Rehab for Third Party Addiction

On November 1, 2015, I divested myself from all commercial insurance and became an “out-of-network” physician. The reasons were many, but the final deciding factor was the threat of financial harm to my patients with a “punitive brand name drug charge” versus the “appropriate brand name drug charge” unless I sent a form attesting that I had tried two generics that then failed in my covered glaucoma patients. This insurance company was using payment for services as a means of controlling my professional behavior without any of the risk or responsibility for the patient’s outcome!

I will address Medicare strategies later, but first commercial insurance – and understanding how we got here. With employer purchase of insurance, bundles of patients are handed over to the lowest insurance bidder for any fiscal year: I served two terms as a Trustee for a large school district and saw first-hand this yearly churning of insurance policies. The insurance companies’ provider contracts demand at least 20 percent discounts to the physician’s usual fees by threatening loss of access to “X” number of potential patients. Comparing the discounted fees with Medicare, many signed “on the dotted line” for the commercial contract. But these contracts self-renew unless you give notice, meaning that over time little attention has been paid to the slowly increasing intrusions of the third party payers. It is therefore crucial to educate yourself on the time and resources you and your employees spend processing requests for generic substitutions, pre-authorizations, proof of insurance and deductibles, as well as requests that make you uneasy. Do this for a week and log daily results. Have your office manager pull 20 frequent procedures and office visits to compare Medicare payment rates with all of your commercial payers. You may be surprised to find that many commercial payers are paying less than Medicare for some of your codes, but it is difficult to detect; payments come in bulk, deductibles are different, and previous payment rates for the same service are not readily apparent. Your results should motivate you to become an out-of-network physician rather than subsidize insurance companies.

How best to achieve this? Pre-planning is crucial – and getting your employees on board will ensure as smooth a transition as possible. Any change is stressful, and although one need not take the leap with all insurance at the same time, I found it eliminated a “gray area” because all of my patients were charged the same fee regardless of their insurance. I posted my fee schedule on my website, included it in letters to my patients to notify them two months ahead of the change, and scripted how I wanted our new policies to be presented on the phone and in person.

We reassured our patients that we would continue to file for them (no increase in overhead as I was already electronically filing), and that they could expect a 50–60 percent reimbursement. Interestingly, many people found that it cost little more to pay me compared with using their insurance because of the high deductibles and co-pays. The most difficult job is to devise your own fee schedule. I looked at Medicare payments, commercial payment averages, and the Wasserman Physician’s Fee Reference that lists the 50^th, 75^th and 90^th percentile fees for all codes across the country. I then used this information to decide what I felt was an honest and fair fee based on resources utilized, complexity and average cost.

So, how did this work out? There was a definite temporary drop in my schedule volume, which took about six months to rebound as we filled it in with new patients who understood our practice model and agreed with my rationale for changing. There was not a month where I did not make a profit – and that was without adding new procedures or aesthetics – and the number of fax requests has dropped to almost zero, even when I write branded prescriptions. It has taken cheerleading of the team along the way to reassure them that we are building a better practice, but I stressed that our model would withstand almost anything the political environment threw at us, because it is ideal for high deductibles, cash pay and health savings accounts.

On to Medicare. I believe that every physician in the US should become a non-par provider, which means the patient pays you at the time of the visit, you file, and they get reimbursed, usually within 21 days. You have the option of accepting assignments as needed on a case-by-case basis, which does several things. Over-utilization drops significantly, and patients (and you!) become better stewards of Medicare dollars as the discussions turn from whether or not insurance pays for it to rather how much it costs and why is it needed. Finally, you get paid 9.25 percent more than the participating provider – CMS.gov will show you the figures. This extra 9.25 percent allows you to implement the final step towards returning joy to your practice – ignoring MACRA and all of the impossible mandates like electronic medical records and the Physician Reporting Quality System for the potential “reward” of a 9 percent bonus or 9 percent punishment under the ridiculous Merit-Based Incentive Payment System (MIPS). Be proud of your zero rating! The CMS itself said 49 percent of doctors will be financially hurt with the MIPS payment system – choose not to be one of them. A Cornell-Weill Medical College study estimates the cost of compliance per physician per year to be $40,000 (1). In other words, you would need approximately $450,000 Medicare baseline revenue to recover your $40,000 investment with the 9 percent reward.

In closing, we are at a time in American medicine with a great opportunity for constructive change to the distortions to our healthcare system. By divorcing yourself from third party contracts and becoming a non-par Medicare provider, you will optimally position your practice for the future and rediscover the enjoyment of your practice.