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September 16, 2015

The Business of Medicine

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Stanley Kapuchinski, MD

Punta Gorda, Florida

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Most psychiatrists (and physicians in general) receive little information in their training about the business of medicine. This is particularly problematic if one decides to go into private practice, as I did.

Issues that enter one’s life in private practice include learning where to get the best loans, finding an office, buying office equipment, hiring and managing staff, handling accounting records, selecting malpractice policies, and dealing with health insurers like Medicare (including becoming ‘approved’ by insurers and facing the hassle of prior authorizations). Throughout one’s time in practice, questions arise such as which insurers reimburse better and in a timely way, what electronic billing/prescribing/charting companies are the best, what should I look for in joining another practice or taking on an associate, and should I continue to take insurance or go to cash only.

By virtue of finishing medical school and training, doctors believe ourselves smart … and we are. But being smart does not mean we know everything. Generally, I have found doctors to be among the worst businesspeople because we make dumb mistakes in areas where we really don’t have much expertise.

I know one young doctor who, when I asked how his practice was going, became indignant. He felt that talking about the business side of his practice was beneath him.

“I’m here to help people,” he bristled. I know he’s dedicated and well intentioned. We all become physicians so we might help people. That’s not the issue.

Someone once said to me, “No one watches your money better than you do.” We can be dedicated to helping, but we also need to be circumspect in how we run our practices as well as informed about how we (and accountants and financial advisers) manage our hard-earned money (eg, paying off loans, investing, building our savings, handling mortgages, planning for vacations).

I’d like to have a forum to discuss the business of medicine with colleagues and share what works and what doesn’t.

To address one issue I raised above, I have not gone to an all-cash basis in my practice but certainly have considered it. Dealing with the various health insurance plans is generally an onerous task. Some years back, an employee of mine who had worked for one of the insurance industry leaders shared that her instructions there were to take a certain percentage of daily claims and shred them. The object, of course, was to delay payment as long as possible and keep the money in the insurer’s accounts. Prior to electronic billing, I received claim forms that had been rejected because I had not kept my signature within the lines or didn’t sign the form with the signature that the insurer thought was right. With electronic billing, those wily contortions to avoid payment have not really gone away. Now, some insurers simply forget to pay or dance around and say certain things aren’t covered.

Dealing with insurance companies requires a lot of personnel time and adds much overhead cost. Hence, some of my colleagues have gone to cash-only practices and believe that the patients they lost are made up for by the new patients who are willing to pay in full. A compromise is to accept patients who have insurance but, instead of dealing with insurers yourself, give patients a superbill so that they submit the claims.

My feeling is that physicians have become servants of the insurance companies—passively accepting the limitations decreed and the payments accorded per the insurers’ dictation—all under the guise of cost effectiveness, but medical costs are going out of control.

I have a fantasy that if a vast number of doctors refuse to recognize health insurance, then insurers would disappear since we really control their existence. What do you think?

Financial disclosure:Dr Kapuchinski had no relevant personal financial relationships to report.

Category: Business
Link to this post: https://www.psychiatrist.com/blog/the-business-of-medicine/
Related to The Business of Medicine

10 thoughts on “The Business of Medicine

  1. Medical insurance companies seem to be (in their estimation) on to a good thing by requiring doctors to justify the use of some medications. The onerous task of filling out the forms takes easily 10 hours a week for me and my staff. I can understand an insurer asking for justification to pay for a script for an expensive medication. However, I’ve had experiences where the insurer wanted a prior authorization for a generic antidepressant that costs $4.00 without insurance at Walmart. I believe the trap here is to tell the patient to go to Walmart’s…but then the insurer pays nothing.
    I find it abhorrent when I’m told that the dose of a medication I prescribe does not meet the ‘guidelines’ of the insurer—usually more than an average dose. When I ask why I’m not questioned when I prescribe less than an average dose, there is no answer.
    Outside of opting out of the insurance plans, I would be interested in any ways someone has eased the prior authorization burden.
  2. I read an article in ‘The Wall Street Journal’ the other day. It was titled “Doctors Could Be Penalized for Ordering Prostate Tests”. The article noted that this measure is …”part of continuing ways to identify and reward value in healthcare.’
    Notwithstanding whether ordering PSA’s are worth it or not and he fact that I, as I psychiatrist, don’t order too many PSA’s, I thought of how I now seem to work not for myself but for medical insurers. Sure, I can prescribe whatever I like for a patient but the ‘Tier’ system really dictates whether a patient can afford the medication. How often I see a patient can label me as an outlier. I have a psychiatrist friend who treats very difficult patients requiring close care. He now is labelled an outlier because he’s rendering too much care per the insurer. I treat a fair amount of ADD patients. One recently got a letter from her health insurer telling her that she must now go to her primary MD for her ADD medication and treatment since the insurer felt that a specialist really wasn’t needed to do this.In this case, I don’t even work for the insurer, I’ve been fired because I know too much? Or is it that they have to pay for that extra doctor.
    Progress has lead us to prior authorizations to justify why a patient who has been stable on a med for 3 years should keep taking it. Progress has led to state how many times is ‘fair’ to see a patient. Progress, apparently for other MD’s has led to when they should or shouldn’t order a PSA. I don’t think I’m working for myself anymore.
  3. We are owned by insuring companies! There is no doubt about that. They have taken over from medical schools to decide on how to practice medicine and , since the majority of MDs don’t seem to be aware and/or interested, this racket will continue endlessly, till the last MD standing! We need to form a (syndicate) union to fight for what we were chosen to do and get the suckers out of our hair!
  4. Since this is ax time and I still subscribe to the notion that MD’s as a group are poor businessmen, I’ll submit the question as to how many readers know what the difference is between your marginal and effective tax bracket. Motley Fool notes that
    marginal rates, effective rates, and misunderstandings are rampant.
    Many people mistakenly assume that if they’re in the 25% tax bracket, all their income will be taxed at 25%. That’s far from the case. If you’re a single filer, with $50,000 in taxable income, you are in the 25% tax bracket. But you’re also in the 10% and 15% ones. The preceding tax brackets show that the first $9,225 of your income is taxed at just 10% and the next $28,225 is taxed at 15%. It’s only the income above $37,451 that’s taxed at 25%. In this case, your marginal tax rate would be 25%. It’s the rate at which your next dollar (or your last dollar, depending on the definition being used) is taxed.

    So if you’re actually paying several different tax rates on different sums, what’s your overall tax rate? Well, your total taxes calculated from the brackets above amount to $8,293.75. If you divide that by your taxable income of $50,000, you’ll get 17%. That’s your effective tax rate — and it’s probably the rate that should matter most to you, because it reflects what you actually paid. Your marginal rate just reflects the highest rate at which you paid, the rate at which your last dollar and next dollar are taxed.

    If you hear someone grumbling about being in the 39.6% tax bracket, know that it’s probably only his or her income above $413,200 that’s being taxed at that rate.

    If you are making any income despite insurance companies working against that, you might be interested in what tax bracket you’
    re in for next year.

  5. Does anyone sincerely believe that doctors could unite and no longer subscribe/be parties to/be at the mercy of the health insurance companies?
    I wonder if the doctor looked at what he/she spends on overhead to do the insurance paperwork (prior authorizations, justification for treatments, etc) along with the frustration hassle, one could charge fees that would allow a decent living but be rid of this greedy giant.
    Some doctors have unwittingly become slaves of an insurer in that they have a large population of patients in one or two networks. This makes them obligated to do whatever the insurer says at the risk of losing the bulk pf their patients if they do not adhere to the insurer’s demands.
    Practicing medicine has become defensive in our having to explain to many what we d and why we do it—often to uninformed or very rigid or power driven people all having an ax to grind.
    Would anyone be interested in ridding ourselves of the health insurance industry?
  6. Are we practitioners so dumb? We watch insurance companies continue to dictate what our work is worth, make us ask permission to prescribe necessary meds and, in some situations, how much treatment we might actually give a patient?
    A recent APA online article titled:
    “Bigger Insurance Companies: Better Care or More Profit?

    Did you know that only 8.5 cents of every dollar you spend on health care actually goes to your physician? According to Joseph Valenti, M.D., of the Texas Medical Association the proposed mergers of health insurance companies into three major carriers will result in higher premium prices, increased out-of-pocket costs, reduced benefits for essential services, narrower networks, and longer delays for shorter appointments.”

    The article chides us to speak out against big mergers. It seems to me that we might simply stop accepting insurance. We have all witnessed our paying more for less. Companies supplying health insurance look for the cheapest package which doesn’t contain much with more taken out of salaries. It seems everyone is getting a bigger cut of the pie except patients and providers. We are an apathetic lot and insurance companies rely on that.
    Insurance companies exist only because we let them by our support.

  7. Are we practitioners so dumb? We watch insurance companies continue to dictate what our work is worth, make us ask permission to prescribe necessary meds and, in some situations, how much treatment we might actually give a patient?
    A recent APA online article titled:
    “Bigger Insurance Companies: Better Care or More Profit?

    Did you know that only 8.5 cents of every dollar you spend on health care actually goes to your physician? According to Joseph Valenti, M.D., of the Texas Medical Association the proposed mergers of health insurance companies into three major carriers will result in higher premium prices, increased out-of-pocket costs, reduced benefits for essential services, narrower networks, and longer delays for shorter appointments.”

    The article chides us to speak out against big mergers. It seems to me that we might simply stop accepting insurance. We have all witnessed our paying more for less. Companies supplying health insurance look for the cheapest package which doesn’t contain much with more taken out of salaries. It seems everyone is getting a bigger cut of the pie except patients and providers. We are an apathetic lot and insurance companies rely on that.
    Insurance companies exist only because we let them by our support.

  8. For those who bill Medicare and others for services rendered, I am enclosing an article written by a man who is attempting to help docs transition to electronic billing and coding changes to get the best reimbursement from a system that doesn’t want to reimburse.
    See the following:

    This is a call to all physicians of every specialty and any medical provider that accepts insurance. The reimbursement model for your services is radically changing and it is changing right now! This is not about some fuzzy date in the future. It is now! Everything that is done today in 2016, will affect your reimbursement in 2 years. There is no going back and there is no alternative. As a matter of fact, you current reimbursement is based on what you did 2 years ago in the CMS Medicare system. As long as you continue with traditional straight forward fee-for-service that you are used to, you will be negatively affected. Fee-for-service means: you perform work; you have the work coded and documented; you send it in as a claim to your insurance carriers; and you get a check.

    These changes are especially true with Medicare, which is currently leading the charge; but already all other payers, including all commercial plans and even Medicaid, are following suit. So what is this change? The change is about Value-based care and quality measures. Reimbursement is getting more and more tied to quality measures and will soon make up 50% of Medicare payments by 2018.

    There is good news. You can adjust to the new models. You can avoid penalties or even better, you can get incentives on top of your claims reimbursement and actually increase your revenue. The trick is to know how your payer views proper care and how, by altering your services, you can be rewarded. By modifying what you do to optimize your process and workflows to match what your payer wants to see, you will be reimbursed instead of having your claims questioned, reduced, or even rejected.

    There is better news. CMS realizes that doctors are not robots. They realize that good care is only partly about evidence and that a good portion of it is about innovation and applying the tools you learned to make your patients well. You are artists of good health care and you should be recognized for it. You are individuals and at the top of our society. Everyone knows that. That is why the new systems of reimbursement contain ways that, if you know where and how, you can leverage them. You can far surpass any revenue you’ve ever made before and still be the expert physician your patients want you to be and that you know you know you are.

    Here is a website URl that explains it well. Be warned, this is a fair overview of a 972 rule that is set to be finalized to become law on June 1. It’s not easy reading:

    https://ehrintelligence.com/features/what-is-macra-and-what-it-means-to-providers-ehr-technology?elqTrackId=804ffbfc9a42463f92af70c1793787c5&elq=26515a13a48541c786f6ce360c0672f5&elqaid=144&elqat=1&elqCampaignId=68

    And here is a link on materials you might find useful to under alternative payment models and Accountable Care Organizations (ACO)’s with a focus on payment models.

    http://www.HCP-LAN.org

    There are organizations like mine, Suncoast RHIO, – http://www.SunCoastRHIO.com – that can help see you through the weeds. We pride ourselves on helping physicians and hospitals work their way through the quality measure jungle. You can learn about Value Based Modifiers, Quality Resource Reports, Meaningful Use, PQRS, Physician Compare, and many more on your own, or you can work through it with us, as a Quality Office Managed Services Organization, a partner that cares. In any case, know that there are resources out there to help you and we are not all in it to take your hard earned money from your practice. We love our doctors and we want to help. I hope to write more on these trends in coming posts. Thanks for reading.
    Lou Galleria

  9. OK
    So with Britain exiting the EU, the stock market has plummeted.
    Monday is coming and half of you believe it will go down further so you want to sell now, wait and buy back at a lower price.
    Half of you want to hold on tight because the market will come back.
    Anyone invested in gold as a hedge?
    Are the young doctors into bonds which don’t pay much over a long span.
  10. I assume most of you, as law-abiding citizens who want to pay their fair share towards make America great, have paid your taxes.
    Did you put aside money for an IRA (traditional versus Roth) and know the difference between the two?
    Every year, you should be ‘maxing out’ the amount that you can contribute because retirement time will come all too soon.
    Many doctors, because they are so smart in so many ways, think they are also smart in handling their finances. And some are and many are not. Especially in these uncertain times, the advice of a financial planner (NOT stock broker) can be very valuable.
    I favor the financial planner who charges you annual percentage rate based on assets handled. Essentially, if you don’t make money (i.e., increase assets), he doesn’t make more money. This is in contrast to the guy who feeds off of charging you for each trade…and his advice, of course, to trade.

    Many of us also avoid making out wills and worse, avoiding estate management should we die.
    Where I used to live in Connecticut, the law was that if you died without a will, 1/2 of your money went to the state.

    SK

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