When I owned my medical diagnostic company I regularly met with primary care physicians (PCP) who consistently complained to me about the insanity of the insurance industry and its unfairness to them. A PCP sees a patient for two minutes or 20 minutes and gets paid the same reimbursement. Anthem/Blue Cross paid on average $60 per visit. If a doctor takes a call on a Sunday to calm that same patient — no reimbursement. I know many doctors who are on the verge, Obamacare or not, of quitting the practice due to the fact that they have spent 12 years, hundreds of thousands of dollars, and get paid at the discretion of an insurance industry that determines what is a “reasonable” rate of compensation for them.
The economics of the insurance industry must first be understood to get behind the motivations of all the players. The patient thinks they are buying complete coverage for the price of their premiums. That is false; they are buying a contract which has severe restrictions and many loopholes. The insurance company is a for-profit business. Their goal is to get the most premiums and pay the least out to the doctors and medical diagnostic companies for the services rendered.
The doctors are forced to accept the payments from the insurance companies if they are “contracted” with a carrier. Most doctors have to be contracted in order to build a practice, not because of the carriers, but because of the patients. Patients go to doctors who are in their network, and will switch doctors if they have to start paying out of pocket for the services.
Is there a problem here? Yes. A person who has spent 12 years of their life becoming a professional should not be told by a faceless functionary what they are going to be paid for the service they render.
As a divorce lawyer I charge based on the value I bring to the case. My hourly rate is determined by me. I am paid based on the amount of time and effort that I put into my cases. Some cases take up huge amounts of my time and have bills in the tens of thousands of dollars. Other cases I dispense with in a few minutes and the bill is proportional.
For doctors the compensation scheme is highly unpredictable. Each carrier pays based on their own rate schedules. This is why medical billing is so outrageous. When my company would bill $6,000 for a procedure to three different insurance carriers, we would be paid three different rates. Some would pay based on a Medicare rate of $780 a test, others would be 50 percent of the billed rate, and some would pay the full bill. Those insurance companies that paid less than my bill would make the balance the responsibility of the patient. We, like most medical professionals, would just write off the unpaid balance as a cost of doing business.
The gamble that one company would pay the full price, made the costs of writing off the unpaid balances worth it. This is the system that we have today, which results in huge medical bills that force people out of their homes because some medical providers wouldn’t write off the unpaid balances.
We also had a cash price for those people without insurance. It was dramatically reduced and most doctors also maintain a separate rate sheet for those patients without insurance. This is in reality the fair and honest rate for the services rendered.
So the problem really is how to have access to health care. We either need to have a comprehensive insurance system that covers the most people in the most economical manner, so that a doctor knows what they are going to be paid and can build a practice on those fees, or we need to have no insurance and all doctors will then charge what they can in the market, and people will get the medical care they can afford. For the majority of people that is going to be minimal care at best.
Doctors, like lawyers (who technically have a doctorate), would be expensive because of the schooling and effort it takes to achieve the degree. Frankly, doctors should be way more expensive than lawyers. The services they render, the effort it took to get to where they are in life, are much greater.
I know how valuable I am to a man who wants to see his kids, or be free of a bad marriage. I know the peace of mind that I bring, and I value it appropriately.
Doctors save lives, they too bring peace of mind, but they don’t get to value it appropriately.
If we are to have a health insurance industry, it needs to be regulated, not just for the patient’s benefit, but for the doctors also. The choice is to do away with it entirely, and I don’t hear anyone asking for that.
David Pisarra is a family law attorney focusing on father’s rights and men’s Issues in the Santa Monica firm of Pisarra & Grist. He can be reached at firstname.lastname@example.org or (310) 664-9969.