Medical billing practices

[spatterso911]

FYI, medical care is 1/3 the cost if you pay in cash at the time of service. Insurance dictates nothing(well maybe for the ignorant).

Totally OT, but here goes...That is solely at the discretion of the provider. FYI, insurance companies typically only pay about a 1/3 the charge, and the assessed charges are leveraged to account for the huge mismatch in charge vs. reimbursement. Name 1 other business model where you charge someone for a service provided, then accept 1/3 of what you charge. Now name one that is successful.

 

[qwk]

Totally OT, but here goes...That is solely at the discretion of the provider. FYI, insurance companies typically only pay about a 1/3 the charge, and the assessed charges are leveraged to account for the huge mismatch in charge vs. reimbursement. Name 1 other business model where you charge someone for a service provided, then accept 1/3 of what you charge. Now name one that is successful.

I haven't run into one provider or hospital that will not do this. All you have to do is ask, it's not like they offer it or advertise this.

 

[Lloyd]

I haven't run into one provider or hospital that will not do this. All you have to do is ask, it's not like they offer it or advertise this.

Well now you have. In the dental business it is considered insurance fraud if you charge a different rate to a cash paying patient.

 

[spatterso911]

Well now you have. In the dental business it is considered insurance fraud if you charge a different rate to a cash paying patient.

Hospitals and providers do it so that they can recoup something, because so many cash patients (uninsured) will default completely. If I collected 100% of my billing, I'd have been a founder, not P7577.

 

[7racer]

spatter is correct. At least for us in the medical field (not sure of dental).

But it's easy to give an example. Always, my "billed amount" vs my "collected amount" per month or year is half. So for example I might bill $100 but only collect on average $50. The $100 price is what we set as our price for a given service. It gets complex as some insurances will pay the full amount, some less, some not at all. So you might have a contract with BCBS that will pay you $95. BCBS HMO $80. Signa $60. Medicare is the most strict as they set a price across the board. Say $55. Every year this changes. One year Medicare might say they will pay less on X or a bit more on Y. Private insurance will also try to negotiate a lower rate on seeing Medicare rates etc.

Medicaid for us it typically the most difficult as they pay less then the cost of doing business, say $30. Some/majority of medical practices won't see medicaid patients because of this. Now imagine if the new nationwide medical plan goes thru where states are required to provide medicaid to all uninsured. The cost for these patients has to come from somewhere (tax). There is a cost to set this up (overhead). Then the payment to docs (less the cost of doing the work).

In regards to the original subject of self pay/no insurance. It's not 1/3. It just depends on the practice or doc or billing policy. One of my partners hates to devalue our services, training, risk, and work. If you have no insurance you get billed 100%. Period. Others might bill medicare rates for example. Then, there is the smattering all in between. If you don't pay the full amount we typically send you to collections.

The problem is with self pay/no insurance is that your accounts receivable (AR) times are the highest. So imagine selling something to someone, say a burrito from Chiptole. But that person doesn't pay the bill for almost a year. Even when payment is received its for only about 10% of the total cost of the burrito!?
That's what happens with self pay/no insurance patients. To pay for the cost of doing business some docs say they will take "any pay", like a 1/3 because they know its better to collect something vs nothing. Also, they know that as time goes on, the cost for the billing department goes up as they have to keep submitting bills and trying to collect. That is how some of the collection companies make money and are in business. That is, a collection company will say we will get the collections for you. If we don't collect, you don't pay. But if we do collect we keep 50% and pay you 50%. For some practices (like ER's where the collection rate is low), that is better than nothing.

Speaking of ER's. My friend is a ER doc. Their collection rate is about 30%. So imagine doing a business where only about 30% of the time you get paid. The hard part is that as an ER you are required to see any patient that comes in. Insurance or not. I can turn away at least some patients or sending them to another place that might take their insurance.

so back to the original quote from who I think was from ?smoothoperator. No, paying in cash isn't a guaranteed 3rd of the rate. It depends and is totally variable.
Depending on the insurance, they do dictate what physicians get paid. Medicare especially. We as physicians have no say in what they establish as a justifiable payment. We can lobby, but thats about it. Private insurance are contracts. So practices will negotiate with a insurance carrier the rates they want to pay and we will accept.

 

[7racer]

in reply to qwk's quote. That isn't true. If you have insurance, we have to accept your insurance. Paying cash technically is breaking a contract that you have established with your insurance provider. That is what happens when you pay for your insurance, it is a contract to provide payment for care. We then as doctors contract with that insurance provider.

A great example of this is medicare. Did you know that if you have medicare and you where like a friend or VIP, and you said to me hey could you charge me 1/3? That would be, and is, considered medicare fraud. You cannot legally bill someone less than the contract rate. Medicare has specifically stated that this is fraud as you are setting up an "incentive" for patients to see you due to the discounted rate. If I was a medicare whistleblower I could "tattle" on you for this practice and get paid a percentage of what they estimate that you fraudulently did. Also, its not exact. The penalty that medicare will estimate is that they might review 10 charts, find that you did this for 2 of them and extrapolate that back for 10 years and determine your fine should be 5 million dollars. The whistle blower will get a million.

 

[7racer]

also, someone might argue what's the big deal about a high AR time and getting paid a year later for that burrito?

The answer is TVM (time value of money). A dollar today is worth more than a dollar in future. It's not good business practice to have a high AR. On top of that you hardly collect from someone in that long of a time frame.
http://www.youtube.com/watch?v=NJ6xBaZ92uA

 

[Lloyd]

spatter is correct. At least for us in the medical field (not sure of dental).

But it's easy to give an example. Always, my "billed amount" vs my "collected amount" per month or year is half. So for example I might bill $100 but only collect on average $50. The $100 price is what we set as our price for a given service. It gets complex as some insurances will pay the full amount, some less, some not at all. So you might have a contract with BCBS that will pay you $95. BCBS HMO $80. Signa $60. Medicare is the most strict as they set a price across the board. Say $55. Every year this changes. One year Medicare might say they will pay less on X or a bit more on Y. Private insurance will also try to negotiate a lower rate on seeing Medicare rates etc.

.

I know he (spatter) is right, but it is not the correct practice to have. Set a fair fee for your service, and that's what should be paid regardless of who is paying and by what means. The result is higher insurance premiums for all. Medicine has dug a hole for themselves in this manner. Medical billing delinquencies are not even considered when evaluating a credit report! The result is that there is now tighter credit for my Dental patients. We have to accurately estimate coverages and insist in proper co-payments be paid at the time of service. Dental is a little different in logistics, but I think they need to consider that billing different amounts for the same procedure depending on how it is paid is NOT ETHICAL, and should not be standard practice! JMHO

 

[xhawk101]

This is why I left private practice for the VA!

 

[7racer]

That would never work. There is a cost to doing medicine. Not just from drugs but cost. If you look at our satellite offices there is different payments for the same service by location. I can make this more evident by a service from someone in NYC to small town Paris, Texas. It's just different. My fair fee for service isn't someones fair fee in Los Angeles or Gnome, Alaska.

I would LOVE to have one standard payment amount. And we DO set one fee for our service. It's just the insurance company that doesn't pay the full amount.

I know he (spatter) is right, but it is not the correct practice to have. Set a fair fee for your service, and that's what should be paid regardless of who is paying and by what means. The result is higher insurance premiums for all. Medicine has dug a hole for themselves in this manner. Medical billing delinquencies are not even considered when evaluating a credit report! The result is that there is now tighter credit for my Dental patients. We have to accurately estimate coverages and insist in proper co-payments be paid at the time of service. Dental is a little different in logistics, but I think they need to consider that billing different amounts for the same procedure depending on how it is paid is NOT ETHICAL, and should not be standard practice! JMHO

 

[Lloyd]

That would never work. There is a cost to doing medicine. Not just from drugs but cost. If you look at our satellite offices there is different payments for the same service by location. I can make this more evident by a service from someone in NYC to small town Paris, Texas. It's just different. My fair fee for service isn't someones fair fee in Los Angeles or Gnome, Alaska.

I would LOVE to have one standard payment amount. And we DO set one fee for our service. It's just the insurance company that doesn't pay the full amount.

Make your fees consistent PER LOCATION. Sure costs are different at various locations. Medicine needs to make the PATIENTS RESPONSIBLE for the amounts that the various policies do not cover. It should not be common practice to write off what the insurace does not cover. This is my point, that by different practitioners allowing the insurance companies to dictate what is fair and right, they have lost controll of their own destiny. Charging a grossly higher fee to offset those that pay less is wrong.

 

[bonnie]

Make your fees consistent PER LOCATION. Sure costs are different at various locations. Medicine needs to make the PATIENTS RESPONSIBLE for the amounts that the various policies do not cover. It should not be common practice to write off what the insurace does not cover. This is my point, that by different practitioners allowing the insurance companies to dictate what is fair and right, they have lost controll of their own destiny. Charging a grosely higher fee to offset those that pay less is wrong.

So you don't think that an insurance group should be able to negotiate a good price on behalf of members? Negotiations of that type happen every day, in every business.

When I moved here, I went through my insurer's portal to find new doctors. That should be worth something to the clinicians who received my business.

 

[dsm363]

In some markets though there is really only one, maybe two private insurers then Medicare/Medicaid so not exactly a thriving market with intense competition. I agree it's odd that medicine is the only field where you bill one thing and can get paid sometimes 80% less depending on the payer.

 

[7racer]

Lloyd,

you realize what you are asking has been essentially done? In various forms. One is the NHS in England. As part of my residency, I had to rotate 10 weeks there. It is interesting and interesting if Americans would tolerate it. That is, having drugs, treatment, or test held due to it being costly or not worth the treatment. However, everyone gets care, all docs get paid equally. But there is little innovation. Waiting list for surgery. And care depending on cost. If you are a cancer patient and a drug showed a possible 10% treatment rate or increase survival of 4-6 months...that could get withheld.

I am not saying its wrong. Europe consistently gets higher healthcare ratings and survival rates than the US. I just don't think the US culture would tolerate that kind of system.

 

[Lloyd]

Doesn't medicare attempt to set fees? Once a medicare provider starts practicing under that plan they are limited to what they can charge non-medicare patients? Still you have the choice to accept this group.

Analogy: It like going out to eat, you are a regular customer and get the lunch special for $10. Thats the regular price. A bus comes in and gets the special for $5 each pre-negotiated. A group of tourists come in and get charged $15 because they dont know any better just to offset the bus. If they were not able to overcharge $15 for the special, would they be as willing to give 1/2 off to the bus? Probably not. Is it right? No. Is it ethical, I dont think so. jmo

Bonnie's point is valid also. Practitioners who accept discounted fees/capitation to be on a particular plan to help them build thier patient pool and start a practice is great, but then to turn around and chage more to a fee for service plan to offset is not right. I don't know that there is a good and easy answer.

Insurance fraud comes about but is not commonly prosecuted when a cash discount is given to a patient, and the insurance company is billed for the non-discounted amount. Similiarly when a co-payment is waived by a practitioner, they are supposed to inform the insurance company of the 'discount' so that a proper calculation of benefits due to the practitioner can be done.

I set my fees in my practice based on the difficulty and skill necessary to complete work to be performed, not at all on the method of payment, who or what plan is paying for the treatment. I feel good about my work and what is charged. It enables me to donate time and treatment to those less fortunate when I am able.

 

[ItsNotAboutTheMoney]

In some markets though there is really only one, maybe two private insurers then Medicare/Medicaid so not exactly a thriving market with intense competition. I agree it's odd that medicine is the only field where you bill one thing and can get paid sometimes 80% less depending on the payer.

E.g. Maine. Two insurance companies offering private annual health insurance (only one of which will provide online quotes), which are also the largest employee-health-benefit insurers in the state. The private market isn't big enough for companies to care. My colleague had a private policy with an insurer taken out when he lived in Utah and when he moved to Maine found out that they didn't service Maine. The only realistic way to improve the competition would be to ban employee health benefits so that companies can't just compete in the employee market.

 

[7racer]

Lloyd,

I am confused. You make your fees consistent and you make the patients responsible. But you are able to do pro bono cases? Shouldn't they also be charged the full amount?
Dentistry, specifically orthodontics is like the old days of medicine with fee for service. You can set the price.

I would love to go back to that for medicine. We don't (and I hope you are not suggesting) that we grossly over charge. That is ridiculous! I also see my fair share of pure pro bono cases and do surgery on them. I am a sub sub specialist and some patients cannot get access to my care. So for medicare that is like you saying well my fee is $15. But medicare comes back and says great. It's now 10. Take it or leave it. Are you ok with that? What if that is lower than your overhead?

The problem with medicare is that you cannot dictate your fees AT ALL. Do you know what the SGR fix is?
Congress Passes 2012 SGR Fix | ASNC
this is some crazy legislation that has been kicking the can down the road for your highly valued "set fee". This set fee could cut medicare reimburesment by 21-25%. Just imagine that. You are cruising along at your set fees and they come and cut your salary by 21-25%. Even if they don't cut it and debate it, payments get held. So as they "kick the can" to the next election, we wait 2-3 months with no accounts receivable. So again. Imagine yourself with your set fees, you bill and do everything right. But you don't get a payment for 2 months.

In regards to your analogy. It isn't correct. If you did your analogy you would need the customer, the food establishment and the middle man. Unlike your nice analogy medicine works like this. The customer buys a ticket from a vendor middle man to guarantee them a lunch. Some people are smarter because they can go to the HMO middle man and get a cheaper lunch. Other people don't like that the HMO lunch doesn't include the meatloaf and they want the PPO lunch. On the other side the middle man goes to the food establishment and says, hey for our group, we are going to pay you $10 for lunch regardless of wether its one person, a bus load of people or a chronically obese guy who will eat 10 plates. Those are all $10. Great I say but that is too low as the 10 plate eater will cost more and there bus load of eaters typically eat more. So, we want $15 for all of it. Fair and square. I set my price and that is what I want.

Well the middle man says. That's great, but is too high. We will send our eaters to another food establishment.

Get it?!

Doesn't medicare attempt to set fees?....
Analogy: It like going out to eat, ....

 

[7racer]

in regards to ethics. Is is ethical that the middle man can choose who will get lunch? How much they charge for that lunch and then discount it so they can make a profit and pay less to the dinner establishment? Is it ethical that they do pay for the lunch but then exclude some items that the dinner establishment wants to serve like apple pie and ice cream?

I really think you are pointing the finger in the wrong direction.
The middleman never had to take the Hippocratic oath to serve that lunch.

 

[Lloyd]

We are exactly on the same page! Perhaps I did not express it properly. I like your more in depth analogy, I was trying to keep it simple.

Regarding the pro bono cases, yes it is necessary to have some balance. The balance gets swayed by hoe much philanthropy the government does on your behalf.

Medicare is a mess. Practitioners as you point out are being asked to care for more patients for less.

Can medicine get back to fee for service? I doubt it. Dentistry is struggling to keep this.

This could easily go OT about Obamacare. Let's agree to save that for another forum!

 

[ItsNotAboutTheMoney]

Lloyd,

you realize what you are asking has been essentially done? In various forms. One is the NHS in England. As part of my residency, I had to rotate 10 weeks there. It is interesting and interesting if Americans would tolerate it. That is, having drugs, treatment, or test held due to it being costly or not worth the treatment. However, everyone gets care, all docs get paid equally. But there is little innovation. Waiting list for surgery. And care depending on cog cst. If you are a cancer patient and a drug showed a possible 10% treatment rate or increase survival of 4-6 months...that could get withheld.

(I'm originally from the UK).

There was a well-publicized case several years ago of a terminal cancer patient who was denied Herceptin that might have extended her life. The UK has the National Institute for Health and Clinical Excellence (Nice) that studies effectiveness of drugs and other treatments and determines value for money, which is of course necessary in a taxpayer-funded system with limited budgets (limited, but frequently borrowing from next year's budget).

The biggest difference that an NHS-like system makes is that cost of healthcare doesn't act as a drag on the nation's psyche. Quite simply, you don't think about it until you need it and when you need it your only concern is getting the treatment you need.

I am not saying its wrong. Europe consistently gets higher healthcare ratings and survival rates than the US. I just don't think the US culture would tolerate that kind of system.

Successful systems in Europe include systems that spend much more on healthcare than the UK. The NHS is cheap. It's more efficient than the US system(s) because it eliminates a lot of the competitive bureaucracy, but you get what you pay for.

(Like others on this thread I've tried to avoid making relative judgments, just sticking to observations)