Same Doctor Visit, Double The Cost

On August 26, 2012, the Wall Street Journal published a story describing a situation whereby a patient who sees a physician employed by a hospital essentially pays double out-of-pocket what they would have paid for the same exact office visit with a physician NOT employed by the hospital.

I actually wrote about this situation in January 21, 2012.

Beyond what the Wall Street Journal reported, what's going on?

Assuming all things equal whereby a private practice physician and a hospital-based physician are equally competent and the supporting staff for each are both equally good (such assumptions are debatable in some circles, but will be ignored here), it all comes down to money.

When a patient sees a private practice physician, the government-established fee schedule only incorporates payments to the physician.

When a patient sees a hospital-based physician, the fee schedule not only incorporates physician payments, but also additional payments to the hospital.

Now, the patient doesn't pay what insurance covers in either scenario, but typically there is a copay or coinsurance payment that the patient is responsible for that typically is 20% of the total charges.

Here's an example using the Medicare fee schedule from 2002. I elected to provide "old" 2002 data as this information can be found easily and corroborated, but rest assured, the numbers are starkly different and perhaps more lopsided today. Medicare was selected as it is the bar to which all other insurance plans are typically based on.

In a physician run private practice, the only charges that are incurred is from the "Physician Fee Schedule". In a hospital-based practice, a patient incurs not only the physician fee schedule, but also additional charges based on the "Outpatient Prospective Payment System".

As you can see, the physician fees are slightly higher in the private practice setting compared to hospital-based practice... BUT, given the additional hospital charges involved with a hospital-based practice, the patient ends up being charged more per service for a simple clinic visit ($16.48) than if they had been seen in the private practice office ($10.06).

The cost differential for the patient is far worse with any procedures ($62.62 versus $342.47).

For the same exact procedure or service, a patient automatically ends up paying more to be seen in a hospital-based practice.

This payment system is the same whether you go to a tertiary care teaching hospital like Massachusetts General Hospital or a tiny 98-bed community hospital.

As an aside... for any physicians employed by a hospital, it behooves you to consider this differential payment in terms of how a hospital determines your salary and productivity. Do they consider ONLY the physician fee schedule or do they also take into account the outpatient prospective payment system?

I should also mention that Congress is considering abolishing the outpatient prospective payment system for clinic visits only. Click here for more info.

Source:
Same Doctor Visit, Double the Cost. WSJ 8/26/12

Hospital-Based Practice Versus Physician Private Practice. Fauquier ENT Blog 1/21/12.

Elimination of Differential in Medicare Payment for Clinic E&M Services Furnished in Hospital-Based Outpatient Departments Proposed. Martinedale 12/10/11

Medicare rules for hospital-based clinics. American College of Surgeons. Vol 87, No 4

Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System. Congressional Research Service. 8/6/2010

Hospital-Based Practice Versus Physician Private Practice

The other day, an astute patient of mine asked what the difference is between a physician who works for a hospital (hospital-based practice) versus a physician run private practice.

After all, a patient still sees a physician in either case...

Is there an actual difference from a patient's perspective???

Assuming all things equal whereby a private practice physician and a hospital-based physician are equally competent and the supporting staff for each are both equally good (such assumptions are debatable in some circles, but will be ignored here), it all comes down to money.

When a patient sees a private practice physician, the fee schedule only incorporates payments to the physician.

When a patient sees a hospital-based physician, the fee schedule not only incorporates physician payments, but also additional payments to the hospital.

Now, the patient doesn't pay what insurance covers in either scenario, but typically there is a copay or coinsurance payment that the patient is responsible for that typically is 20% of the total charges.

Here's an example using the Medicare fee schedule from 2002. I elected to provide "old" 2002 data as this information can be found easily and corroborated, but rest assured, the numbers are starkly different and perhaps more lopsided today. Medicare was selected as it is the bar to which all other insurance plans are typically based on.

In a physician run private practice, the only charges that are incurred is from the "Physician Fee Schedule". In a hospital-based practice, a patient incurs not only the physician fee schedule, but also additional charges based on the "Outpatient Prospective Payment System".

As you can see, the physician fees are slightly higher in the private practice setting compared to hospital-based practice... BUT, given the additional hospital charges involved with a hospital-based practice, the patient ends up being charged more per service for a simple clinic visit ($16.48) than if they had been seen in the private practice office ($10.06).

The cost differential for the patient is far worse with any procedures ($62.62 versus $342.47).

For the same exact procedure or service, a patient automatically ends up paying more to be seen in a hospital-based practice.

This payment system is the same whether you go to a tertiary care teaching hospital like Massachusetts General Hospital or a tiny 98-bed community hospital.

As an aside... for any physicians employed by a hospital, it behooves you to consider this differential payment in terms of how a hospital determines your salary and productivity. Do they consider ONLY the physician fee schedule or do they also take into account the outpatient prospective payment system?

I should also mention that for 2012, Congress is considering abolishing the outpatient prospective payment system for clinic visits only. Click here for more info.

Source:
Elimination of Differential in Medicare Payment for Clinic E&M Services Furnished in Hospital-Based Outpatient Departments Proposed. Martinedale 12/10/11

Medicare rules for hospital-based clinics. American College of Surgeons. Vol 87, No 4

Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System. Congressional Research Service. 8/6/2010

Mind Over Body Treatment

24 years old female presents with several week history of progressive stomach pains, substernal chest discomfort, heart palpitations, loss of appetite, headache, insomnia, and growing lump sensation in her throat. Physical exam was essentially normal.

Can this previously healthy female have suddenly developed reflux, globus, paroxysmal supraventricular tachycardia, brain tumor, and throat cancer with possible overlying thyroid disorder? Or perhaps has she contracted some other horrific mystery disease?

Maybe...

But maybe none of the above...

What if I told you she will be giving a doctoral dissertation for her Master's next week for which she is ill-prepared for given a recent breakup with her boyfriend of 5 years and has a growing distaste of her school classmates who have been less than supportive.

In other words anxiety.

The point is that the mind has tremendous influence over the body and numerous physical maladies can be attributable to a patient's mental state. People can die of a broken heart or out of extreme fear. Stress can age the body dramatically (look at a picture of a presidential candidate and than another after having served 2 terms as President of the United States).

A mind under stress CAN affect the body. Reassurance helps. Elimination of the stressor is even better. If the stresses can't just go away, development of strong coping mechanisms will do much to help. After that, there are prescription drugs that help, but have addictive potential as the anxious patient will tend to take a pill rather than dealing with and learning coping skills.

But here's where the power of the mind can be "manipulated" into helping rather than hurting the body.

In my last blog, I did ridicule therapeutic hands to manipulate human body energy as total bunk (or rather a 9 year old girl did)... BUT... if a person truly believes that it does help, it probably can help some individuals just from the idea/belief/faith that it can.

Faith, trust, and sharing with another human being who lends a sympathetic ear is where questionable "medical" practices and homeopathy may provide benefit... not because such quackery directly helps the individual, but more because the individual BELIEVES it can help.

I can totally make up a quack treatment like placing an ice cube over the heart and stating that this practice can "calm" the heart palpitation down by "cooling" it to a more natural state... and if the patient believes it to be true... than the mind can potentially make it so in a significant number of people. In fact, I can state with some confidence that it will help in as many as 20-40% of patients.

How can I state such a statistic knowing my treatment is total hogwash?

It's because of the placebo affect.

Although I don't support (and perhaps even discourage) such quack medicine, as long as it doesn't harm the patient and there's no danger if a patient decides to forgo more traditional and evidence-based medical treatment, than I don't see any long-lasting harm in it.

Because as scientists and doctors know... the placebo effect is real and DOES lend improvement nearly 40% of the time! Who cares if the activation mechanism of the placebo effect is via "therapeutic hands" or "local honey" or some other "un-accepted" treatment.

After all... the patient is feeling better and that's what really counts in the end.

AND... if it doesn't work, than traditional medical treatments can be pursued.

What is evidence-based, scientifically proven medical treatment?

It's when the treatment helps people way more than the placebo (or in other words, way more than 40%).