Same Doctor Visit, Double The Cost

On August 26, 2012, the Wall Street Journal published a story describing a situation whereby a patient who sees a physician employed by a hospital essentially pays double out-of-pocket what they would have paid for the same exact office visit with a physician NOT employed by the hospital.

I actually wrote about this situation in January 21, 2012.

Beyond what the Wall Street Journal reported, what's going on?

Assuming all things equal whereby a private practice physician and a hospital-based physician are equally competent and the supporting staff for each are both equally good (such assumptions are debatable in some circles, but will be ignored here), it all comes down to money.

When a patient sees a private practice physician, the government-established fee schedule only incorporates payments to the physician.

When a patient sees a hospital-based physician, the fee schedule not only incorporates physician payments, but also additional payments to the hospital.

Now, the patient doesn't pay what insurance covers in either scenario, but typically there is a copay or coinsurance payment that the patient is responsible for that typically is 20% of the total charges.

Here's an example using the Medicare fee schedule from 2002. I elected to provide "old" 2002 data as this information can be found easily and corroborated, but rest assured, the numbers are starkly different and perhaps more lopsided today. Medicare was selected as it is the bar to which all other insurance plans are typically based on.

In a physician run private practice, the only charges that are incurred is from the "Physician Fee Schedule". In a hospital-based practice, a patient incurs not only the physician fee schedule, but also additional charges based on the "Outpatient Prospective Payment System".

As you can see, the physician fees are slightly higher in the private practice setting compared to hospital-based practice... BUT, given the additional hospital charges involved with a hospital-based practice, the patient ends up being charged more per service for a simple clinic visit ($16.48) than if they had been seen in the private practice office ($10.06).

The cost differential for the patient is far worse with any procedures ($62.62 versus $342.47).

For the same exact procedure or service, a patient automatically ends up paying more to be seen in a hospital-based practice.

This payment system is the same whether you go to a tertiary care teaching hospital like Massachusetts General Hospital or a tiny 98-bed community hospital.

As an aside... for any physicians employed by a hospital, it behooves you to consider this differential payment in terms of how a hospital determines your salary and productivity. Do they consider ONLY the physician fee schedule or do they also take into account the outpatient prospective payment system?

I should also mention that Congress is considering abolishing the outpatient prospective payment system for clinic visits only. Click here for more info.

Source:
Same Doctor Visit, Double the Cost. WSJ 8/26/12

Hospital-Based Practice Versus Physician Private Practice. Fauquier ENT Blog 1/21/12.

Elimination of Differential in Medicare Payment for Clinic E&M Services Furnished in Hospital-Based Outpatient Departments Proposed. Martinedale 12/10/11

Medicare rules for hospital-based clinics. American College of Surgeons. Vol 87, No 4

Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System. Congressional Research Service. 8/6/2010

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Financial Issues with Emergency Room Specialist Care

Imagine this scenario... A young child is playing in the yard when her pet dog bites her face. Bleeding, the child is rushed to the emergency room and the emergency room doctor offers to suture up the child's face.

The next question a parent will probably ask (or demand) is the desire for a plastic surgeon to suture the face instead of the emergency room doctor.

As such, the plastic surgeon is called in and sutures up the face beautifully.

The child and family goes home and that's when the financial nightmare begins...

The plastic surgeon bills the family for $2,000 for services rendered in the emergency room. The plastic surgeon does NOT participate with their health insurance plan and being a non-participating provider, the bill for care provided is directly sent to the child's family.

Here is a New York Times article describing this situation.

Outrageous?

Unfortunately, it is not unusual... and there are lawsuits now pending among insurance companies, specialist physicians, as well as even against patients regarding who pays the medical bills.

Here is an article portraying a hand surgeon who has sued numerous patients regarding just this scenario. Most specialists will either write-off or accept any amount after being sent to collection.

Background

If a patient has a medical problem, a call to the medical office is made to see the doctor. However, before the appointment is made, both the patient and office checks to ensure the visit will be covered by insurance. If not, a call to a different medical office is made until one that participates with the patient's insurance is found. However, if the patient decides to see a physician who does NOT participate with his health insurance company, he will be responsible for the entire bill (the office visit will not be covered by insurance).

The same is true for outside specialists called into the emergency room. These outside medical specialists participate only with certain insurances. As such, if they perform services on a patient whose health insurance does not cover that particular medical specialist, the patient will get the entire bill.

Emergency room care IS covered by insurance... because it is an "emergency," but services performed ONLY by the emergency room staff applies. NOT services by outside specialists called in.

What to Do?

So what is a patient to do in order to avoid a surprising large bill?

Ideally, have all services performed by emergency room staff and avoid services by outside specialists. If it is not life-threatening (like a facial dog-bite... ugly, but not life-threatening), have the emergency room doctor do all he can. Than follow-up as an outpatient with a specialist who participates with your health insurance plan.

If an outside specialist MUST be called in, ask whether this specialist participates with your health insurance plan. If not, ask how much the specialist will charge for services rendered. Be aware, if the outside specialist actually comes into the hospital, a consultation fee will be charged (typically around $100-$200). If a procedure is performed, a procedure charge will be present (hundreds to thousands of dollars).

A patient can request whether there is a different doctor who can be contacted should the specialist on-call not participate with his/her health insurance plan. However, be aware that typically only ONE doctor per specialty is on-call to the emergency room at any given time and as such, an alternative doctor may not be available.

Once you are aware of the charges, you as the patient needs to decide whether to proceed with specialist care or not.

Be aware that the insurance coverage issues also applies for specialist consultations during a hospitalization and not just in the emergency room.

Bottom Line

Simply going to the emergency room does not mean all medical services will be covered by insurance, especially services provided by a medical specialist.

If specialist care is required in the emergency room, just ask whether the specialist participates with your health insurance plan, because if not, be aware that you directly will get a bill.

That's just how the medical system is set up currently.

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Hospital-Based Practice Versus Physician Private Practice

The other day, an astute patient of mine asked what the difference is between a physician who works for a hospital (hospital-based practice) versus a physician run private practice.

After all, a patient still sees a physician in either case...

Is there an actual difference from a patient's perspective???

Assuming all things equal whereby a private practice physician and a hospital-based physician are equally competent and the supporting staff for each are both equally good (such assumptions are debatable in some circles, but will be ignored here), it all comes down to money.

When a patient sees a private practice physician, the fee schedule only incorporates payments to the physician.

When a patient sees a hospital-based physician, the fee schedule not only incorporates physician payments, but also additional payments to the hospital.

Now, the patient doesn't pay what insurance covers in either scenario, but typically there is a copay or coinsurance payment that the patient is responsible for that typically is 20% of the total charges.

Here's an example using the Medicare fee schedule from 2002. I elected to provide "old" 2002 data as this information can be found easily and corroborated, but rest assured, the numbers are starkly different and perhaps more lopsided today. Medicare was selected as it is the bar to which all other insurance plans are typically based on.

In a physician run private practice, the only charges that are incurred is from the "Physician Fee Schedule". In a hospital-based practice, a patient incurs not only the physician fee schedule, but also additional charges based on the "Outpatient Prospective Payment System".

As you can see, the physician fees are slightly higher in the private practice setting compared to hospital-based practice... BUT, given the additional hospital charges involved with a hospital-based practice, the patient ends up being charged more per service for a simple clinic visit ($16.48) than if they had been seen in the private practice office ($10.06).

The cost differential for the patient is far worse with any procedures ($62.62 versus $342.47).

For the same exact procedure or service, a patient automatically ends up paying more to be seen in a hospital-based practice.

This payment system is the same whether you go to a tertiary care teaching hospital like Massachusetts General Hospital or a tiny 98-bed community hospital.

As an aside... for any physicians employed by a hospital, it behooves you to consider this differential payment in terms of how a hospital determines your salary and productivity. Do they consider ONLY the physician fee schedule or do they also take into account the outpatient prospective payment system?

I should also mention that for 2012, Congress is considering abolishing the outpatient prospective payment system for clinic visits only. Click here for more info.

Source:
Elimination of Differential in Medicare Payment for Clinic E&M Services Furnished in Hospital-Based Outpatient Departments Proposed. Martinedale 12/10/11

Medicare rules for hospital-based clinics. American College of Surgeons. Vol 87, No 4

Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System. Congressional Research Service. 8/6/2010

Read More