The trend to cash medical practice

Some time ago, I did a post on my own blog about doctors dropping out of Medicare and many quitting all insurance. I really got thinking about this after the American Geriatric Society meeting in Chicago last year. I met a woman geriatrician, the only fellowship trained geriatric specialist in central Iowa. She had quit Medicare. That sounds a bit suicidal if all your patients are Medicare age. What had happened was she was being harassed by Medicare because she was seeing patients too often. Many of them were frail elderly living at home. She dropped out and began charging her patients cash for services. She was making a decent living after a year and was happy with her decision. I don’t know how many realize that geriatrics, as a specialty, is a university subsidized field. There is no private geriatric practice because the doctor can’t survive on what Medicare pays. She tried and had to quit. She is doing it on her own now.

The Weekly Standard has an interesting article this week on this trend. The doctor is not near retirement , as many of the folks I had previously talked to were. It took a lot of guts for him to start out this way and he explains why.

There are a couple of errors in the article and I will point them out.

“The discovery I made was that by getting rid of administrative, bureaucratic hassles, I was able to do very well financially and at the same time have high patient satisfaction and good quality of care,” he says. Even more surprising, most of his patients are not wealthy. Half have no insurance, and another 15 percent are on Medicare.

This is not exactly an error but may mislead. The patients on Medicare may use it for other doctors or for the hospital but he does not accept any Medicare payment. He has to quit Medicare to avoid the rules they have, including inflated prices and rationing.

The Democrats’ new command-and-control health care law is sweeping. For most Americans, there will be no escaping its effects: on premiums, taxes, access to doctors, and insurance coverage. But at the margins, some doctors and health care companies will find ways to operate successfully outside the system, offering patients more control over their health care and often at lower costs than in the government/private insurance oligopoly.

The reason why I believe this trend is growing rapidly is that some states, like Massachusetts, plan to pass laws requiring doctors to accept Medicare as a condition of licensure. If they were not worried, why write a law about it ? Medicare has a provision that they determine the price and there are no extra charges allowed.

A participating physician agrees that payment for Medicare services based on the fee schedule represents the approved and full charge. This means a physician cannot collect or balance bill an amount in excess of the approved charge listed on the fee schedule for services furnished to Medicare patients.

That, plus the rationing, drives most primary care doctors out of the field or, more recently, out of Medicare. Those who remain, hire Physician Assistants or Nurse Practitioners to see Medicare patients. That works for a while but PAs and NPs are still expensive.

With the passage of Obamacare, Forrest says he’s seeing more physicians aggressively search for alternatives, as he once did. Over the years, he’s helped a couple of dozen offices open across the country, and he’s started speaking at industry conferences about his practice. But in recent months, he’s been flooded with inquiries from fellow doctors. “Since the health care reform bill passed, you wouldn’t believe the number of doctors who have said they’ve had it and want to operate outside the system,” he says.

I would not be surprised to see more laws attempting to force physicians into accepting the government plans. One ironic effect may be to reduce the rate at which the Medicare trust fund is exhausted. If more and more doctors leave the plan, that will reduce Medicare spending.

Another business model that some doctors have been exploring is a “concierge” or “boutique” practice. Often, these practices combine the acceptance of traditional health insurance with an added fee, which doctors say relieves the pressure to move quickly from one patient to the next and allows them to focus on prevention, not just treatment.

Most of the “boutique” practices I know about have dropped all insurance although they have no objection to the patient attempting to collect from the insurer. The doctor simply will not cooperate with the insurance company. I am now starting to hear about surgeons who are dropping all insurance. They say they (or the patient) are getting paid because they usually charge less.

He says his patients come from all walks of life, from dot-com executives to school bus drivers and about half are on Medicare. “There are people of very modest means who find this to be a value to them,” he says.

Here, again, this is misleading since Medicare controls all details about payment. You cannot do this if the doctor is still a Medicare provider. Medicare requires that you charge their price which is grossly inflated. Then they pay about 10 to 20% of the price. If a doctor member charges a cash patient less, and Medicare learns about it, they will reduce his “profile” price to the cash price and pay 20% of that. You simply cannot go to cash medicine and stay enrolled as a Medicare provider.

It’s not just celebrities heading abroad for cosmetic work. As other countries have become more sophisticated medically, they’re offering all sorts of elective work, typically at a fraction of what the procedures cost in the United States. Foreigners still come to the United States for treatment, but there’s an even greater number of U.S. patients heading overseas. The countries with the most accredited hospitals include India, Brazil, Thailand, and Singapore.

I think this will be a minor trend as more and more surgeons drop out. The busiest hip surgeon in Newport Beach, CA, one of the wealthiest communities in California, has dropped Medicare and charges $1200 for a total hip. Cash. Patients say that is impossible because total hips cost $5,000. No, that is the Medicare price. He is charging what he gets paid by Medicare. Very few people realize the level of discounting that goes on since insurance companies have been able to sign doctors to contracts.

I think the medical tourism will be a minor factor unless the government tries to ban private practice. If it is allowed to develop, we will see hospitals joining the trend. They will not be general hospitals but they will be specialty hospitals. There are already cardiac and orthopedic hospitals. It is only one more step to dropping Medicare.

It’s a good article and more is coming.