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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
To the Robin Hood Era...
by Vern Cherewatenko, M.D.
Once upon a time, Marcus, son of the senior Dr. Welby, graduated from medical school and joined his father's medical practice. Trained in the new ways, Marcus told his father to throw out the old note cards and spiral appointment book for the fancier computer version.
After learning all he could about the New Current Procedural Terminology book of billing codes, Marcus loaded up his computer and started producing bills for his patients. Of course, Marcus told his father they would have to raise the rates from $35 to $40 to cover the new added cost of the computer system and the new employee to run it.
The $40 would always be enough to cover those less fortunate souls, like the Medicare and other welfare patients who only paid $8 toward the cost of the visit. The money from the more fortunate people was put in the same bucket, and all was well in Welbyville.
Over the years, costs went up and up, and Marcus raised his rates from $40 to $50 and higher, until the local insurance company said: "Marcus, quit sending out all those silly bills to your patients and just bill us!" So Marcus did, thinking: "Cool! One stop shopping!"
Then he found out that he had to turn around and bill the patients anyway because the insurance company didn't pay all of the bills all of the time. So he raised his rates again, from $60 up to $70 and then up to $80. The insurance companies, he found, would pay about 95% of what he charged.
Then, at a very strategic turning point in Welbyville, insurance companies stopped paying a percentage of the billed charge and just paid a given fee for a given code. Soon this "reimbursement" went down and down. No longer was there enough "fat" to cover the poor fees allowed by Medicare and other welfare programs. In some cases, the insurance companies were paying even LESS than government programs. Marcus had to make the un-Welby-like decision to close his practice to Medicare and other welfare patients in order to keep his doors open, or he wouldn't be able to care for anyone. He still thought that he had to keep his "insured" patients, or he wouldn't be seeing anyone. He obtained a personal line of credit to pay his overhead expenses.
He raised his rates, but it didn't matter. The insurance companies essentially said that when he signed their contracts, he would get his name in a little book so that all the people that bought their insurance could come to him. And if he didn't sign, the people couldn't come, unless they paid for the services themselves. And by the way, the insurance companies would decide what they would pay, and that's what he would have to take.
Sign or have an empty reception room. That was the choice they presented.
So Marcus signed.
A few people without insurance still came to see him. Marcus charged them the posted "retail" fee even though he didn't have to do anything except be a doctor for them. No claim forms, no authorizations, no eligibility verifications, no demands for more documentation, no resubmissions. He just had to see to their medical needs. And yet, they were the only ones paying Marcus the full price! Such a deal! They paid two to three times what the insurance companies paid.
And that is how the insurance company gets to "offer" all those discounts to their customers. Discounted fees, that is. Has anybody heard of a discounted premium?
Take it or leave it, they told Marcus.
One day, Marcus decided to leave it. He tossed the CPT book in the garbage and bought a spiral-bound appointment book for $0.49. His father grinned.
So ends the story. In the real world, faced with a similar scenario, my partner David MacDonald and I left it too! And we should have done it five years ago. We would have been both happier and better off financially. Now I see the young and the old, and the rich and the poor. I got a plant the other day from a patient for payment. Both the plant and the practice are growing. Uninsured patients (including Medicare "beneficiaries") pay a fair price. Insured patients file their own claims and pay a price reflecting the increased costs of supplying codes and other information required by the third party.
And our checkbook is finally in the black.
Dr. Cherewatenko is a family physician in Renton, WA, and a cofounder of SimpleCare.
Pamphlet No. 1093, October, 2002