Posts Tagged fair payment
Trying to define the market value of someone’s professional services is difficult when those services are typically paid at vastly different rates, depending on the payer, especially when the party paying is usually not the direct recipient of the service. So when an emergency physician provides clinical services to a patient, how are those services valued by different payers, and what does that say about the reasonable market value of those services?
For example, let’s say that you come to the emergency department with an acute asthma attack: you can’t breath well, and your inhaler hasn’t helped to break the attack. A pretty straight-forward case, really: your ER doc does a history and physical exam, orders up some oxygen and a few respiratory therapy treatments, some steroids, perhaps an IV to rehydrate you and get access in case your condition worsens and you need IV meds, and returns to re-evaluate you every 15 minuets to make sure the treatments are working. Two hours later, you are able to go home with a script for three days of Prednisone and a refill for your Ventolin inhaler as the one you have is running low. You get instructions on how to care for yourself at home, when to see your primary care doctor, and what you should do if the wheezing comes on again despite the treatment. Chances are, you will likely get a charge for this service from the physician for 99284 level care for around $320, give or take, if you live, let’s say, in central California.
If you didn’t have insurance, you would be expected to pay the full charge. Unfortunately, many patients can’t afford to pay; or could afford to pay but are just irresponsible, and don’t pay anything. If the patient pays nothing, the emergency physician may be able to recover about $45 from California’s EMS Fund, a tobacco settlement funded program that pays on average about 15% of the emergency physician’s fee.
However, if you were uninsured with a family income at or below 350% of the federal poverty level; or you are insured and have incurred high medical costs (greater than 10% of family income over the prior 12 months) with a family income at or below 350% of federal poverty, and you submitted a request for a discount; you would (by virtue of California law) only have to pay 50% of median billed charges of a nationally recognized database of physician charges, probably around $150.
If you were covered by your County’s new Low Income Health Program (a family of 4 making less than $41,000/year), the county may pay the emergency physician about 30% of the Medicaid rate, or a whopping $21.
If you were covered by California’s Medi-Cal program, one of the lowest paying Medicaid programs in the country: $68.
If you were covered by Medicare: the federal program would pay about $125.
If you had HMO coverage, but had to go to a closer out-of-network ER, your HMO would pay the ER doc between $140 and $250.
If you had PPO coverage, the plan would pay between $175 and $240, minus any co-insurance payment, and you would have to pay the rest up to the $320 charge.
So, for a $320 emergency physician service, the emergency physician might receive anywhere from the full $320 down to $21, and about 10% of the time – nothing. The average emergency physician in California provides about $140,000 a year in unreimbursed care.
Of course, in order to provide these services, the emergency physician has to spend $10 to pay for malpractice insurance, $30 for billing services, and additional costs for other overhead amounting to a total of about $55 for every ED patient treated (even if the payment is $0)
So, what’s the real market value for an emergency physician’s services? I would argue that it is the full amount that the emergency physician charges, as long as these charges aren’t significantly higher than what other emergency physicians in the same area charge, but then I just paid a heating technician $175 for 10 minutes of maintenance on our furnace. Others would argue differently, but their estimate would be based on their particular agenda: protecting those living in poverty, reducing costs for the employer, dealing with government budget deficits, or making higher profits for the insurer. Unfortunately, none of these advocates actually provides emergency care to anyone.
By the way, if you were suffering from a heart attack or serious injury, and the emergency physician (and his team) actually saved your life (it happens hundreds of times every day), the emergency physician’s charge would be around $800 to (rarely) $2000. So, what’s the real market value of YOUR life?
This post also appears on the blog The Fickle Finger www.ficklefinger.net/blog/
Efforts to prohibit balance billing by non-contracted hospital based physicians, especially for emergency care patients, continue to confront ACEP state chapters left and right (or should I say North, South, East and West). It is pretty clear that many legislators and insurance regulators see this as a consumer protection issue, predicated on the fact that in an emergency, most patients do not have the ability to shop for providers that are contracted with their health plan; and that when they go to their ‘networked hospital’, it is with the expectation (often built upon misleading health plan assertions) that all of the docs at this hospital will be contracted with their plan. Health plans, regulators, and legislators are also motivated by the desire to contain costs; and for the plans in particular, prohibiting balance billing by hospital-based docs is the camel’s nose under the tent for control of all physician-related outlays.
The simplest solutions equate to fee setting. Fortunately, no one seems quite willing to go there….yet. I think this is because most folks recognize that setting fees at the wrong level could lead to disastrous unintended consequences, especially given physician shortages in this country. The AMA considers the balance billing issue to be a problem with ‘inadequate networks’, but pressure on plans to include more hospital based docs in plan networks often just results in more coercive contracting. This is where the plan pressures the hospital to leverage the staffing contracts of the hospital-based docs, to force these docs to accept deeply discounted contract rates with the plans. This has unintended consequences, too. Hospital employment of physicians would certainly ensure that these docs were contracted with all of the hospital’s networked plans; but hospitals are notoriously poor at collecting for physician services, and the downsides of the corporate practice of medicine are real. You would think the marketplace would have resolved this issue; but because of EMTALA and coercive contracting and the burden of the uninsured and the lack of good regulatory oversight; the market for emergency care services is really not a fair and free market.
The conundrum is: how do we make sure that emergency care providers and hospital-based physicians subject to EMTALA’s mandate are sufficiently compensated for commercially insured services so that they can meet their mission to provide care to all those uninsured and under-insured patients, and at the same time keep insured patients out of the middle of disputes between plans and providers over the reasonable value of emergency care and hospital-based physician services? One could argue that the patients should not be excluded from the debate, but the plans and legislators easily trump that argument with tales of egregious charges by a few ‘greedy doctors’. Hospitals and plans could be required to include physicians in three-way network contract negotiations, but that is impractical. Hospitals could be forced to provide subsidies to make up for the losses incurred by hospital-based docs who are forced to sign contracts with plans at deeply discounted rates; but many hospitals are already going bankrupt supporting flagging ER on-call rosters, and really it is the plans who are making most of the profits nowadays. Plans should not be able to say: ‘the uninsured are not our problem’. Some legislators (most recently in Illinois, in exchange for honoring assignment of benefits) have proposed fee arbitration as a solution, but the arbitration of millions of underpaid non-par claims is just ridiculous, not to mention hugely expensive. Any so-called solution that does not result in the vast majority of claims being paid appropriately up-front is doomed to failure. Others have proposed all sorts of inventive solutions to balance billing that would precipitate one or more serious unintended consequences by failing to address charge outliers or relying on fee setting or ignoring claims dispute resolution or relying on impossible claims management procedures. What is a well-meaning regulator or legislator to do?
One alternative is to try to get at the issue by addressing fair contracting rates for hospital-based physicians. Some advocates of what would essentially be ‘forced health plan contracting’ for hospital-based physicians argue that these physicians should accept contracting discounts from their usual and customary charges because their hospital’s networked relationships provide them with patient referrals, and that the only real question is: what is a reasonable contract rate? There are lots of different considerations that are usually exchanged for a fee discount in managed care contracting, referrals being but one of them. Determining a ‘reasonable contract rate’ is no easy matter, especially since contracting rates are supposed to be confidential between plan and provider, so getting at valid ‘usual and customary contracting rates’ would be difficult, if not an outright anti-trust violation. There are so many other terms and conditions negotiated in contracts with plans that establishing fair-market-driven contract rate standards for hospital-based physicians is probably a hopeless cause.
ACEP has addressed the balance billing / fair payment issue by developing a set of fair payment principles and model legislation. The ‘solution’ eliminates the need for balance billing and is predicated on using usual and customary charges to get close to the reasonable market value of non-contracted services and to address charge outliers, and on the establishment of a fair, fast, and cost-effective claims dispute mechanism to address the other causes of claims underpayment for non-contracted (and contracted) services. These and related documents can be found on the ACEP website: http://www.acep.org/advocacy.aspx?id=22188 This is a complicated issue requiring carefully constructed components and backstop measures to ensure a balanced approach to balance billing and fair payment.
Considering the fragile state of the emergency care system in the U.S., and the proclivity of legislators and regulators to ‘fix’ complex problems without really understanding them first; there are no perfect or easy solutions to the balance billing / fair payment issue that can be enacted without the risk of punching great big holes in the safety net, and making it impossible for emergency care providers to fulfill their mission. ACEP’s solution is neither perfect nor easy, and not everyone will be happy with it, but it is workable, and reasonable.