How Do Doctors Get Paid?

The following was taken from an article written by Dr. Megan Lewis with the above title. This is what happens when doctors become coders for the apparatchiks of Medicare and the insurance companies.

Imagine going to your favorite restaurant. You are greeted at the door by the hostess, who seats you and takes your drink order. You order through your favorite waiter, Andrew, who recommends the special of the day: prime rib with a dinner salad and a chocolate torte for dessert. Soon after, the food is brought out and it is delicious! You have time to enjoy your food. You then receive the bill and pay for your meal, returning to your home satisfied, all your dining needs met. Let’s say, for simplicity’s sake, you paid $75 for this meal: $50 for the steak, $10 for the salad and $15 for the dessert.

A change then occurs in the restaurant industry. A new form of eating out has been adopted. Your favorite restaurant has now contracted with over 30 different “restaurant insurance companies.”

Anticipating another pleasant dining experience, you return to the restaurant with your new “subscriber’s card.” You pay your $5 “copay.” You sit in the foyer of the restaurant and wait an hour, even though you made reservations. A harried Andrew greets you at your table and quickly takes your order after you briefly glance at the menu. The food arrives at your table. As you take your second bite, Andrew informs you that “your time is up” and the table is reserved for another party. You are escorted outside with your hastily boxed leftovers.

What has happened to the restaurant? Behind the scenes, the restaurant owner has learned some tough realities of the “new system.” During the first month of taking insurance, the owner sends a form to the insurance company requesting payment for the $75 dinner. The contract with the insurance company says they will only pay $45 for the $50 steak, but the owner decides that the extra customers brought to the restaurant by contracting with this insurance company will more than off-set this small loss.

The first attempt at collecting the $75 for the full meal is returned unpaid with the note that it was rejected due to a “coding error.” The forms for payment from the insurance company require the owner to list the parts of the meal, not by name, but by numerical code. The owner had listed the salad by the wrong numerical code. No suggestions for the correct code are offered, so the owner purchases a series of books, at a cost of $500, to learn how to assign the correct code to the different parts of the meal. These books will need to be bought annually due to the constant changing of the code numbers. After 30 minutes of study, the owner realizes the dinner salad should be coded as 723.13, not 723.1. The salad it turns out, needed to have 2 digits after the decimal point, indicating that it was a dinner salad, and not a “main course salad.” The owner mails the corrected form.

In response to the second request for payment, the insurance company does not send a check, but a detailed questionnaire: Was garlic used in seasoning the steak? Was it necessary for garlic to be used for this particular recipe? Did the restaurant ask for permission to use garlic from the insurance company before serving the steak? Why was salt, a cheaper alternative, not used instead? The owner submits the answers, emphasizing that the garlic is part of a secret family recipe that made the restaurant famous.

The owner waits another week (it has now been 3 weeks since the dinner was served). The check arrives three and a half weeks after the dinner was served. The check is for $20 and states that it is specifically for the steak. The check also comes with a letter stating that no billing of the patron may occur for the salad, but no other explanation is enclosed. No mention is made of the $15 dollar dessert.

After calling 4 different phone numbers at the insurance company, the owner gets to ask why, when the contract says the steak will be paid at $45, has the check only been written for $20. And what happened to payment for the $10 salad and the $15 dessert?

As it turns out, this patron’s insurance contract only pays $45 when the patron has reached the deductible. The remaining portion of payment for the steak must now be billed by the restaurant to the patron directly. The dessert, the owner learns should have had a “modifier” number put with its particular billing code when billed with the steak and the salad, as opposed to being served separately.

Realizing that insurance billing is quite a bit harder than anticipated, the restaurant owner hires a company that is paid 5% of any money collected to specifically make sure these coding errors do not occur again, and to follow up on payment rejections. For an additional $99 a month, the billing company will “scrub” the forms submitted for payment to make sure specific clerical errors will not cause future delays in payment.

The owner must now lay off the hostess and the bus boy to pay the billing company, so these duties are now added to the waiters’ other responsibilities. In the meantime, the owner has also had the waiters take on the job of answering the phones due to the now high volume of phones calls from patrons questioning why they are receiving a bill for meals that they ate over 2 months ago, and why did their insurance company not pay for this portion of the meal? The extra work is now resulting in longer times the patrons must wait to be seated, and grumblings from the waiters who “were not hired or trained to do this kind of work.”

The owner now realizes that so far he has received only $25 on a $75 dinner. The remaining $30 billed to the patron is now in its third mailing, with the first two requests for payment going unanswered by the patron. The restaurant owner realizes a collection agency must be employed in order to have any hope of receiving any portion of payment from the patron.

Each meal served now costs at least an additional $20 due to the added overhead of the billing company, coding books, and the collection agency. These added expenses have nothing to do with cooking the food or providing any direct service to the restaurant’s customers.

Service to the restaurant’s patrons has been compromised with these changes as well. The owner has now over-extended the waiters, who have taken over the roles of hosting, phone answering and table bussing.

In order to meet the costs of providing fine dining, the restaurant owner must now seat twice as many patrons in the same amount of time.
What was once an outstanding business that focused on fine dining and customer service has now been turned into a business of trying to get paid.
Alas, I wish this were a fictional tale, but it is not. The only fictional portion is that this is not your favorite restaurant, but your favorite doctor’s office, which is responsible not for meeting your dining needs, but those of your health.

Postscript: The above was written in 2009 and things have worsened since then. For example, according to the magazine Medical Economics a family practice physician now spends on average 19 hours a week on the phone with insurance companies doing prior authorizations!

– Gary Gallo, MD