Saturday, October 8, 2011

Middle Man Payment Plan?

Healthcare billing is a very complex issue, mostly because people are familiar with purchasing things with money or credit in full disclosure of costs, not the complex system of insurance billing.  

People pay a lot for insurance, and then expect insurance to cover the cost of care, but they often do not realize the details of their contracts with insurance - AKA the Middle Man.  

Patient <--> Insurance <--> Doctor Office

This is  a long post, so bear with me... it is such an important but complex issue. I am only touching the surface here.  If you can't read the whole thing, at least hit the highlights at the bottom!
Typical purchase:  Buying a shirt. 
  • I select my favorite store. 
  • I look through the rack of shirts and pick one that is the right size and color.
  • I look at the price tag and decide if I want it.
  • Maybe I have a coupon or it's on sale - I can calculate the discount!  
  • If it is the right cost and meets my needs, I make the purchase. I can choose cash, check, credit card.  Maybe I have a gift card! 
  • If it isn't right for any reason, I keep shopping.
Healthcare purchase: Full of Unknown costs... making the decision to "purchase the product" much more difficult.  
Product? What product?
  • "Product" is the expertise and knowledge of the healthcare professionals. 
  • There is nothing to take home to show.  
  • Time spent with the provider may or may not end up with a prescription or other identifiable thing that shows what the money was used for.  
  • You might leave the office with as many (or more) questions because final diagnosis of a problem can be a process that takes time.
  • You might disagree with the diagnosis or treatment given.  You don't have the option to choose another shirt. You already bought this one when you signed in.  You could buy another (2nd opinion) but you'd have to pay for both.  I hope you talk about these concerns at your visit... don't just worry that we "missed" something or did it wrong! 
Costs are becoming more important to the consumer as many insurance companies are putting more financial responsibility on their policy holders and covering less medical costs.  So it would be best if we let you know our fees and your payment amount before we see your child, right?  Well, there's a catch to that.  
The catch?  I don't know what your insurance contract requires of you, so it is impossible to accurately tell you what your real cost will be until after my office gets the insurance adjustment.  I don't know exactly what the insurance company will pay and what they'll discount ... my billing staff can make an educated guess based on past experience with a company, but it varies from case to case.
In this difficult economic time this places financial stress on families. I understand this and am happy to work with families on payment plans if they let me know their hardships, but often they simply yell that I billed it wrong. Because of contracts between my  office and the insurance company and the patient and the insurance company, there are many rules and laws regarding how to bill and collect payment.  

Back to Healthcare "purchase":
  • Patient/consumer uses a service.
  • Place of business (ie doctor's office) submits a bill based on well defined codes.  This bill doesn't go to the patient.  It goes to the Middle Man.
  • Middle Man (insurance company) reviews the bill submitted.  
  • Middle Man discounts each item to what they believe is a reasonable fee.  
  • Middle Man pays the part of the adjusted fee that they are contracted to pay. 
  • Middle Man sends us this information and we write off the discount they applied and bill the patient/consumer the difference.  
  • We have provided a service and it is several weeks to months before any money is collected. Anyone in business knows the consequences of this timeline of money collection. 
  • Payment collected from the doctor's office depends more on what the insurance company adjusts the bill to rather than the original bill itself. 
  • Note: although the bill comes from us and is due to us, it is a result of your insurance plan/contract!  In general, the less expensive your plan for monthly health insurance, the more you are responsible to pay with each use.
Let's run through a couple scenarios of this Middle Man payment plan.

First scenario: Well visit plus additional concerns. A child is scheduled for a well visit but woke with a fever and cough.  He has an insurance company that requires a copay for each issue seen in the office.  We provide the care for a complete well visit (monitoring growth, development, nutrition, safety, reviewing vaccinations, etc) and bill for that service. We also ask further questions regarding this illness and symptoms and discuss management for the fever and cough.  Addressing and Documenting these issues (after all, the kid isn't well) is important.  When the bill is submitted to the Middle Man, the insurance company sees that the child is sick, so tells us to bill the family for a 2nd copay.  Our contract with this insurance company requires this, so we must bill to the family.  By law we must follow our legal contract.  To fail to do this is insurance fraud.  I'm not willing to go to jail to save a family a few bucks.  Sorry. I love my patients and want to help, but I don't want to have to go to jail for trying to do a good deed.

Second scenario: Screenings and tests sometimes, but not always covered. Another child is in the office for a 3 year old well visit and is due for a vision screening.  We know that most people either don't have vision coverage or their insurance only covers one vision test every 1-2 years.  The standard of care (ie what should be done if we want to provide the BEST care) is to do the vision test at this age.  This causes many possible scenarios, most of which equates to a headache for pediatricians:
  • If a patient passes a vision screen done at our office and the insurance pays:  great. Rare, but great.
  • If a patient's parent refuses the vision screen in our office (or fails to take the child to the specialist when we refer) because they feel the eyes are normal and don't want to pay, but later learn there was a problem that should have been addressed earlier for better outcome: parent is upset with us that we didn't insist on screening. The child also suffers from an undiagnosed vision problem.  
  • If a patient passes a vision screen and insurance applies the charge to the deductible: the parent is upset at us for charging something "that wasn't needed. I knew the eyes were fine." (Note: we are the bad guy because the bill comes from us, despite the fact that it is their insurance company that chooses this payment method.)
  • If a patient fails our vision screen and insurance pays us: parent is upset because we used up the once/year (or every other year) coverage, and now they pay out of pocket for the ophthalmologist.
  • If patient fails our vision screen and insurance doesn't pay: parent is VERY upset because they must pay twice! (us and ophthalmologist) Why is this? Screenings by nature pick up some normals so they don't miss any abnormals. If a child fails at our office, they need to be seen by a specialist to confirm if there is or is not a problem.  Two visits by two providers with two fees.  Ugh!  
So... how many of these vision screening scenarios ended up with all happy?  ONLY ONE RARE CASE!

Please read your policies and ask questions to your insurance company before visiting the doctor so you know your financial responsibility.  Plan accordingly to save some money for healthcare needs.

One major issue we are seeing is described in scenario #1 above.  We follow the use of CPT codes as published by the American Medical Association. To bill both a sick and well visit on the same date of service, we add a Modifier -25 to identify separate preventive medicine service (well child exam) and a problem-oriented service (ear infection, hurt foot, earwax removal, etc) on the same date of service. This is the national standard, but not all insurance companies cover it the same.  Middle Man may tell us to charge the insured family a second co pay.  Why?  Because they want their members to pay their contracted portion of each visit.  Simply saving up multiple issues to be seen on the same visit day does not result in a person being less responsible for their portion of medical costs agreed to in a contract.  You are responsible for what your contract states.

Or maybe you simply have a high deductible plan.  You will be responsible for payments until you reach the magic number in your contract.  You have the benefit of lower monthly premiums, but expect to pay more each time you need medical care.

Another issue is labs.  Some insurance companies ONLY pay for labs done at their contracted lab. This means that quick Strep throat test we did gets charged to you.  Unfortunately we didn't know this from your insurance card.  Is it worth it to you for the convenience of knowing results right away to pay for the rapid strep, or would you prefer to wait for the lab to give culture results in a couple days? If this is important to you, call your insurance company.  Tell us before we do the test!

Billing codes separate out parts of services/product. Immunizations are a great example of this. There is the vaccine component, and there is an administration cost to cover costs associated with a vaccine:

  • vaccine insurance -- they are expensive and need to be covered!
  • temperature control of the refrigerator--did you know if the temp gets too high or low it alarms so our vaccine doesn't become ineffective? After hours one of us is automatically paged and we have to go in to see what is wrong?
  • incidental supplies like syringes, needles, bandaids-- all the little costs add up!
Some insurance companies pay only the vaccine component, but not the administration fee. It goes toward the deductible.  Do you know how your plan works?
What does this all mean?
  • We would like to provide the best care to our patients in a timely and economical manner, but we need your help identifying what you want done and not done due to costs before your visit. 
  • If we address well and "not well" issues on the same day, it might mean a 2nd co pay or deductible for you to pay.  Some issues deserve a separate visit due to the nature of the concern.  
  • We encourage you to do the recommended follow up labs and tests discussed at visits for the best medical care of your child.
  • If your insurance company tells us to write off a portion of your bill, we do.  It is illegal to balance bill a patient.
  • If your insurance company tells us to bill you for a service, we do.  It is illegal to write this portion off.   
  • If you have a high deductible plan, save the money you save on premiums monthly in a special account for use when needed. 
  • If you have any questions about your bill, please feel free to call our billing department to discuss. Please choose nice words with our staff. They are only the messenger!


  1. This was a really useful article. Thanks for taking the time to write it. It's easy to only see things from our own point of view, so hearing about your issues and concerns as pediatricians can only be beneficial for everyone

  2. Insurance is a frustrating subject from all points of view. It is so difficult to understand and even more difficult to try to explain! I'm glad you found this useful! DrS