Part 3 of 9: Why “Networks” Are the Most Influential Factor in Your Practice and Provider Experience
- garret78
- 6 days ago
- 8 min read
Updated: 1 day ago
Introduction: A System Built on Groupings
Healthcare in the United States is fundamentally designed to function in groups.
Consumers are grouped—typically through employers or insurance exchanges—for the purpose of spreading financial risk.
Providers are expected to organize into delivery groups to serve these consumers.
Insurers function as the financial intermediary between the two.
This three-part structure—grouped consumers, grouped providers, and insurers in the middle—defined the U.S. healthcare system throughout the 20th century.
However, in the mid-1980s, the model evolved. A new construct emerged: Managed Care. In Part 2, we explored the value that chiropractors and PTs deliver to consumers, providing guideline concordant care that delivers exceptional outcomes. This would leave one to believe that these professions would be well-positioned in care pathways and leverage in healthcare. But, this is far from the reality. And the reason has everything to do with "groupings".
Managed Care: The Shift to Control
Rather than simply connecting consumers and providers and processing claims, insurers began to take an active role in managing both cost and care delivery. Managed Care introduced key tools and restrictions, including:
Prior authorization
Narrow networks
Utilization management
Standardized fee schedules
To administer these controls at scale, insurers needed providers to be grouped—not only for access and contracts, but to be ranked, tiered, and managed collectively. The system began transitioning from individual provider autonomy to network-based oversight.
The Fragmentation Challenge and the Rise of Intermediaries
Chiropractic and physical therapy have traditionally been made up of independent, community-based clinics. While well-positioned to deliver patient-centered care, these disciplines have long lacked structural scale. This made them vulnerable in the Managed Care era.
To bridge the administrative gap, intermediary organizations emerged in the 1980s that organized independent clinics into a “network” to rent/sell to insurance companies. Their core offerings:
A pre-credentialed provider network insurers could access easily, and
A centralized administrative interface for contracts, authorizations and utilization management, and claims.
This gave small clinics access to insurer networks they couldn’t reach alone, and gave insurers the convenience of managing hundreds of providers through a single contract.
Over time, as payers consolidated and adopted capitated payment models (per-member-per-month payment), so did intermediaries. National firms with the infrastructure to manage utilization and absorb financial risk replaced smaller regional intermediaries.
Today, fewer than 10 national intermediaries control the majority of chiropractic and physical therapy network access. Their contractual terms, utilization controls, and reimbursement schedules are now the primary force shaping the provider experience in these disciplines.
Intermediary Models: PPOs vs. IPAs
The two main intermediary structures that exist in the U.S. include:
PPOs (Preferred Provider Organizations)
Operated by private companies, not governed by providers
Contract individually with providers and then "roll" these providers into a single "network"
Sell access to their PPO network to insurers and employer plans
Handle utilization management and fee schedule administration
Profit-driven, aligned with insurer interests (insurance company is the customer, not the providers)
IPAs (Independent Practice Associations)
Formed and governed by groups of providers
Negotiate as a collective with payers, usually competing with PPO networks for business
May handle data, credentialing, and utilization oversight
Focused on provider autonomy and shared governance
In the 1980s, the market was dominated by IPAs. Today, PPOs control an estimated 85–90% of the chiropractic and physical therapy intermediary market, while IPAs account for just 10–15% (Arete Network estimate, based on payer filings and market data). The shift reflects economic incentives: PPOs generate higher margins for their owners by controlling scale, suppressing provider reimbursement, and avoiding shared governance. As such, PPOs are incentivized to invest more in technology and the ability to offer conveniences to their potential customers (insurance companies), thus resulting in the displacement of IPAs.
Most major insurers now own or are affiliated with PPO intermediaries, creating vertically integrated structures that can retain profits and influence care without passing value back to providers.
Influence on Organizational Structure
Intermediaries impact how clinics are structured. One example is contracting by individual NPI, even within multi-provider practices. Unlike most of healthcare, where group contracting (by TIN) is the norm, many chiropractic and PT intermediaries insist on 1:1 provider-level contracts—especially in chiropractic. This creates significant administrative burden:
A 10-provider practice across 5 locations = 50 contracting and enrollment combinations
With group contracting = just 1 to 5
The rationale for this approach remains unclear. It is not administratively efficient, nor is it aligned with industry norms. However, one possible explanation is that it prevents providers from negotiating collectively, further weakening leverage. Notably, physical therapy practices aligned with larger entities have successfully negotiated group contracts, even within intermediaries that refuse to offer group contracts to chiropractors. This suggests the practice is not universal, but selectively enforced based on provider leverage.
Influence on Care Delivery and Scope
Intermediaries also shape care through tiering, prior authorization (PA), and utilization management (UM)—applied within discipline-specific peer groups.
These comparisons are based on claims data only, and thus:
Fail to account for episode treatment group value (e.g., avoided surgery or opioid use)
Capture the impact to an outcome (the benefit), but not the service and cost of cash based services that may be provided without landing on claims. Thus, the positive impact of these cash services may be falsely attributed to utilization management programs.
Tend to falsely accentuate providers that submit fewer claims with fewer services as the gold standard, regardless of total episode treatment group impact
This structure leads to what could be called "claims-based value reduction."
Examples:
In chiropractic, most contracts now cover only spinal manipulation (CPT 9894x). Broader scopes of practice (allowed by state law) are effectively excluded by narrow fee structures.
In physical therapy and chiropractic, approved visit counts have declined steadily, based on incomplete claims data that do not account for cash-pay transitions.
Approximately 20% of care episodes begin under insurance but shift to cash-pay due to PA/UM delays or cost barriers. Once this shift occurs, the data disappears from the insurer’s view. This gives the impression that utilization is dropping, leading to even stricter PA and UM triggers.
High-need, high-risk patients may also be filtered out of the system due to high out-of-pocket costs or administrative barriers, further biasing the data and reducing access.
Machine-Readable Files (MRFs): A Glimpse into Intermediary Impact
In response to CMS’s Transparency in Coverage Rule, all health insurers were required to publish Machine-Readable Files (MRFs) starting July 1, 2022. These include:
Negotiated in-network rates by CPT code
Out-of-network allowed amounts (Source: CMS.gov, 2020; Transparency in Coverage Final Rule)
The Arete Network analyzed MRF data across many states and payers for chiropractic. One of the most striking findings:
Reimbursement rates for chiropractors are virtually identical across markets managed by a single intermediary, regardless of local wage levels, cost of living, or competition. Furthermore, intermediaries reimburse nearly identically to each other.
Chiropractors are the least reimbursed discipline, in both absolute and relative terms.
Reimbursement has remained largely unchanged for over two decades, despite significant inflation and staffing/overhead increases
In many cases, the patient’s copay now exceeds the full allowed amount, effectively eliminating the insurance benefit (a dynamic sometimes referred to as a “phantom benefit”).
This has implications for:
Scope of Practice – Chiropractors are effectively reimbursed for one service (manipulation), while other services are priced so low they are financially unviable and thus are not being provided.
Access to Care – High copays relative to reimbursement reduce utilization, particularly in underserved communities. Provider concentration is shifting toward affluent areas.
Intermediary Conclusion: A Structural Force with Lasting Impacts
Network design and intermediary practices—largely invisible to patients—have become one of the most powerful forces shaping chiropractic and physical therapy in the United States.
They influence:
How providers are organized
What services are reimbursed
How care is accessed
Where clinics are located
Who receives care—and who doesn’t
Despite the exceptional clinical value, both professions remain structurally disadvantaged in the network economy. As data transparency grows and value-based care expands, further investigation is needed into how these dynamics are affecting outcomes, equity, and the long-term sustainability of these disciplines.
Looking Forward: A New Path Through Clinically Integrated Networks
The Clinically Integrated Network (CIN) is a legally permissible model for independent clinics to organize into a member-governed network. It is a relatively new model in healthcare, taking shape in the 2010's. It was introduced to solve a fundamental challenge in U.S. healthcare: how to transition from volume-based care to value-based care—especially among independent providers—without requiring consolidation into hospital systems or corporate entities.
CINs enable independent providers to join together—sharing data, coordinating care, and measuring performance—to improve outcomes and reduce costs. Crucially, CINs preserve practice autonomy while unlocking the ability to negotiate collectively with insurance plans, bypassing traditional middlemen.
Unlike PPO networks, which are typically profit-driven and aligned with insurer interests, CINs are governed by the providers themselves. In medicine, this model has flourished. Primary care, specialty groups, and entire health systems have used CINs to contract directly with payers, build accountable care strategies, and enhance their influence within the healthcare ecosystem.
CINs are typically supported by an integrated suite of services designed to reduce administrative cost and burden and improve operational efficiency for member-clinics. These often include:
Health IT infrastructure (EHR, patient engagement tools, health information exchange access)
Centralized revenue cycle management (RCM)
Contracting and credentialing support
Shared call centers or care coordination teams
Quality reporting and performance improvement systems
What’s more, the fees associated with CIN participation are typically transparent and reinvested into support services—such as technology infrastructure, revenue cycle management, and care coordination. By contrast, many intermediary networks retain 20% or more of the total reimbursement—sometimes exceeding 50%. These fees are hidden from the provider, embedded in the contract between the intermediary and the insurer, making them nearly impossible to detect. From the provider’s perspective, the only visible benefit is inclusion on the payer’s roster—a potential source of patient volume.
CINs offer that same access to insurance networks, but with a critical difference: they also provide operational support, technology infrastructure, and collective governance—often at a lower overall cost. The value is not extracted—it’s returned to the providers in the form of services, support, and strategic scale. Why? Because CINs are governed and managed by the member providers themselves. Thus, the members are prioritized.
The CIN is more than a network. It's a platform for autonomy, scale, and long-term sustainability.
For chiropractic and physical therapy, however, this path has remained largely untapped—until now. One reason is complexity. Creating a CIN is not as simple as just gathering a group of like-minded providers. It requires:
Legal and regulatory expertise (to meet antitrust and clinical integration standards)
Health IT infrastructure (to aggregate and share performance data)
Payer contracting knowledge
Performance management tools
A strategy aligned with evolving value-based care models
Committee governance structure
These barriers help explain why CINs have been virtually absent in chiropractic and physical therapy—despite both professions delivering high-value, non-invasive care that aligns perfectly with value-based principles.
What makes the need even more urgent is the longstanding financial strain caused by intermediary models. In much of the United States, reimbursement for chiropractic and physical therapy services has remained flat for over two decades—despite rising costs, inflation, and increased administrative burdens. This stagnation is placing unsustainable pressure on providers who consistently deliver some of the most effective and cost-efficient care for musculoskeletal conditions.
That’s where Arete Network comes in.
Arete is the first CIN purpose-built for chiropractic and physical therapy, structured to meet the regulatory standards necessary for direct payer contracting—without the need for a margin-driven intermediary. It enables independently owned clinics to stay independent, while gaining the collective strength, governance, and leverage needed to succeed in today’s healthcare economy.
We’ll take a deeper dive into how the Arete Network works—and how you can participate—in Part 9 of this series.
Next Up: In Part 4 we're going to uncover the costs of our professions being fragmented, from the costs of redundancy in administrative processes to the impact intermediaries have on administrative overhead.