Regence BlueCross BlueShield’s Decision Leads to Friction Among Physical Therapists

Regence, the state’s largest health insurer, has chosen a for-profit company based in South Carolina to manage physical therapy visits, which has irritated that provider community.

A rift is brewing between physical therapists in private practice and their state association after Regence BlueCross BlueShield signed a contract with an out-of-state company to manage patient care.

The problem resulted after Regence chose CareCore National to administer physical therapy visits in Oregon and Washington. The for-profit company based in South Carolina is a major player in the management of healthcare, having received a multi-million dollar investment in January from General Atlantic, a global equity firm.

Nearly all the privately-owned physical therapy clinics in Oregon have contracts with Regence, which has more than 497,000 members in the state. Diana Godwin, a Portland attorney, represents 165 physical therapists in Oregon and another 170 in Washington.

”Right now no other insurer has such rigid standards about how many visits a patient can have than Regence,” she told The Lund Report. “Premera tried it a few years ago and abandoned it. They found that patients weren’t getting timely access to care, and it resulted in more costly interventions down the road.”

But Regence shows no signs of relenting, and is attempting to soften the blow by forming a closer alliance with the Oregon Physical Therapy Association. Its president, Chris Murphy, was recently appointed to a four-person advisory council to help resolve some of the pressing issues. That association has more than 1,200 members.

Regence spokesman Jarad Ishkanian declined to say who else was serving on that council or any details about its role.

Murphy, however, was quite forthright about his working relationship with Regence in an article appearing in the association’s newsletter -- Oregon Log – and acknowledged that some of his colleagues had taken action to “block or discredit the program (CareCore).”

Murphy also wrote, “We acknowledged that Regence needs to control the disproportionate rise in physical medicine costs. We also believe that this disproportionate rise is not coming from the mainstream of our profession and that controlling that rate will be critical to success for us in the long run. We chose to work with Regence and CareCore to offer solutions.”

When asked to comment further about his relationship with Regence, Murphy declined to respond to phone calls. Instead, he issued the following statement: “I do want to emphasize that both CareCore and Regence have been very open to feedback about the UM (utilization management) program. There have been incremental improvements already, and I'm excited to work with them and with my colleagues from other states and other professions to continue to improve the program.”

But Goodwin’s still not convinced Regence is taking the right approach, and believes the insurer is simply trying to cut costs by imposing limits on physical therapy visits.

“Sometimes you have to stand up and just say what’s happening is wrong,” she said. Almost daily she hears from her clients, telling her how this new pre-authorization requirement interferes with timely patient care and is creating access problems.

“I’m concerned that patients aren’t receiving the benefits of their health insurance policies,” said Godwin, who intends to share these concerns with Laura Cali, the state’s insurance commissioner, in the coming weeks.

In an attempt to understand what was behind Regence’s decision to contract with CareCore, The Lund Report asked a series of questions to Ishkanian, and also requested an interview with John Prassas, vice president of network management at Regence, who was instrumental in the decision, but our request was turned down.

Among the questions posed to Regence were:

. How much money did they anticipate saving by implementing this pre-authorization requirement in Oregon and Washington?

. What led Regence to choose CareCore – did they seek proposals from companies that had more familiarity with physical therapy?

. Does CareCore use outcome measures to determine the number of visits a patient can have with their physical therapist?

. Did Regence pay attention to the trial period – from November-January -- when the program was being tested and make any modifications before implementation?

Here’s Ishkanian’s unedited response to The Lund Report:

“Regence is actively working to promote programs that further the Triple Aim: improving quality of care, patient health and affordability. In this spirit, we have implemented authorization for physical medicine, a program rooted in evidence-based guidelines that are informed by national experts in collaboration with local providers.

“This program focuses on a small number of outlier providers who are practicing beyond the bounds of evidence-based standards. In doing so, we’re honoring our commitment to facilitate safe, effective and affordable treatment on behalf of our members. Member benefits remain unchanged, and members are not required to receive prior authorization for initial evaluation visits. These changes apply solely to our fully-insured individual and employer coverage.”

Alternative Utilization Program Available

Not to be confused with CareCore, there’s actually a locally-developed pre-authorization program Regence could have chosen – CareConnections – that’s been around since the 1990s. Rick Katz, its business development director, submitted a proposal to Cambia Health Solutions, the parent company of Regence, when bids were announced. But, his offer wasn’t taken seriously. Cambia wanted a company that offered a more comprehensive approach that included acupuncturists, chiropractors and massage therapists, and Katz told Cambia he could only work with physical and occupational therapists.

The CareConnections program relies on clinical practice guidelines, outcomes data and patient satisfaction to determine the number of therapy visits, compared with CareCore which only uses claims data, Katz said. “There’s really no pay off here, and it doesn’t speak to the Triple Aim goals of population health and quality and patient satisfaction being measured.”

But his main concern with CareCore is the administrative burden, which requires his staff to spend 20-45 minutes transmitting information – time lost without any revenue coming in the door. “During that time, we can’t see another patient. It’s more time consuming than the Regence people are willing to admit. What Regence has done will ultimately find its way into higher level of payment for providers and those costs will show up in the insurance premiums. There’s no such thing as a free lunch,” said Katz who is also director of contracting and business development for Therapeutic Associates and executive director of the Northwest Rehab Alliance, a network of private practicing therapists.

In contrast, Care Connections, uses a simple tool that a patient completes, which become part of the algorithm that determines how many treatments they need “as opposed to the therapist doing the work,” Katz said. Currently this program is being used by all Northwest Rehab Alliance providers in Oregon, Washington and Idaho and one insurance company is on board.

The provider community will never rid itself of pre-authorization, but the real question, Katz said, is one of execution., “Is it being done efficiently and is it done respectfully of a provider’s time and what’s it based on – is it actually improving patient levels? And, if we could get true collaboration between insurers and providers as opposed to providers having to meet the needs of each insurance company for what their systems demand. What concerns me is having every insurer require something different from us. Providers are at the hub of healthcare, and our administrative burden will increase and we’ll continue this spiral of costs. ”

Oregon’s not alone in experiencing problems

Larry Post, chief financial officer of Olympic Physical Therapy in the Seattle area, met with Regence officials, together with Katz, to explain the difficulties with the new pre-certification requirements. But, almost immediately realized the situation was hopeless when a Regence official told him, “The train’s already left the station,” adding the decision makers had already made up their minds and weren’t interested in hearing about the ground level problems.

Later, Post met with the Washington insurance commissioner’s office, who sympathized but couldn’t offer any help. Regence had actually informed the commissioner’s office about its decision, characterizing the pre-authorization decision as “no big deal,” Post said.

“That’s where they made their initial mistake,” Post said. “They wanted someone to cover everything, and the closest thing was CareCore, but they had never done physical therapy before. Our concern is for the patient who isn’t going to receive medically necessary care.”

On a national level, for a particular ailment, people see a physical therapist for 10-12 visits, Post said. However, when it comes to people who have coverage with Regence in the Pacific Northwest, the average number of therapy visits is 6.29, while 75 percent are below 7.91, which is an outstanding statistic, Post said.


CareCore, on the other hand, is using a cookie cutter approach to authorize the same number of visits, no matter what diagnosis a patient has, Post said. They determine what’s best by using a tiering structure, which is inherently flawed because it only looks at claims data – age, sex, diagnosis and the number of visits – but ignores the goals for the patient and what’s most appropriate for them, while imposing more administrative burdens and delays.

“Regence is micromanaging physical therapy visits,” he added. “It’s not just pre-authorization but a system designed to not look at you as an individual, but to determine your appropriateness of care based on population studies done on people who have a diagnosis similar to you.”  

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Unfortunately, this article only presents the case for Physical Therapy and fails to mention that this approach is impacting all rehabilitation disciplines, including Occupational Therapy and Speech/Language Pathology.  More importantly, the impact is felt by the patients who's treatment is delayed or disrupted while the practice offices go through the laborious requirements of the insurer to gain prior authorization and assure that we'll be paid for the services rendered.  As is accurately portrayed, time spent on completing their forms and jumping through their hoops is time not spent in patient care and therefore loss of revenue to the practices.  Our administrative costs keep rising while the insurance companies are able to find the revenue to name sports arenas and simultaneously cut our reimbursements. 

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