Who Decides How Much To Pay For Medical Services

My new book

The Nifty American Healthcare Scam: How Kickbacks, Collusion and Propaganda accept Exploded Healthcare Costs in the United States

Tin can now be purchased on Amazon. Hither are the links:
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Introduction

Do you know how much your medico gets paid to see you? Yous probably don't but, what if I told yous nigh doctors don't know how much they're paid to see a patient either?

Take a moment to remember about that: not just does your doc accept no thought how much y'all might pay for the medications he prescribes y'all or how much that test he ordered for you lot volition cost, he doesn't even know how much he's paid to see yous in his office. If you didn't think medical finances in this state were surreal before, that should convince yous.

Why don't doctors know how much they're paid to see patients?

The methods in which insurance companies pay doctors are varied, convoluted and rather opaque. I say this as the owner of a private do who does his own billing. As examples:

1. Different insurance companies will pay doctors a different amount for the same billing code.

2. The same insurance visitor will also pay a md a different amount for the same billing lawmaking depending on the type of policy a patient has.

3. There is almost no manner to find out how much an insurance company might pay for an part visit in advance.

4. It'south non always like shooting fish in a barrel to figure out how much insurance companies have paid u.s. in the by for office visits.

5. Unlike insurance companies will approve and disapprove of different services, so it'due south hard to know in accelerate what we'll be paid for.

half-dozen. The same insurance company might have several different methods of payment depending on the patient's type of policy.

OK, that's quite a list only I'll explain each betoken individually. Before I do, though, I'll introduce yous to what an caption of benefits (EOB) is. An EOB is a statement each insurance company sends each medical provider every time that provider bills for a service.

Here's how EOBs work:

If a healthcare provider—hospital, lab, physician, whoever—provides a medical service and bills the patient's insurance company, the insurance company will answer with an EOB. The EOB explains what service we are paid for, how much we will be paid, who pays (the patient or the insurance company) and what was denied or not allowed. Maybe there'll also be a check, only not only will the corporeality exist less than what was billed (recall the amount billed is near always inflated), information technology will usually exist less than what the insurance allows.

BlueShield1
Effigy one: Here's an example EOB from Blue Shield:

This is for a patient I saw on June 2, 2015 for a follow up office visit. There is a lot of disruptive information on this document but, bear with me and I'll walk yous through it all.

Under the heading "procedure number" (to the correct of "dates of service") you run into the number 99213. A 99213 is the insurance code for "follow up office visit, low complexity" meaning that I've seen this patient before, I'm seeing her again today, but not for annihilation very complicated.

Going further to the right, you tin can come across that I billed Blue Shield $110, the immune amount in the next column was $55.69 and the contractual adjustment was $54.31. That ways that Blue Shield has no intention of paying me the $110 I billed for that patient'south visit. They'll let me to collect $55.69 and I can forget about the remaining $54.31.

What's more than, Blueish Shield is only responsible for $40.69 of the $55.69 they approved. The patient already paid me a $fifteen copay. And so the EOB provides both a fractional payment (if I'thou lucky) as well as a set of guidelines for how I might collect the rest of what they say I'm owed.

Every bit yous tin can already see, the insurance companies have created a rather confusing process for collecting an corporeality of money that, in many cases, would barely be enough to fill the gas tank of an SUV.

Now that I've shown yous what an EOB looks like, let's get over a few more.

Below is one from Aetna which shows that I was allowed to receive $73.sixty for a 99213 (again follow up visit, low complication) in March of 2015. $53.60 of that was paid by Aetna and $20 by the patient.

Aetna1
Figure two: EOB from Aetna.

United Health let me have $68.74 for a 99213 in July 2015 ($25 from the patient and $41.26 from United Health) and Blue Cross allowed $74.79 for a 99213 also in July 2015.

So you can already see that each different insurance visitor is paying me a dissimilar corporeality for the exact same service. Merely it'southward actually more complicated than that. Here is another EOB from Bluish Shield for a patient I saw on August 21, 2015. Again, I billed a 99213 (same billing code as in the other examples) merely this fourth dimension, Blue Shield allows me to get $79.56, which is $xv more than than they immune for the patient in the first example. What's more, that extra $15 came out of the patient'south pocket (equally a higher copay) and non Bluish Shield'southward.

BlueShield2
Effigy 3

OK, What's going on?

The patient in the showtime example had an EPO plan whereas the patient in the second example had a PPO programme. In fact, Blue Shield recently sent me this table explaining the range of payments they offer doctors for each listed service:

BlueShieldTable1
Figure iv: Range in some of Bluish Shield'due south payments.

Does that make whatever sense to y'all at all? if information technology doesn't, you're not lone. Now you're starting to sympathize why nearly doctors have no idea how much they're paid for an function visit.

This EOB from Blue Cross shows that they allowed $82.03 but paid me simply $xvi.41. Why? That'south a Medicare Supplemental policy, and then Blue Cross was simply paying 20% of Medicare's approved payment.

BlueCross2
Figure 5: Blue Cross Medicare Supplemental payment.

In fact Medicare's rates are really as high or higher than the highest rate Blue Shield (or any other private insurance visitor) pays a doctor for an office visit:

Encounter	Medicare Rate	Blue Shield Low Rate	Blue Shield High Charge per unit
99203 New Patient, thirty minutes	$121.76	$84	$122
99213 Follow Up, xv minutes	$82.44	$59	$83
99214 Follow Up, 25 Minutes	$121.73	$106	$118
Influenza Vaccination	$46.47	$28	$38

Incidentally, I did non negotiate with any insurance visitor for whatsoever of these rates, nor has whatsoever other doctor I know e'er negotiated office payments with an insurance company. Also, as far as I know, all doctors in my expanse get paid the same as I'one thousand paid past the insurance companies for each billing lawmaking.

Now, I haven't even mentioned deductibles or co-insurances, which we nib the patient for after nosotros see them. These are determined by the insurance companies afterwards we bill them, so the amount we neb the patient will exist explained in the EOB.

At that place will also be services that volition be listed every bit non allowed, which means we get nothing. These services will vary for different insurance providers. Also, when a service is denied or not covered (which is different from a service that'southward not allowed) or, if the patient is out of network, nosotros're expected to pecker the patient for the total billing charge, which is always far more than the amount any insurance company would pay us for that service. Since most doctors have piffling knowledge or understanding of which networks we belong to or why, that tin be peculiarly confusing.

I should also notation that the terms I define here a not really universal. Dissimilar insurance companies might use different terms for the situations I'grand describing so, "not allowed" for one insurance company might mean the same every bit "denied" for another, and and so on. Insurance companies compensate for these differences by sending fastened explanations to explain each explanation of benefits, though.

But it gets even amend.

If a patient has an HMO instead of a PPO or EPO then the doctor isn't really paid for an office visit at all. Instead, doctors get a monthly stipend called a capitation for each HMO patient who chooses that doctor. The corporeality the doctor gets equally a capitation for each patient varies based on the historic period and sexual practice of the patient likewise equally other factors like whether or not they have Medicare.

We still collect copays from HMO patients, which tin can range anywhere from $five-$45, but the copay is all nosotros go for the visit itself and has nothing to do with how much time is spent with the patient or what's done.

What'due south fifty-fifty more bizarre is the fact that much of the money HMOs pay me isn't fifty-fifty from the capitations or office copays. Roughly half of my HMO pay, and xx% of my total role income comes from HMO bonuses. These bonuses usually come up randomly and without explanation about twice each year.

So, in reality, HMOs are my highest payers by far. In fact, the HMOs pay me more than twice as much, on boilerplate, for each HMO patient I see as the other types of insurance providers pay me. Since 2009, 42% of my total office revenue came from HMO payments (including bonuses) even though merely 18% of the patients I saw had an HMO policy.
HMOGraphs
Figure half-dozen: My HMO revenue compared to my HMO traffic.

Every bit you tin see from those graphs, A good portion of my total office revenue each yr doesn't fifty-fifty come from seeing patients. Also, HMOs are patently not about saving coin.

Now nearly doctors aren't enlightened of much of what I've explained here for 2 reasons:

ane. The system is far too confusing for even doctors to understand clearly and

2. Most doctors don't even practise their own billing. Instead, they simply hire a billing agency to practise their billing for them. Doctors will requite the agency a summary of the patients they saw forth with the diagnosis and see codes, and the service takes care of all of the billing and gives the doctor a cheque each month based on what was collected.

Why do doctors over bill for their services?

Doctors, along with all other heath care providers, most e'er bill insurance companies far more what nosotros would look in payments. Why? The simple answer is that nosotros normally don't know what to expect.

Insurance companies will e'er pay what always a medical provider bills upwardly to the maximum amount they're willing to pay for whatsoever service. So, if a dr. bills $100 for an office visit, and the insurance company is willing to pay $75, the medico volition get $75. If the medico bills but $60 for that office visit so $60 is all he'll receive.

At that place is absolutely no penalty in health intendance for over billing, only any medical provider who under bills will short change themselves. This is why billing charges take exploded by so much in wellness care. This payment system is far too confusing for any health care provider to actually understand, and so the all-time strategy is to pecker high for every service then take what they give us.

This creates a huge problem for anyone who is uninsured, but an even bigger problem for people who have insurance and had their merits denied for any reason. The uninsured volition be forced to negotiate on their own behalf confronting billing charges that might exist many times the value of a medical service. This puts the uninsured at a severe disadvantage. A person who uses their insurance, just has their claim denied is almost always expected to pay the full bill, though. They aren't fifty-fifty allowed to try to negotiate.

This department should make it obvious that doctors have very fiddling influence on, or even understanding of the process past which we are paid. The insurance companies take effectively excluded us from understanding the source of our own incomes. This conspicuously shows the degree to which health insurance companies have near complete and unchecked control over the finances of wellness intendance in this country. If that doesn't worry y'all, information technology should.