Physicians, meet another version of the alphabet insurance plan that is structured to reimburse you even less for your services. (In my mind, I see physicians all over America standing up and doing the Howard Beale thing from the movie “Network.”)
What Is an EPO?
An exclusive provider organization (EPO) is a health insurance plan with some aspects of a health maintenance organization (HMO) and some aspects of a preferred provider organization (PPO).
The rise of the EPO is a response by insurance companies to potential reduced income through controlled premiums. In seeking additional paths to profit, payers are narrowing their networks to include only providers who fit their algorithm of high patient satisfaction, high preventive care, controlled test ordering, chronic disease management, and controlled hospital admissions. How interesting to take “the best of the best” and then say “pay them less than everyone else!”
What Are the Hallmarks of an EPO?
- May be very attractive to subscribers due to lower premiums and lower copays
- There is a big emphasis on preventive care and staying healthy
- Subscribers may be required to choose a primary care physician
- Subscribers may need referrals for specialist care, even if within the EPO network
- Payments are based on fee-for-service, not capitation as with HMOs
- There may be some out-of-network benefits for subscribers or subscribers may be responsible for 100% of out-of-network services
- Providers can expect lower reimbursement, but expect payers to promise high volumes of patients due to the restriction of the network
- Payers may also lease their EPO network to other plans and payers
What Should a Physician Do When Presented with an EPO Contract?
If the selling point of the EPO is an influx of new patients at a reduced rate, or the ability to keep your existing patients at a reduced rate, you should consider very carefully if this is the plan for you.
I recommend that practices limit each payer to no more than 30%. If you keep each payer to no more than 30% and the network drops you (as we have recently seen with UnitedHealthcare Medicare Advantage plans narrowing their networks), or if a local employer changes medical insurance plans, you could recover. If you allow any single payer to comprise more than 30% of your revenue, you could find yourself at the mercy of a single payer. Who is to say what algorithm any plan might devise that would eliminate you or your practice?
Perform an analysis of what accepting the EPO contract could mean for your practice. If the EPO is replacing an existing PPO, substitute the reimbursement you received in the past 12 months for that PPO with what the EPO would pay. Can you live with that revenue?
If the EPO is going to be so prevalent that you can’t possibly turn down participation, what will you do to offset that decrease in revenue? Will you accept as many patients that come your way? Will you add nonphysician providers to increase your capacity for seeing patients without the expense of an additional physician? (Does the EPO credential midlevel providers or would the midlevels work under physicians as supervising physicians?) Will you revisit in-house lab or other ancillary services?
Or, will you stand up like Howard Beale and say, “We’re mad as hell and we’re not going to take this anymore?”