in solo practices, 36% in dermatology group practices, 9% in multi-specialty groups, and 2% in university, hospital, and other settings.
In part, the nature of a dermatologist’s practice may account for some of this perceived lack of strong pressure to form the larger group practices so common with other specialties such as neurology. The Galderma Report cited several physicians’ opinions on this interesting phenomenon, including those from Steven Feldman and Noah Steinberg.
Forty-four percent of dermatologists reported that their incomes had risen over the past 2 years, 24% reported that their incomes had remained stable, while 32% reported a decrease. (See Figure 3.)
The sources of income for dermatologists are gradually shifting. For example, with increased downward pressure on reimbursements coming from third-party payors, 11% of physicians reported that their primary income source was from cosmetic procedures or consultations (services not covered by insurance). But the primary revenue sources for most practices still are medical consultation/E&M (48% of practices) and procedures (38% of practices). And 2% of practices indicated that their primary revenue source was the in-office sale of dermatology products.
An interesting and revealing response resulted from the question: “What changes do you anticipate in your practice during the next 12 months?” Fully 45% stated that they would increase the number of cosmetic procedures performed. (See Figures 4 and 5.)
The Insurance Environment and Physician Perceptions
The second Galderma Report data reveal a lot about how third-party care is impacting the administrative routines of dermatology practices, and also how managed care impacts the ways physicians practice medicine.
Physicians were asked a series of questions: “How satisfied are you with…” Results are shown in Figures 6a through 6g.
Some of the results indicating “poor” (the lowest rating) are truly disheartening. Two examples:
46.8% re: ease of paperwork,
48.9% re: the procedure to obtain prior authorization.
And at least in the minds of physicians responding to the survey, administratively things are getting worse with managed care, not better. The same questions on the 2004 survey generated much lower “poor” responses:
30% re: ease of paperwork,
31% re: the procedure to obtain prior authorization.
But it would be premature to jump on this apparent wrong-way trend as clear evidence that things are totally upside- down in the managed care world. The surveys also indicate that in some practices there might be a “disconnect” between physician perception and business office reality. For example, I would be remiss not to point out an interesting incongruity in the answers collected from physicians and business office staff on the matter of payment timeliness.
Whereas 53.4% of physicians responded that payment timeliness was “poor,” 73.6% of coding and reimbursement professionals in dermatology practices indicated quite the opposite -- that managed care plans pay in a timely fashion per the terms of the third-party contract. (See Figure 7.) Perhaps this is an indication that additional data analysis is necessary or, at a minimum, there needs to be more and better communication between the physician and key staff.
Given the irritation and palpable stress generated by some managed care protocols, if in fact most plans are now paying claims on time, then at least that critical issue should not continue to be wedge between most physicians and many/most payors.
Cost of Medications and Co-payments
Another area of great concern to dermatologists is patient access to and out-of-pocket costs for certain medications and therapies. Managed care formulary restrictions and co-payments are big issues.
For example, the Galderma Report notes that while biologics are often safer and better tolerated than traditional agents (e.g., methotrexate and cyclosporin), they also typically cost from $13,000 to more than $30,000 per year per patient. At such costs, even a 10% to 20% co-pay for biologic therapy is often beyond affordability for many/most patients who need it. And dermatologists are rightly concerned that patients may suffer as a consequence, especially given the negative impact psoriasis exerts on quality of life. (See Figure 8 below.)
Other data from the Galderma Report show further evidence of this physician concern and their worries balancing the effectiveness of treatment against the cost incurred by the managed care patient. (See Figures 9, 10 and 11.)
Results from the Coding and Reimbursement Survey
Dermatology practices across the country received a 100-question survey focused on coding and reimbursement issues. The respondents indicated some modest progress over the past 2 years dealing with third-party payors, but also several lingering concerns. Much still needs to be done to firm up the working relationships between dermatology practices, particularly the business office, and those responsible for adjudicating claims.
Changing Revenue Sources/Revenue Streams
Practices were asked if income had increased in the previous year, and if yes, why. The new data showed some interesting trends, particularly as to changing revenue sources. (See Figure 12.)
Not surprisingly, the most often cited reason for income growth was working longer hours and/or increased patient load. But adding cosmetic procedures to a practice’s armamentarium was the second most cited reason. The percentage of practice revenue derived from cosmetics increased by 42.5% compared to 2 years ago, and the percentage of patients seen exclusively for cosmetic purposes increased by nearly 40%. (See Figures 13 and 14.)
The new Galderma Report data show that many practices still have a lot of work to do if they are to be profitable in a world increasingly dominated by third-party care. Sixty-eight percent of respondents reported that most of their managed care contracts are profitable. Another 14% reported that they are not. But a frightening 18% reported not knowing if their managed care contracts are or are not profitable. In today’s environment of increasing costs and decreasing reimbursements, not knowing is a sure path to financial chaos and disaster.
Contrary to popular myth that it is impossible to negotiate with third-party payors, just over 40% of practices reported that they have been successful. The foci of negotiations and magnitudes of success are shown in Figures 15 and 16.
More than 60% of respondents indicated that they were able to negotiate reimbursements equivalent to Medicare + 10% to 25%. On the other hand, 23% of respondents indicated that they had dropped a managed care plan in the past year, with the top reason (50%) being that the fee schedule was below Medicare. (See Figure 17.)
The data also revealed that most practices dropping a third-party plan did not replace it with another. And shooting down yet another common myth, most practices that dropped a managed care plan did not suffer adverse financial aftereffects. To the contrary, dropping an under-performing plan turned out to be a good financial decision. (See Figure 18 above.)
Close to 20% of practices reported that their overall revenues went up after dropping a bad plan, and almost 67% reported seeing no financial impact. (The unstated truth, however, is that even those “neutral” practices did better financially since they no longer incurred the costs connected with seeing patients from the under-performing plans.)
Of course the next thought that comes to mind is, “How, then, did practices make up for the lost revenue?” The answer was surprisingly simple. Most (68%) said they saw the same total number of patients, but that their appointment schedules were filled with more patients from better-paying plans.
Customer Service Gaps
One aspect of managed care administration that clearly has not gotten better and, in fact, increasingly causes problems for the business office staff is poor payor customer service. Sixty-eight percent of respondents said that staff frequently is on-hold for 15 minutes or longer when trying to speak with a representative from third-party plans. Only ten percent indicated that it is easy to get someone on the phone to answer questions.
But the problem getting an answer from a health plan staff member is compounded by the fact that once the answer is obtained its validity may be (often is) questionable. An incredible 42.9% indicated that, “We cannot reply on the information given on the phone because it is frequently wrong.”
And as to payment, although the situation appears to be getting better, many practices report having little or no idea if they are correctly reimbursed for services. Forty-eight percent reported in the current survey that they had great difficulty or were unable to obtain a current fee schedule (58% in 2004). But of those 48%, half have no idea what the allowables are, and the other half do know what the allowables are but don’t know if they are being paid correctly.
As a practice management consultant I find this staggering. There is simply no way any practice could be growing and profitable to its full potential without knowing both how much it is to be paid for each and every service, and also being confident in the knowledge that it is paid correctly.
Coding Challenges
Although about 25% of the increased practice revenue reported in Figure 12 was the result of better billing processes, coding issues continue to be major concerns for those in the business office. For example, a practice’s use of modifiers remains in frequent conflict with the standards applied by many payors. Almost 27% of practices reported third-party payors not even recognizing the -25 modifier. (See Figure 19.)
And in answer to the question, “Which of the following E/M modifiers is most frequently ignored by payors?” the data showed:
• modifier 25, 67.2%
• modifier 24, 16.8%
• modifier 57, 16.0%
Results from the Employer Survey
Finally, The Galderma Report presented some rather disappointing survey data collected from employers. As discussed in the first story on the original Galderma Report, dermatology and dermatological conditions are not on most employer’s radar screens.
The results of this recent survey indicate that, “…employers believe that neither the cost of treating dermatological conditions nor their impact on employee morale and productivity is significant.”1 And it’s clear that today employers are focused on frying bigger fish. “…[t]he largest cost and productivity loss drivers – diabetes, cardiac problems, asthma, and hypertension – are getting the most attention.”1
The Galderma Report also notes that the emergence of consumer-directed health care has the potential to change employer perceptions and interest. As employees start to foot a larger portion of the health care bill they will demand benefit programs that reflect their needs and address their concerns on quality, availability, and affordability. Almost by default, employers will be forced to pay more attention to issues that concern their employees
The Participants
Those returning surveys included chief operating officers, corporate medical directors and nursing staff, health and wellness managers and staff, human resource executives, and benefit managers. They served in a variety of industries including, but not limited to, manufacturing, transportation, wholesale and retail, financial services, government, and health care services. The number employed ranged from just a few to some companies with more than 25,000.
In order to influence change it is essential for dermatologists to understand as much as possible about these employers who, after all, are the ultimate decision-makers on what is and is not covered. Most respondents (57%) use a health care database to learn about, understand, and manage costs. The type of data employers track most often are shown in Figure 20.
Level of Concern about Derma Matters
While one cannot say that employers totally discount dermatological care as a cost concern, it’s abundantly clear they’re not worried that anything financially earth-shaking is coming along in the near future. Seventy-seven percent replied that their approach to dermatological cost-control is “passive,” while only 20.5% indicated an “active” approach, and a mere 2.4% described their efforts as “aggressive.”
Their opinions on specific conditions are enlightening and, at the same time, somewhat dismissive. For example when asked whether acne is a key contributor to employee absenteeism, approximately 82% disagreed (54%) or strongly disagreed (28%). Considering psoriasis as a key contributor to employee absenteeism, 39% disagreed and 37% neither agreed nor disagreed. And when considering disability claims, 74% disagreed (41%) or strongly disagreed (33%) that dermatological conditions are a key driver.
When Do Derma Conditions Get Attention?
In light of these almost “Who cares?” responses, dermatologists must wonder when employers do pay attention to dermatological concerns. The Galderma Report answers that clearly: when there is the potential to be life-threatening.
Figure 21 (above) shows the relative levels of employer concern for managing the drug costs of five dermatological diseases. Fully 41% of employers rate skin cancer as a major concern. But none of the other four diseases came close to registering at the upper level of the cost-concern scale.
Covered Therapies
Employers were asked a series of questions on what dermatological coverage they offer through their health plans. The data revealed that many employers simply are unaware.
• 24.7% cover light therapies (PUVA), 21% do not, and 54.3% don’t know,
• 42.9% include biologics on formularies, 13.1% do not, and 44% don’t know,
• 29.8% require step therapy before approving biologics for psoriasis, 34.5% do not, and 35.7% don’t know,
• 12.0% cover lifestyle/cosmetic treatments, 79.5% do not, and 8.4% don’t know.
The Galderma Report offered a possible explanation for this overall lack of employer awareness: an apparent minimal concern about future dermatology drug costs – or at least as it applies to biologics. For example, when asked about their level of concern for the costs of managing care with biologics, more than half (53.4%) indicated “low“ (1 or 2 on a 5-point scale; 5 highest). (Figure 22)
Thoughts for Advancing The Quality Of Patient Care and Repositioning the Profession
In the summary to the employer survey section, the authors noted some realities about employers, namely that they “…are driven by business issues – the direct costs of health care, prescription, and disability benefits as well as indirect costs like impact on productivity and employee morale. Dermatological conditions are not perceived as having a significant impact on key drivers of business success.”2
It’s clear that those same thoughts could easily be applied to the health plans, even those designated “not-for-profit.” Further, the authors opined that if dermatologists and industry are to make any changes to the current lack of awareness and/or indifference they must,
• “Demonstrate through valid studies that dermatological conditions have a significant impact on productivity and profitability,
• Educate employers and other benefit plan decision makers about the cost/benefit of early and comprehensive treatment of dermatological conditions,
• Provide evidence of the underlying science and efficacy of a range of treatments including biologic, light, and other less-well-understood strategies.”2
In my story on the first Galderma Report (Skin and Aging, March 2006, pg. 40) I wrote about this reality. “You need only to look at psoriasis and biologics for an obvious example of the truth in those words. If a dermatological condition unquestionably can be treated faster and to a better resolution with new technologies then it’s incumbent upon dermatologists to provide conclusive evidence that such modalities should be encouraged rather than discouraged by the payors. Conceptually the payors are on-board when it comes to better and faster treatment, but there is always that nasty little complication – cost.”
That was the bottom-line yesterday and today, and it will always be the bottom-line with both health plans and employers. And with the emergence of consumer-directed health care (see Skin and Aging, November 2006, pgs. 34-38) these realities will increase in importance to those patients who’ll be footing a much larger share of the cost of care.
And so in addition to the promotional and advocacy efforts put forth by industry, it is incumbent upon every dermatologist, young or old, in solo, group, or university practice to get on board with a much-needed educational effort. It must target all of the diverse constituencies involved in decisions as to who will get care, and exactly what sort of care, and when, and at what cost. Everyone involved in this complicated decision tree knows intuitively that cheapest does not always result in the lowest total cost or the best outcome. But moving decision-makers to grant more than lip-service to this obvious fact is a challenge that every physician must accept as his or her own personal responsibility.
Copies of the Galderma Report can be requested on-line at www.galdermausa.com. Click on “For Professionals,” and then on the Galderma Report button (blue-green) on the left side.
