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How Long Will Your Doctor Continue Accepting Private Insurance?

Doctors are getting fed up with private insurers. Here's a look at what out-of-pocket costs could look like for patients.
 
 
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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."

How many readers have found themselves sitting in a doctor's waiting room, not because they were sick, but because they needed to renew a prescription? Since insurers don't pay doctors for the time it takes to read an e-mail or to take a phone call and then write a new prescription, many doctors insist that patients come in whenever they need a renewal -- that way, the doctor can bill the insurer. This makes sense if the doctor needs to check your blood pressure to see whether the medication is working. But if he's simply going to chat for a few minutes and write the script, the visit is a waste of time.

"Health insurance is certainly necessary to guard against financially catastrophic illness. And the poor need a safety net beyond what Dr. Dappen can provide," Jones observes. "But for routine care," a practice like Dappen's "can make heath care affordable to the middle class, and reduces costs by at least 50 percent while dramatically increasing convenience."

Concierge Medicine

Dr. Val calls Dappen's practice "concierge medicine for the masses." Other physicians practice more traditional "concierge medicine:" customized, round-the-clock care for the elite.

In California, the Ventura County Star reports that local doctors opting out of insurance "spend more time with patients -- and make more money."

Some doctors charge patients an annual "membership fee" -- rather like the fee you might pay to belong to a country club.

"I wish I had done it a long time ago," says Dr. Edward Portnoy. An internist, Portnoy once had a practice of about 2,800 patients. Now he sees roughly 380 people but takes home "about the same profit" thanks to the $1,800 membership fee that each patient pays yearly.

Portnoy spends roughly twice as much time with each patient as he did when he accepted insurance. He explains that he has "more time to do intensive physicals and help patients stay healthy, rather than running from one crisis to the next like a war surgeon doing meatball surgery."

At Dr. Stanley Frochtzwajg's family practice in Ventura, patients don't face annual fees but pay "at the office for whatever services they receive," the paper observes. "A routine office visit is about $80." Patients are then given the paperwork to submit to their insurance companies themselves. "One patient said she ends up paying about 30 percent of the bill but is happy with her care and willing to pay for it."

The paper reports that doctors "don't really like the term 'concierge' or 'boutique' medicine. They prefer labels like personalized, preventive care."

That's understandable; they don't want to sound snobbish. But in truth: "There's not a lot of people who can afford it," says Anthony Wright, executive director of the consumer advocacy group Health Access California. "The reason some people call it boutique medicine is that this is for a well-to-do clientele."

Wright is concerned: "I don't think systems that shift more burden onto the patients are the answer to our broken system or will evolve into more than an isolated alternative. ... The trend of boutique medicine sends the consumers in the direction of you're on your own. Everyone for themselves."

On the other hand, the paper notes, "Carol Miller of Thousand Oaks thinks the $3,600 she and her husband pay in annual fees to see Portnoy is worth it because it brings peace of mind. The money covers an annual physical and a battery of screenings for everything from Alzheimer's to sleep apnea. The fee also covers follow-up that focuses on preventive care.

"There are other perks. People in Portnoy's waiting room find a basket filled with Cliff bars, crunchy peanut butter and chocolate chip bars. Tea and Snapple is served."

Crunchy peanut butter and chocolate chip bars? Is this part of the emphasis on preventive care?

Some worry about what the larger trend means. Are the Millers, who receive an annual "battery of screenings," being overtreated? If insurers reimburse for even 70 percent of unnecessary treatment, are we all paying for boutique medicine?

Dr. Bob Gonzalez, medical director at Ventura County Medical Center, also talked to the reporter and confided that he worries "that less reliance on insurance means fewer people getting health care. They won't be able to afford it."

The specter of more doctors downsizing their practices and seeing fewer patients also alarms Gonzalez. It means patients won't be able to find any doctors, or they could be dumped on an already overburdened doctor.

So yes, he said, more money, less insurance and more time with patients may be good for individual doctors.

"But whether it's good for society or good for patients is the overall question."

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).