Charging Patients Extra Fees May Hurt, Not Help
Medical Economics Feature – May 2013
Tex Med. 2012;109(5):27-31.
By Amy Lynn Sorrel
As physician practices struggle to stay viable, some have resorted to charging additional patient fees to make up for declining payments, rising costs, and scarce time that stack the odds against many doctors.
The fee may come in different brands and sizes, labeled as an annual medical home fee, administrative charge, or direct payment for a membership of sorts for insured patients to stay in the practice.
But the idea is the same: Physicians are looking for a way to continue to give their patients high-quality, personalized care, while filling in the economic gaps created by the many things doctors say today's health care system expects them to do but tends not to compensate. That could be anything from paperwork and prescription renewals to after-hours consults.
Unlike concierge medicine, the extra-fees option appears to allow practices to continue seeing patients of all insurance stripes.
While it sounds easy enough, some experts caution it may come with hidden consequences, and a recent federal enforcement action on the matter provides a cautionary tale.
"If you are charging a fee just to keep the lights on, or continuing to do what you did before but putting a fancy name on it, that's a problem," says former TMA staff attorney Hugh M. Barton, of Austin.
Still, others attest it can be done right, albeit carefully, and can free physicians up for patient care.
Aside from allowed deductibles and coinsurance, the Centers for Medicare & Medicaid Services (CMS) strictly prohibits billing for services already covered by government programs.
Commercial health insurance contracts typically have similar provisions. Clauses barring balance billing also may come into play.
But payers generally allow physicians to charge patients for noncovered services when they notify patients in advance. Medicare refers to this as advance beneficiary notice (ABN).
A 2010 TMA white paper on the subject warns, however, that such a notice is not blanket permission for doctors to charge patients when they aren't paid for something.
"Physicians should be extremely careful in the use of ABNs, as charging a [Medicare] beneficiary for services the government considers to be covered (without regard to whether a payment by government is made) is a violation of the terms of participation and Social Security laws (regardless of whether one is or is not participating in the Medicare program)," the paper says. The only exception would be for physicians who have filed a formal opt-out affidavit so they can privately contract with patients.
The whiter paper, "Advance Beneficiary Notice of Noncoverage – Charging for Services Not Covered by Medicare," is available in the TMA Medicare Resource Center.
The difference between what is covered and what is not, however, can be murky.
What doctors may consider additional services in the form of administrative tasks, for example, may in payers' eyes already be included in the covered services. That leaves what Mr. Barton says is a fairly narrow window of opportunity for physicians to charge for anything they might consider "extra."
Even now, health plans don't always pay for covered services if they don't consider them medically indicated, or if the payment is "bundled" with other services.
On the flip side, administrative activities like preauthorizations and filling out forms may not be considered medical services at all.
"If there were a recognized set of tasks that a practice performed that was significant in terms of time and complexity, and payers were willing to recognize that, they might see it as a separate service. Whether it would be covered or not is another matter," Mr. Barton said.
He pointed to a pilot within the Texas Medicaid program that pays primary care practices an extra fee for case management – having a dedicated, certified case manager to follow patients, make sure they keep their appointments and take their medications, and connect to any needed specialists.
Blue Cross and Blue Shield of Texas requires physician practices to sign an agreement before charging a formal medical home fee. That allows physicians to bill the payer for care coordination services covered by the agreement. Blues representatives were not available to comment on the details of the medical home contract or other fee policies for noncovered services.
TMA's white paper says there is no "bright line" or clearly defined rule for covered versus noncovered services in Medicare and no single list to refer to. "According to the government, 'there are many scenarios (ICD-9/CPT code combinations) that will determine if a code is covered or not,'" the analysis says.
Mr. Barton says a key question for practices to ask themselves is, "What exactly are you doing that is different from anybody else? Communicating with patients, keeping records, scheduling appointments – that's just being responsive and being a good doctor."
Lack of Guidance
Physician practices may want to consider themselves on notice following a recent settlement between a South Carolina medical group and the Department of Health and Human Services Office of Inspector General (OIG).
Heritage Medical Partners LLC and four physicians agreed to pay $170,260 in civil penalties to settle allegations that an annual $50 administrative fee they charged patients violated Medicare rules. The group admitted no wrongdoing.
The Hilton Head Island, S.C., practice sent letters to 5,474 of its Medicare patients requesting the fee because "the federal government (Medicare) continue[s] to increase the amount of paperwork we're required to fill out to assure you receive the benefits to which you're entitled," legal records show. The practice explained the money was "partial compensation for the time your physician and our staff spend assuring you receive prescription renewals quickly, maximum benefits from Medicare, and any secondary insurance, etc."
The federal government saw it differently. It contends the services specified "are actually covered and reimbursable by Medicare." Other than coinsurance and deductibles, the doctors could not collect additional payment, the settlement states.
"Therein lies the rub," said Heritage's attorney, David W. Ball, of Greenville, S.C. "The basic rule is very easy to articulate: Medical practices can't bill Medicare patients for covered services subject to Medicare rules. But there is a lack of clear guidance on what was covered and what is not," and maybe this case will provide some guidance.
"My client is a small independent primary care practice in a trying environment and wants to remain independent," Mr. Ball said. "The real bottom line is, if doctors were getting adequately reimbursed, they would not be doing this."
He says OIG agreed that dealing with things like secondary insurance filings and canceled office visits were not covered Medicare services. But, overall, OIG took the position that many of the services Heritage was charging for – such as prescription renewals and on-call coverage – were rolled into an office visit and more or less part of a practice's obligation to its patients.
Heritage, on the other hand, believed those activities went above and beyond the call of what Medicare required, and charged what Mr. Ball says was a nominal fee in line with their value.
Although it did not sway OIG, "our argument was office visits for some patients are few and far between, yet prescription renewals and other demands can come on very regular basis," he said, adding that most patients opted to stay with the practice in spite of the fee. "To the extent something could be tied back to an office visit, even if it's remote in time, that is in [OIG's] view part of the covered service."
Aside from the legal and regulatory concerns, the potential for upsetting patients with a new fee for services they received all along "is a very tangible downside" that could end up costing a practice more than that fee is worth, says Mr. Barton, who has received such complaints.
If most of the patients excluded because they cannot or do not wish to pay the fee are older or of a particular race or ethnicity, the charge could deny care to a protected class of people and be considered discriminatory. "Or the Texas Medical Board may view it as 'practice inconsistent with public welfare' or deceptive, and make you come in and explain it," he warned.
Going Above and Beyond
Nevertheless, some physicians and experts say that, while tricky, finding a way to work in fees can be done right to help a practice financially and better cater to patients.
With the help of the Florida-based consultancy MDVIP, Houston internist Steve Rosenbaum, MD, says he is doing something different that also allows him more time to focus on his patients at Baylor Clinic.
Under the company's model, patients personally pay a yearly membership fee ranging from $1,500 to $1,800 for access to an annual, comprehensive wellness exam, and unlimited follow-ups or telephone consults, for example. Patients' public or private insurance still covers anything outside of that, like regular office visits or acute care.
Years of filing paperwork and chasing insurance companies for payments owed took away precious time from patient care, Dr. Rosenbaum says. He even considered becoming an expert witness to make up for lost payments.
"But that would have been more time, and when you are working flat out, you just can't do it," he said. "Money is important, but the most precious commodity is time. Now I can practice medicine the way I was trained and take as much time as I need."
Because he spends more time with patients, Dr. Rosenbaum limits his practice to 600 patients. Most understood the shift, and he had a plan to refer those who did not stay.
The key, says MDVIP President Mark Murrison, is "patients pay a direct fee for additional services that go above and beyond what's provided today by commercial insurance or Medicare."
The one- to two-hour wellness exam includes additional screenings, labs, and time to help doctors evaluate patients holistically for things like diabetes risk, heart health, emotional well-being, hearing, vision, and sexual function.
The consultancy handles the legal and regulatory hoops for its member physicians, which means constantly monitoring federal changes and collaborating with private insurers.
For example, the company modified the exam in 2011 after the Patient Protection and Affordable Care Act began requiring Medicare and private health insurers to cover additional preventive services like cancer, obesity, and behavioral screenings.
Providing an additional service meant some adjustments, Dr. Rosenbaum says. He had to purchase some small equipment and familiarize himself with certain screenings that were not part of routine office visits.
But besides keeping his practice financially stable, his patients benefit.
For example, the program includes a hemoglobin A1c test, one that Dr. Rosenbaum called common but not always included in a regular checkup. Most often, insurance companies won't cover it without a diagnostic reason.
"Because of this test, we are seeing more frequency in patients coming back with abnormalities and discovering early glucose intolerance and diabetes. So we are able to check things we normally would not be able to check for," he said.
Mr. Murrison says simply charging patients extra fees is not likely to take practices very far if patient care is not the primary motivation. If physicians depend upon such income, "but patients do not see the value in the care you provide, and you are just doing it for the money, they will sense that."
Physicians also must recognize that the health care legal and regulatory environment evolves rapidly, and if they do not keep up, they risk running afoul of those rules, he added.
Mr. Ball, the South Carolina attorney, also says practices can charge extra fees so long as they are carefully structured. Physicians must specifically describe what they are charging for and make sure they bear relationship to the fair market value for those services.
Practices also should prepare for pushback from patients and have a plan to refer those who don't wish to pay.
Take a Step Back
If physicians look to fees for extra income, they should first take a step back and evaluate their practices to find out why, says TMA Medical Economics Specialist Donna Kinney.
That means looking at overall practice revenues and costs and determining whether the former outweighs the latter. Solutions can come from increasing revenues or from decreasing costs, or both.
A good place to start: "Physicians perform lots of services that they don't get paid for, but some new programs might help," Ms. Kinney said.
For example, Medicare and some commercial carriers now cover transitional care management, even for practices that are not part of a formal medical home or accountable care organization. That means practices may receive payment for time spent coordinating patient discharges from the hospital to the home, including services that are not part of a face-to-face visit.
Taking stock of payer mix and health plan contract rates is another good step.
TMA's 2012 Physician Survey results show that only half of physicians attempt to negotiate with insurers, and solo and small group practices are less likely to do so. But even small practices that do try to negotiate with plans report that they are sometimes successful in securing better terms and fees.
When evaluating income from a health plan contract, rather than comparing a single procedure code, Ms. Kinney recommends physicians look at income in the aggregate, because often higher-paying procedures will make up for lower-paying ones.
"The plan's use of coinsurance and deductibles and your practice's ability to collect these fees can also determine whether a contract is profitable," Ms. Kinney said.
TMA Practice Consulting has a toolkit to help physicians conduct an operations assessment and evaluate whether they are properly paid.
When it comes to evaluating practice expenses, Ms. Kinney recommends the Medical Group Management Association's (MGMA) annual cost data as a good benchmark tool to compare costs for things like office space, staffing levels, average staff salaries, and medical supplies and equipment. More cost information is available through MGMA.
Amy Lynn Sorrel can be reached her by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.
Practice Checkup From TMA
TMA Practice Consulting can help you perform a comprehensive diagnostic review of your medical practice.
The assessment will include:
- Accounts receivable analysis,
- Review of billing/collections processes,
- Patient flow analysis,
- Internal controls review,
- Managed care process analysis,
- Review of medical records systems,
- Review of practice management software,
- Overhead analysis,
- Human resources/personnel issues, and
- Clinical staff operations.
TMA Practice Consulting services are available for a fee. For more information, contact TMA Practice Consulting at (800) 523-8776 or by email.
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