The 80/20 Rule Of Managed Care

Just like auto insurance won’t get your car back to 100%

By the raise of hands how many have ever been in a car accident?  No hands?

Oh…yeah, I won’t be able to see hands raised in a blog post.  Well, let’s just assume that most of you have. What maybe around 80%?  The rest that have not, likely know someone that has, or are familiar with car accidents in general.  I was in a car accident once. I can still play it back in my head like a slow motion movie! Pretty interesting though that when I replay it in my head I look a bit like Vin Disel behind the wheel (but with hair, so even better!).

Well, that part is not important.  The other thing that I remember really well was the insurance hoops and hassles.  What I want each of us to think about for just a minute is how the insurance companies handle getting your car repaired or replaced.  My guess is that for most of you the insurance either sent out an appraiser or asked for detailed reports and pictures. The appraiser either on site or with the company assessed the damage, made a recommendation and the insurance then decided what would be covered according to your plan.  That about right? I am also assuming that for most of you, that coverage did not exactly “cover” everything. I know it did not in my situation. My plan just did not cover 100% of the cost to get a similar new vehicle or to repair the crashed one back to pristine condition. Nor did the injury coverage cover getting back 100% of normal ability.  

Apply to Health Insurance

What is that you say, car insurance and health insurance are not the same? Technically, you are right. However, both generally have deductibles, max limits, coverage exceptions, preferred service providers; both are governed by state insurance laws; both are contractual policies the member/patient agrees to upon purchase; both are contractual policies the service provider agrees to when becoming part of the network or agreeing to take payment for services rendered. So I think the comparison will work just fine.

Just like the amount allowed for my totaled car did not allow me to just go get another brand new one; health insurance benefits for various health problems are not always contractually written to get the patient back to 100% (or better) of their ability.  This may seem strange and even borderline unethical. I used to think that way, in some ways I still do. However, it all comes back to the contract that everyone agrees to and signs. This is very true in skilled rehabilitative care!

I think it is time for a little economy math.  Sounds fun doesn’t it? I bet you have heard of the 80/20 Principle in some variety or another.  

80% of wealth is owned by 20% of people

80% of work is completed by 20% of your team

80% of stress in your life is caused by 20% of the people in your life

80% of ultrasounds are effective 20% of the time

Another way to think about it is that most people will spend most of their time dealing with 80% of the least productive tasks and procrastinate working on the most productive 20% of tasks.

This idea has been around since 1895 when Italian Economist Vilfredo Pareto developed it after observing differences in highly productive and minimally productive people. He noticed an 80/20 split in many different areas of production of the time.  No matter how he looked at it the most vital things (tasks, employees, goals, etc) really only made up about 20%. But that they accounted for the most production. Crazy huh? Wouldn’t it have been nice to really focus and only need to do 20% of PT school?

Now for the purposes of skilled care, we are going to apply this rule a bit differently.  It goes something like this:

The 80/20 Rule of PT: Once a patient has achieved about 80% of normal function they should be able to continue with self care the other 20%.

I know to many this will seem harsh.  You are all thinking this just leaves the door open for patients to regress and to then need more skilled care down the road.  So the insurance company should just continue to pay that little bit more. I agree the system is not perfect, yet after several years being more involved with clinical review I can accept this a bit better.  This is certainly not my rule, and every health plan does not have the exact same standard. What I am suggesting is that if you work with your patients from day one with this expectation in mind it may reduce your frustration in the health plans and help you improve your clinical practice.

Remember the Contract, Understand the Contract, Honor the Contract

I have written about health policies being a contract already.  So I won’t go into much detail here. However, it is certainly worth repeating that the health policy your patients purchase is a legal contract.  In addition, when your clinic, or your as an individual provider, agrees to become a networked provider there is also a contract in place.  Even for those out of network, when taking even partial payment from a health plan, you are in part agreeing to their terms, which may include management of the care being authorized.

I very much feel that all health plans need to become more transparent. Often times the only thing people really look at is the general spreadsheet of benefits.  These spreadsheets don’t go into the details of the actual policy. So while most your patients may know their physical therapy benefit limit, what they don’t know is that there are restrictions and limits to how they can use those visits.  More and more health plans are initiating some kind of utilization restrictions to their policies. Not just for physical therapy, but for many common services and procedures.

My recommendation to everyone is to at least read your own health policy. Not just the spreadsheet of actual benefits. It used to be that the health plan would send you a paper copy of your policy when you started.  I remember looking through the first one I ever signed up for after getting married. It was long! I admit, I did not look through the whole thing; and you know what?  That came back to bite me a couple years later (see epilogue). With most companies trying to “go green” it is very possible that your policy was not mailed and is accessed online through a secure portal.   It will be boring, but it will give you insight into what plans generally REALLY cover. I also recommend that you get your patients to read their policies as well.

In conjunction with this, I recommend you go find a few of the contracts you signed to become a provider with a health plan.  It will take some time, but read through those as well! Don’t be like I was straight out of DPT school. I just signed wherever the office manager had marked and did not look at anything else.  If there is anything you don’t agree with, contact that health plan before signing.

Adding in utilization management of skilled care to health policies is not a new thing.  I recall some levels of it for some patients even from back in my PT Aide days (2001-2004).  It is not going anywhere anytime soon.

These policies should lay out all the terms for the skilled care the policy is going to cover.  This is where you should get some idea as to how the health plan is going to determine when a patient should be discharged from the health plan covering the care.  This is where you will find their version of the 80/20 Rule of PT (OT, etc)

A great example of this is highlighted in an article about OrthoNet back in 2005.  They took the 80% rule VERY seriously.  It actually stated in their discharge criteria documents that,

“OrthoNet’s discharge criteria for range of motion, strength and function are defined as 80-percent of established normal values.”

Other health plan’s discharge criteria may be defined differently; however there will be certain similarities.  There will be limits placed on when a patient should (per contract) be discharged from the responsibility of the health plan paying for the care.

Finding these can be tricky as well. The criteria is generally only referred to in the policy, so you would also need to access the criteria separately.  Some other terms to look for are “clinical guidelines”, “inclusion criteria”, “practice guidelines”. If you cannot find access to them on the health plan’s website then contact the health plan for assistance. I have seen some up to 900 pages long, so there is good reason they don’t just mail them out.

One last recommendation on contracts, be a professional and honor the contract you enter into.  If you don’t like it, don’t sign up or do what is needed to get out of it. However, there are plenty of smart, professional and successful providers that agree to the contracts and make the best of it for each patient they see.  

Clearly Define the Role (job) of the Patient

What job does the patient have in their healthcare?  I want you to think about that for a minute. Let it swirl around in your mind.  Thinking about the role of a patient more like a “job” is an interesting exercise.  Now I want to think about what your employee (or you as an employee) needs from the employer to define their role at work?  One of the first things an employee needs at any job is a clearly defined role, a description of what is expected of them and a timeline of when they should have autonomy of that role.  In an article in HBReview, Len Schlesinger and John Fox discuss the job of the patient in healthcare (and how it is changing from what it used to be)  They say:

“Well-designed jobs, for example, give individuals a clearly defined role to play with sufficient autonomy and regular performance feedback built in. This not only allows people to execute tasks effectively but also gives them a sense of meaning and satisfaction in their work by seeing the connection between their efforts and outcomes.”

However with patients, they stated “their roles and responsibilities are almost never clearly defined or fully supported”.  That for patients to be satisfied and successful with their care they need to be involved, motivated, and given clearly defined roles as to what their participation is going to be in getting them better.

In today’s world of managed care, the patient’s role is often extremely fuzzy to them.  One reason is that they do not understand their own policies. This aside, most providers do not give the patient the clear definition that not only does the patient have an active responsibility for their care but also that most health plans will not pay for services to get them to 100+% of their previous ability.  That part of their role (job) will be to take charge of their progress at a certain point before that 100% mark. Every rehabilitation patient should understand this concept at visit #1. Just having a front desk person tell them “you have 30 visits a year” is no longer sufficient because that only tells a partial truth and also gives a false expectation.

The Patient Has A Responsibility For Their Goals

Another very effective way of defining one’s role is to establish goals.  We all know that establishing goals is an integral part of physical or occupational therapy.  Most modern EMR software even has template wording on evaluation and re-evaluations that “the patient participated in setting these goals and has agreed to them…”.  I really wonder how closely most patients help in setting their goals? In 2001 Baker et al published a research article in the PTJournal about just this: 

Twenty-two therapists were recorded while performing 73 evaluations on elderly patients.  These recordings where then evaluated on how much the patient was involved in setting the short and long term goals.  Their findings showed that in most cases, the physical therapists did not take advantage of involving the patients in goal setting.

My feelings are that if this study were replicated (PT students? – super awesome final project idea right there!!) the findings would not be much different.  Most goals I see documented are still very generic and involve more pain, ROM or physiological issues.

Patients may care about pain but most are not going to say “I want my PSIS to stay in alignment for 2 weeks or more, or I need to achieve CGA for ambulation x 250 feet”,  they are going to say, “I need to be able to bend down to pick up my 2 year old multiple times a day and get her into her car seat without pain and feeling locked in my low back”, or “I have help at home so I need to get to where I can walk without falling with their help for longer distances and over the four steps from my door”.  Do goals need to be measurable, yes, but do they have to sound like we copied them from our 2nd year PT school notebook, no.

Once the patient understands THEIR goals there will be more buy-in from them and better definition of what they are to expect.  This can then be used to again, help them understand that they have a responsibility to work on their goals. You will give them things to work on and they need to do them.  Also, as above, that you are here to get them as close to those goals as possible. That they need to understand their policy will allow visits to a certain point, but that may not be 100% of each and every goal.

Set The Patient (and Caregivers) Up For Success

We should all be able to agree that setting a patient (and any of their caregivers) up for success is something that needs to start from that first visit.  There is a great deal of talk out there about using positive discussions with patients; eliminating fearful terms like “slipped disc” and “degenerative disease”; and using new ideas of “pain science” to help empower patients towards better health.  However, there is more that can be done. Let’s go through two different scenarios that could occur in any clinic. We are going to leave out treatments, diagnoses, etc and just focus on what this article is about today:

#1. The patient limps in the door and the front office asks for their insurance information and has them start to fill out the intake information.  They come back up to the front desk when complete and are told “Well, you have XYZ insurance so I’m sorry but your insurance has a deductible, also you only have 30 visits for the whole year and your plan covers 80% of each visit after your deductible is met. You also have a co-pay of $45, I can take a cash or card.”  The patient pays the co-pay and sits back down. The patient is called back and you meet with them. You give your assessment and treatment and indicate you would like to see them a couple times a week. They remark they have a deductible and copay and are not sure they can afford 30 visits. You repeat your recommendation of what you think they need. You apologize that their health plan is not sufficient and give some closing remarks likethe healthcare system is pretty sad these days”.   You hand them a worksheet of home work and have them go back up front to re-schedule. The front desk says “the therapist would like to see you at least 12 more times, lets go ahead and schedule those now”. The patient agrees to schedule the next few visits at least as that is what he can afford right now. The patient leaves the clinic.

#2 The patient limps in the door and the front office person comes out to him with a clipboard to help him find a seat. They ask for their insurance information and has them start to fill out the intake information.  They come back to the patient and state “great news, we have some information about what your insurance will help you with. Your policy could allow you up to 30 visits a year, as you get better the therapist will talk with you about how you are doing, hopefully you will get on track with how you can improve at home and you won’t need to use all those.  Your plan is great and is very similar to most major plans. You do have a deductible, do you understand what that is?”. They say they do, they knew that had one. The office person continues, “Like most of our patients you also have a co-pay, yours is $45 dollars and we do need this to start treatment today. Is this ok with you?” The patient hands the office person their payment card. The office person comes back with receipt and says, “thank you so much for coming in today, the therapist will be with you soon and be sure to talk with them about your expectations.” The patient is called back and you meet with them. You give your assessment and treatment.  You ask them for 3 specific goals they want from coming to therapy. You discuss those goals and what it will take to get there. You tell them that based on what you see today it will take some time to achieve those goals. You recommend twice a week to start off with and ask them what they think? They respond, “I have a co-pay and deductible so I don’t know that I can afford that much care“. You respond, “I understand your situation, and to be honest, we really want to help you become independent in caring for yourself. The more dedicated you are to doing your homework is less time you need to be here. In reality, most health plans expect you to do your part.  I know you can do this! How about this, here is your home program, you work on that as we discussed and lets do 4 visits over the next 2-3 weeks to start. Then we can re-visit this discussion after there has been time to see how you are doing. Would that work?” You hand them a worksheet of home work and have them go back up front to re-schedule. The front desk says “so what plan did you come up with the therapist?”. The patient asks to schedule 4 visits over the next 2-3 weeks. The patient leaves the clinic.

So, without any details on pain, symptoms (ok,limping is a symptom) or treatment received I hope you can see a significant difference in these two situations.  As in number one, most health care provider offices these days make insurance out to be a negative point. I don’t think anyone does this on purpose. My assumption is that they just don’t want to be the one to blame when the patient starts having to pay more than they expected.  In number two, I hope that you saw that even though the same information was presented, it was done in a more positive way. The patient was involved in all choices and made to feel like they are in charge.

Does anyone like to be told they purchased an inferior product or service? Would you like it if everyone told how cheap your shoes are? Or when you tell them about the new TV you just purchased to watch re-runs of Gillmore Girls they proceed to tell you about its flaws and problems?  As I thought, you and the rest of us would not like that. So, thinking about example 1 and 2 above, do you think patients enjoy going to a clinic and being told they have poor insurance, poor coverage, etc?  Even though, in the first example the office person did not say the word “poor” or “bad” or “inferior” they made a point to apologize that the patient had co-pays and only 30 visits, etc. The provider blamed the health system and did not adjust the situation to the patient’s needs.  These most certainly have an underlying tone that the patient’s insurance is a problem, a problem the provider is not really interested with. There is always a message between the lines.

If the situation is more like number two that may be one of the first times they don’t have to feel ashamed for the coverage they can afford or were offered where they work.  It may be one of the first times where a provider appears to be concerned with the patient’s situation and is professional enough to find the right solution for them.

As you, your office staff and the patients begin to understand the 80% rule in skilled care frustrations will decrease and your patients will become more empowered.  Just like any kid learning to ride a bike, the patient needs to know that at some point in the near future the “training wheels” will come off. Our patients need to be more responsible for their progress.  You don’t go to the dental hygienist to clean your teeth everyday. At some point your child has to learn to walk without holding your hand (living in the basement is a whole different story).  I know this may not apply to all your patients (and I am not talking about Medicare Skilled Maintenance), but it will apply to most. 

One final idea.  As you start empowering your patients with these concepts you can also start to plant the seeds for other cash based services you provide.  Maybe the patient’s health plan really will only get them to about 80% of full ability, but that patient really wants to get to 100%. You can certainly let them know you would love to get them that far, that you offer all kinds of options and help for when the insurance option is not available.  So now, not only do you have a more empowered patient (one that sees you as the ONLY health care provider that didn’t tell them their health insurance is crap) but you also have a VERY potential future client!

I really appreciate your sticking around for this article.  It has been a long time coming and I just wish I had finished it earlier.  As always I would love to hear your comments and thoughts.


My only excuse is that my sight was still “blinded” by being a newlywed to the most beautiful women on Earth!  Life was perfect! We had our cute apartment near school, we had our cute love seat, we even had a cute refrigerator from the 80’s.  What we didn’t have was a health insurance policy. Way back in the old days of 2002 we didn’t have newfangled insurance laws like being able to stay on our parents policies.  Not only did we have to drive to work uphill both ways, we had to get our own insurance.

We had looked high and low.  The best policies to the worst.  We found one that was being marketed to students and it was in our price range.  We met with the agent in our home and we thought all was perfect. We knew we wanted kids some day as well and added a pregnancy rider to the policy.  We had agreed on a $5000 rider knowing that was the average cost of a simple delivery way back then.

A few weeks later we got a thick packet in the mail with our completed forms and the final policy.  We filed it away and cuddled together on the couch feeling like true adults. We did not really even look at any of it.

Fast forward 2 years.  My wonderful wife has completed her schooling and I am knee deep in knee anatomy, special tests and such in PT school.  My wife gives me the greatest news I could ever hear, she was pregnant! We were both over joyed, and we were so glad to have our insurance rider we had signed up for.  

The pregnancy goes well.  The drive to the hospital during a snow storm (that part is 100% true) barely goes well.  The delivery goes, well . . . well :-). Our first boy is here!

Fast forward again just a bit.  It has now been a few months and we start to get bills from the hospital saying we owe money.  The bills are nowhere near $5000 yet. So we contact the hospital to let them know they are mistaken, that we have a $5000 benefit.  They kindly let us know that we do not have a $5000 benefit, that we have a $1000 benefit, most of which barely covered the Dr bills.  I hang up the phone and go to inspect the thick packet.

To my utmost horror, the hospital was right!  The agent had signed us up for the wrong amount of coverage from the start.  It was way past time to correct it as we had not been paying the premiums we should have been.  We did not check our contract! Despite letters and phone calls there was nothing we could do other than work with the hospital on a payment plan.  

I know this is not quite the same thing, but it still illustrates the importance of reading your policies and treating them as a contract.  Read them, understand them, and then read them again even after signing to just make sure.  Learning the hard way is no fun at all when it comes to insurance contracts.

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