Market Overview

Doctors and Health Insurance Companies

Whether you see the doctor at a small practice or a hospital it pretty much requires the same process to get health insurance companies to pay for the services rendered.  It is a complicated dance and the health insurance companies are the ones on top, running the show.  They decide how much a procedure costs and how much they will reimburse the doctor, anesthesiologist and hospital.  Merritt Hawkins & Associates conducted a survey on the viewpoints of physicians and found that 49% of doctors age 50-65 are planning to either eliminate or reduce the number of patients they treat due to frustration with reimbursement intricacies.  If doctors were more connected they could bargain for better rates but that is not the case.

Once you see the doctor at a private practice or hospital you must have that claim submitted to bill the procedure to the insurance company.  The doctor gets paid via a CPT code which is linked to a diagnosis or ICD-9 code which can then be broken down to DRG or APC  codes for inpatient or outpatient hospital stays. Medicare and Medicaid pay the least amount of money and sometimes doctors end up losing money with the government insurances.  The private insurance companies that people pay monthly premiums to have very strict rules when it comes to accepting claims.  They have to be free of error and a simple misspelling, wrong birth date or incorrect code number can result in a rejection or denial.  For private practices receiving prompt reimbursement is crucial that is why some of the small clinics pay separate agencies to handle the billing aspect of their practice. 

All the paperwork and different codes as well as intermediaries result in higher premium costs.  If you are a patient ready to see a doctor at a local clinic and have cash do not think you can get a discount.  A customer paying out of pocket will not need to go through the billing process but if the doctor's office gives a discount then the insurance companies will accept that new discounted rate as the new standard reimbursement rate for all his/her patients.  Doctors want to be able to get the insurance companies to pay as much of the claim as possible. 

When health insurance companies merge they become powerful and can bring fear to doctors they know they will have a hard time getting claims paid at the rate they want.  The stronger the insurance companies become the less bargaining that can take place.  As a patient you may not care if a doctor receives less compensation, sure they are well off, but lower reimbursement rates to a doctor can mean higher premiums for the patient.  Very few doctors can evade being at the mercy of health insurance companies and having to wait to receive compensation.  Only the best doctors in the world can demand getting paid in cash only, they know people from all over the world will come and pay for their services.  Those few doctors can receive payment immediately and relieve themselves from insurance companies.

According to the New England Journal of Medicine 40% of medical malpractice suits in the U.S. are meritless. This leads to doctors having to practice defensive medicine and order unnecessary tests to evade law suits.  This cost then passes on to the patient that is why some states have reduced the amount of excessive damages that can be awarded in frivolous suits.  Texas premium rates fell by 30%-40% as a result of the tort reform.  For years doctors have complained that the Department of Justice and the Federal Trade Commission have brought antitrust lawsuits to doctors and hospitals yet the laws were written about 40 years ago when health insurance companies were not as powerful.  If the system continues the way it is some doctors may just start looking for career changes. 



The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Personal Finance

 

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