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Have you ever had work steered from your shop to a direct-repair shop?
Have you ever tried to get on a DRP and were told the insurer “isn’t looking to add any shops right now”?If you’ve been in business for more than three minutes, you likely answered “Yes” at least once – if not twice.
But what if (play along with me here) steering didn’t exist anymore because every shop that wanted on a DRP could get on a DRP?
I’m as nutty as a pecan roll, you say? Possibly. But bear with me here …
The U.S. Supreme Court recently upheld Kentucky’s “any willing provider” law and ruled unanimously that states have a right to force health maintenance organizations (HMOs) to open up to all doctors, hospitals and other providers who agree to their terms. (Though not all states have “any willing provider” laws, some predict that this ruling will make state legislatures more open to the idea of passing them.)
What this ruling means is if, let’s say, a doctor wants to be in the network – and he’s willing to do what it takes (which may or may not involve concessions) – then he can’t be excluded. This, of course, is completely contrary to HMOs, which try to hold down health care costs by creating limited networks of providers who accept lower fees in exchange for a higher volume of business. (Sound familiar?)
It didn’t take long for the Health Insurance Association of America to denounce this ruling, saying it’ll lead to higher health insurance premiums. (Substitute “auto” for “health,” and you’ll see that this argument also sounds familiar.)
So what’s all this got to do with you exactly? Plenty. Or nothing.
It all depends.
“Though the decision only applies to HMOs, the implications are enormous for DRP agreements,” says one repairer. “All it would take is a court challenge mounted by a shop or a coalition of shops to apply this ruling to the collision repair market.”
I know what you’re thinking: “So we take ’em to court and now I’m allowed to get on DRPs, provided I agree to concessions. Great. Thanks a bunch.”
Hold on. You’re not completely off, but you’re also not looking at the big picture. If any shop can join, the insurer can no longer feed volume in exchange for concessions. The insurer will also be forced to create uniform, documented programs.
“A lot of shops that rail against DRPs think shops are giving concessions, when, in fact, they may not be,” says an industry insider. “The point is, no one really knows what the deal is because it’s not public information. Right now, these deals are arbitrary, depending on how greedy the insurer wants to get and how desperate the providers are. Documenting would shed light on the concessions and reveal how prohibitive some agreements are.”
And it’d be just in time, if you ask me, considering that DRPs are getting scarier by the minute. Case in point: Progressive has launched its Concierge program on a national level. This program allows customers to have their vehicles repaired without ever having to step foot in a body shop. The program literally turns the shop into a nameless, faceless entity. And because the customer doesn’t even know the shop exists, the shop isn’t going to generate repeat or referral business from that customer.
Imagine, now, if all DRPs were set up like this? Shops would become totally reliant on (and subservient to) insurers.
So why would a shop agree to be on a program like Concierge? Guaranteed volume, of course.
That’s why this Supreme Court ruling could be so far reaching. The exclusivity DRP shops enjoy gives the insurer power to direct work and exact concessions. But if the insurer no longer had the ability to steer work, the DRP becomes worthless to its shops.
“Steering gives insurers the power to demand concessions,” says one repairer. “Eliminate that power, and the whole thing comes crashing down.”
Georgina K. Carson, Editor