Physicians

The Great Balance Billing Scandal By Eric Novack

Novack_sm_2In California, the possibility exists that the unelected
department of insurance, under pressure from the insurance industry and
patient advocacy groups, may fundamentally alter the way medicine is
practiced. In an effort to get a work around the
disgraceful- yet very culturally sensitive- single payer bill recently
vetoed by Governor Schwarzenegger, there is a move afoot to ban the
practice of balance billing.
 
What is balance billing you say? Sounds very wonkish and unimportant. Sounds like those unethical, over-utilizing, quality-unconcerned doctors are just trying another technique to scam the ‘system’. (But I thought the familiar refrain is that we do not have a health system? …) I will explain with an example.

If a doctor provides a service, she can set the fee for that
service. If
the doctor does not have a contracted amount for the provision of that
service, she can bill the patient for that portion not covered by
insurance. Bill breaks his wrist and goes to an emergency room. Dr.
Jones comes in and ‘reduces’ (realigns) the fracture. Bill has his
insurance through Blue Cross. Dr. Jones has no contract with Blue Cross.
 
Dr. Jones bills $1000 for his time, expertise, the procedure, and subsequent care. Blue Cross pays him $600. Dr. Jones bills Bill for the balance. This is balance billing.  Bill must pay Dr. Jones the remaining $400.
 
In California, they want to outlaw balance billing.<!–
D(["mb"," This means that no matter what Dr. Jones bills, or believes his service is worth, or that a patient thinks a service is worth, it does not matter. The doctor must accept whatever the insurance company wants (or does not want) to pay.
A win for the insurance company – no angry patients who could choose to switch plans. Only angry doctors who have already performed the service they- gasp- want to be paid for.
A win for patient advocates who believe that health care is a right—regardless what effect that ‘right’ might have on the ‘obligations’ of the physicians.
I desperately want someone to provide a cogent argument that, in a free society, requires the doctor to work only for whatever the dictating outfit chooses to pay— in 60 or 90 days.
Before you answer—note that insurance contracts for patients forbid them from paying for a service privately that the insurance company has denied. For example, if the insurer refuses to ‘authorize’ a MRI, and the patient decides to just pay out of pocket, he is in violation of his health insurance contract. Hmmm.
Eric N. Novack, MD
Phoenix Orthopaedic Consultants
5605 West Eugie #111″,1]
);
//–>
This
means that no matter what Dr. Jones bills, or believes his service is
worth, or that a patient thinks a service is worth, it does not matter.
The doctor must accept whatever the insurance company wants (or does
not want) to pay.
 
The insurance companies win.  How so?  They can
control their payouts.  It is clear that the one thing that insurers
actually fear is losing ‘insured lives’.  This means people switching
from one insurance company to another.  Disgruntled with their
insurance plan, employees, companies, and individuals switch companies
if they feel the insurer causes them too much grief.  But, under this
new world of no balance billing, the only people who would complain
would be doctors.  And, I can assure you, health insurance companies
are not nearly as concerned with physicians.  Doctors cause their
‘losses’ (aka paying for work)
 
A
win for patient advocates who believe that health care is a
right—regardless what effect that ‘right’ might have on the
‘obligations’ of the physicians.
 
I desperately
want someone to provide a cogent argument that, in a free society,
requires the doctor to work only for whatever the dictating outfit
chooses to pay— in 60 or 90 days.
 
Before you
answer—note that insurance contracts for patients forbid them from
paying for a service privately that the insurance company has denied. For
example, if the insurer refuses to ‘authorize’ a MRI, and the patient
decides to just pay out of pocket, he is in violation of his health
insurance contract. Hmmm.

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KatepatriclppatientChiron Recent comment authors
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Kate
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Kate

Eric, I was wondering if I could get your input on this matter. I live in Nevada. I was insured under a self-funded insurance coverage program (“the company”). I had been paying high premiums and thought I was getting the best coverage possible. I had a baby, so the bills began to stack up. Having received Explanations of Benefits for all the physician and hospital charges, however, I assumed they were being properly paid. The EOBs indicated I was only responsible for a very small amount (copay/coinsurance). (Please note, all providers I used were contracted as preferred providers). A few… Read more »

patric
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patric

I know of a few companies that are developing a condum type sleeve that fits on a colonoscope to protect you from the prior patient that had the same scope used on them that is “supposed to be clean”. These sleeve would not be initial reimbursed by the insurance companies, so doctors may ask patients to pay $100 to have access to this sleeve. Does anyone have any comments on this?

lp
Guest
lp

>>Chiron said ” the insurance company’s “allowable” amount is … in fact, based on data from the geographic region on that specific CPT code, and what other providers with the same credentials are charging for that CPT code.” Who fed you this line of BS? The insurance company? How is it possible then that the allowable amount is often less than the Medicare amount? Do you really think providers are charging less than Medicare? Get real! This is typical misconception of people who are outside the system and completely clueless as to what is going on, yet they spout off… Read more »

lp
Guest
lp

>>Chiron said ” the insurance company’s “allowable” amount is … in fact, based on data from the geographic region on that specific CPT code, and what other providers with the same credentials are charging for that CPT code.” Who fed you this line of BS? The insurance company? How is it possible then that the allowable amount is often less than the Medicare amount? Do you really think providers are charging less than Medicare? Get real! This is typical misconception of people who are outside the system and completely clueless as to what is going on, yet they spout off… Read more »

patient
Guest
patient

What about another scenario that relates to this. I went to a psychologist for a few sessions of therapy who accepted my PPO insurance plan yet insisted I pay the $120 upfront. She then stated she would bill for the service to my PPO and whatever the insurance company paid, which she thought would be around $80, she would turn over to me. Whether or not I get $80 back, the fact is that my copay (no deductible) was only supposed to be $15. Therefore, I actually will end up paying more ($40 instead of $15) to the therapist than… Read more »

Chiron
Guest
Chiron

Eric, Just to begin, let’s revisit the whole balance billing concept. “Balance” is not the difference between what the insurance company pays, and the physician bills. It is the difference between the amount considered “reasonable & customary” and what the physician bills. So even in the absence of some kind of bizarre legislation preventing balance billing, the patient would still be entirely responsible for everything the insurance company “allows” even if it paid zero because the patient has a high deductible. E.G. The bill is $1200, and the insurance company allows $1000. Patient A has an unmet $2500 deductible, and… Read more »

John Eck
Guest
John Eck

Your comments are not accurate. A patient can get an MRI whenever he/she wants, even if his insurer denies payment in advance. Also, in April 2006, a CA court ruled balance billing was ok.

Layton Lang
Guest
Layton Lang

Texas will begin the same debate as to wheher to pass a bill to prohibit out-of-network physicians from balance billing patients. If this is passed, this will set a dangerous standard against providers. To date providers, use the balance biling of patients tactic to compel carriers to pay claims correctly and fairly. Most managed care contract arrangements are infavor of the plan and provide little to no recourse for the provider; but to cancel the contract and treat patients out of network. If plans would cease their deceptive trade practices, we would see more providers partcipating. In sum, this debate… Read more »

Ann Marie
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Ann Marie

Reading your comments with interest. The development of health care policy understandably evolves, in part, from objective data, but have any of you ever faced the harsh reality of a life threatening chronic helath condition, loss of your job and the consequent loss of your group health coverage and insurability for life? Have you spent hours and hours on the phone with health care professionals, insurance company representatives and the almost completely uninformed Medicare representatives (you can hear them clicking away to find the script they need to read to you)that you are forced to deal with if you choose… Read more »

ben
Guest
ben

What about the lawyers, malpractice rates and defensive medical practices?

colleen tabor
Guest
colleen tabor

As a concerned health care user, what does one do when one is in an emergency situation and goes to a preferred provider hospital expecting to be serviced by preferred providers and then is slapped with balance billing. The insurance will only pay 90% of what they have contracted with their preferred providers. Most common people are struggling to meet their families many needs and are not planning to get slapped with several thousand dollars worth of bills, especially when they are already paying extensively for their health care coverage. What is the consumer to do in a life threatening… Read more »

Jack E. Lohman
Guest

I am following some of the CMS activities, Eric, and if they want to reduce motorized wheelchair reimbursements by 35% it’s my guess that there is significant fat and overbilling in them. After the dust settles, and they’ve listened to the industry’s arguments, I doubt the number will be that high. >>> “But spending on these devices has increased 2700% over 8 years. Who do you blame? Doctors for being ‘too easy’, patients for being ‘too sick’, for profit companies for being ‘too greedy’, government for being ‘too corrupt’? Who would you blame?” My answer is all of the above,… Read more »

Barry Carol
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Barry Carol

“Unfortunately, Barry, getting interest groups that are for-profit corporations to do anything that would harm shareholder profits would violate their legal responsibilities to those shareholders.” Jack — Managements have wide latitude in how they manage the business. Shareholders have both short term interests and long term interests. The better managements are trying to build value over the LONG TERM and recognizes that they often must incur short term costs to do so. Wal-Mart’s recent initiative to reduce the price of several hundred generic drugs to $4 for a 30 day supply is a classic example of this. I meet with… Read more »

Eric Novack
Guest

Jack- hopefully you are following the CMS plan to reduce payments for motorized wheelchairs by 35%. The outcry from industry and patient advocates has been loud, and will get even louder as the final decision time approaches. But spending on these devices has increased 2700% over 8 years. Who do you blame? Doctors for being ‘too easy’, patients for being ‘too sick’, for profit companies for being ‘too greedy’, government for being ‘too corrupt’? If your answer to the question is ‘all of the above’, how will your single payer system solve this? You are right– there are other national… Read more »

Jack E. Lohman
Guest

Eric, I’m against for-profit health care corporations that by law must put their shareholders above all else, even the patients. Even if there wasn’t a law the CEOs of these corporations would see to it that they got a disproportionate piece of the pie. The more money in the system, the better and easier it is to extract and distribute. I’d also be against for-profit fire departments, police departments, National Guard, etc. That 1 out of 6 dollars are generated by the health care industry is not a plus, it’s a shame. A symptom of the disease, especially when other… Read more »