How Long Will Your Doctor Continue Accepting Private Insurance?

By Maggie Mahar, Health Beat. Posted July 18, 2008.

This article originally appeared on Health Beat.

More and more doctors are fed up with private insurers. It's not just a question of how stingy they are, but how difficult it is to get reimbursed. Paperwork, phone calls, insurers who play games by deliberately making reimbursement forms difficult to interpret ...

Some physicians have just said "no" to insurers.

What does this mean for patients? Business models vary. Some doctors charge by the minute. I recently read about a physician who punches a time clock when the appointment begins. She has calculated that her time is worth $2 per minute. Fifty-nine minutes = $118. Will you be paying cash, or by charge today? Somehow, I think the meter would make me nervous. I suspect I might begin talking very quickly. But this is only one model.

Rather than charging by the minute, some doctors make fee-for-service charges. In those cases, many physicians mark up their fees well beyond what an insurer would pay. But, they point out, they also spend more time with their patients. No one feels rushed.

A story in a New Jersey newspaper describes how physicians in Northern Jersey have begun following in the footsteps of "elite Manhattan doctors and are withdrawing from all insurance plans." The article compares fees with and without insurance. On the right, the fees that insurers typically pay for these services; on the left, the fees that Jersey doctors who don't take insurance charge:

• Mastectomy: $5,000 / $900
• Ruptured abdominal aneurysm: $8,000 / $1,800
• Routine screening mammogram: $350 / $100
• Initial neurological consultation: $400 / $100

Some Doctors Share Savings with Patients

Other physicians find that if they don't take insurance, they can cut their overhead and actually charge patients less.

Over at Revolution Health, "Dr. Val and the Voice of Reason" tells how Dr. Alan Dappen has set up his practice:

"He is available to his patients 24 hours a day, 7 days a week, by phone, e-mail and in person. Visits may be scheduled on the same day if needed, prescriptions may be refilled any time without an office visit, he makes house calls, and all records are kept private and digital on a hard drive in his office.

"How much do you think this costs? Would you believe only about $300/year?"

Dappen has streamlined his practice. It's not just that he doesn't need an assistant to keep up with stacks of insurance paperwork. In general, he keeps his overhead low, offers full price transparency, has "physician extenders" who work with him, and "charges people for his time, not for a complex menu of tests and procedures."

The key is that Dappen practices very conservative medicine.

"I believe in doing what is necessary and not doing what is not necessary," he says. "The health care system is broken because it has perverse incentives, complicated reimbursement strategies, and cuts the patient out of the billing process. When patients don't care what something costs, and believe that everything should be free, doctors will charge as much as they can. Third-party payers use medical records to deny coverage to patients, collectively bargain for lower reimbursement, and set arbitrary fees that reward tests and procedures. This creates a bizarre positive feedback loop that results in a feeding frenzy of billing and unnecessary charges, tests and procedures. Unlike any other sector, more competition actually drives up costs."

Dappen has it right about competition in the health care marketplace. Studies show that in areas where there are more hospitals competing with each other, hospital bills are higher. This is in part because hospitals jousting for market share all invest the same cutting-edge equipment. The only way to pay for it is to use it. So they do more tests and more procedures, driving hospital bills higher.

Dappen, who practices in Fairfax, Va., told Dr. Val Jones that "after building a successful traditional family medicine practice he felt morally compelled to cease accepting insurance so that he could be free to practice good medicine without having to figure out how to get paid for it. He noticed that at least 50 percent of office visits were not necessary -- and issues could be handled by phone in those cases. Phone interviews, of course, were not reimbursable by insurance."

Dappen also casts a skeptical eye on the pricey annual physical: "The physical exam is a straw man for reimbursement. Doctors require people to appear in person at their offices so that they can bill for the time spent caring for them. But for long-standing adult patients, the physical exam rarely changes medical management of their condition. It simply allows physicians to be reimbursed for their time."

Again, Dappen is spot on.

"Cutting the middleman (health insurance) out of the equation allows me to give patients what they need without wasting their time in unnecessary in-person visits," Dappen explains. "This also frees up my schedule so that I can spend more time with those who really do need an in-person visit."

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Maggie Mahar is a fellow at the Century Foundation and the author of Money-Driven Medicine: The Real Reason Health Care Costs So Much (Harper/Collins 2006).

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