When describing to the curious the benefits of opting out of both Medicare and private insurance, Gerard J. Gianoli, MD, president of The Ear and Balance Institute in Baton Rouge, La., often recalls one particular example: During one 90-day global period about five years ago, after an eight-hour resection of a skull-based glomus tumor, post-operative ICU care and several days of inpatient care and the usual post-operative office visits, he received a total reimbursement of $500.
Explore This IssueSeptember 2010
“I don’t even think that covered the malpractice portion of my premium on that case,” said Dr. Gianoli, clinical associate professor of pediatrics and otolaryngology–head and neck surgery at Tulane University School of Medicine and an ENT Today board member.
Dr. Gianoli’s case for “opting out” may be more persuasive than ever in the current landscape, as more and more physicians, otolaryngologists included, consider operating practices that accept no private insurance or Medicare, known more formally as third-party-free practices. The conversation has percolated in recent years, but the concept seems to have drawn even more attention in the wake of the health care reform debate, with physicians who accept insurance and Medicare fearing reduced reimbursements. To wit, the Association of American Physicians and Surgeons (AAPS), whose website includes how-to guides on opting out of managed-care contracts, has seen record numbers of online visitors in the past year. AAPS has also sold out two one-day seminars this year aimed at educating physicians on their opt-out options.
“When I first mentioned this to my colleagues, they said I was crazy and it wouldn’t work,” Dr. Gianoli said. “Now, many of those same people are asking me how they can do what I did … there is a growing tide of interest in what we are doing. I am asked to lecture on the topic, and many physicians call or e-mail asking for details.”
Jane Orient, MD, executive director of the AAPS, believes the third-party-free concept will become even more appealing as the government and private carriers ramp up efforts to recoup money improperly paid out, an initiative driven by the Centers for Medicare and Medicaid Services’ Recovery Audit Contractor (RAC) program.
In that vein, otolaryngologists considering opening a third-party-free practice from scratch or transitioning their current practice may wonder if the swap works on a variety of levels. The resounding answer from those who have done it: with a few common sense tweaks to practice management, absolutely.
“For me, and it’s not for everybody, being out of network allows me to provide the best care I can,” said Benjamin Asher, MD, PC, an otolaryngologist in New York City and a member of the Independent Doctors of New York, a group of physicians who work outside of managed-care contracts.
Dr. Asher launched his third-party-free practice in 2004 because he felt the parameters of Medicare and private carriers would restrict his ability to provide the “highest quality of care.” That decision means new patients get a clear explanation of fee schedules, and Medicare patients are required to sign a form that says they understand that the physician has opted out. If patients have additional questions or fears, Dr. Asher has the time to answer them. His average patient load is around 13 to 15 a day, compared to large group practices where he estimates physicians see two or three times that census. His initial visits with new patients, during which he explains both the conventional aspects of his practice and the alternative approaches he integrates into his treatment, last an hour on average.
Several third-party-free practices have used their websites to post detailed summaries of how their payment processes work. Private practices usually require payment at the time services are rendered, but most maintain the option of allowing payment plans, reduced fees or charity care, all on the provider’s schedule. Physicians note the latter point when questioned about whether they feel the cash-for-treatment model in any way conflicts with the concept of delivering treatment to sick patients in need of help.
“My doors are wide open,” said Michael J. A. Robb, MD, a neurologist and otoneurologist in Phoenix who launched his practice seven years ago. “That’s the beauty of the model. There’s always room for charity in a clinic like this.”
Dr. Asher, who sets aside office time each month for patients who can’t afford his full fare, added: “If I’m setting up an office that is totally out of network, I believe the services I have to offer are of value. I don’t want that to be an exclusive for people who have money.”
THE REFORM FACTOR
The wild card in how many otolaryngologists and other specialists consider moving to third-party-free practices is the uncertainty about how exactly health care reform will impact reimbursements. AAPS, which has sued the government to fight the law’s implementation, hopes more doctors move toward fee-for-service payment as they battle what Dr. Orient calls “ever more onerous and costly” requirements for record keeping and the potential for longer office waiting times as more people with insurance make appointments.
“In some ways, it will help my practice, because with the general lowering of reimbursement you will see physicians spending less and less time with patients and missing more and more things,” Dr. Gianoli said. “By comparison, the physician who charges a reasonable price and works for [the] patients, spending adequate time with [them], and practices good medicine will look like [a] superstar.”
Another potential hurdle in the future is how health coverage plans deal with reimbursement for out-of-network services. After Dr. Gianoli’s patients pay him at the time a service is rendered, they are free to seek some level of compensation from their insurance plans. Should the influx of newly-insured patients push carriers to lower or even eliminate out-of-network reimbursement eventually, patients might decide they can no longer afford to purchase that level of care, Dr. Gianoli added.
—Michael J. A. Robb, MD
THE BOTTOM LINE
Dr. Robb said another benefit of not accepting insurance is that overhead is dramatically reduced since the provider doesn’t need to hire multiple staffers whose primary function is to “haggle and fight with agents and push paper.” There is, however, the issue of the up-front costs involved in starting a practice that relies on reimbursement from insurance companies. Dr. Robb estimated that when he started his practice he saved $50,000 to $150,000 of the start-up debt associated with practices accepting in-network payments, such as buying computers and software to comply with mandates regarding electronic medical records and billing.
Dr. Gianoli said a key to running the financial aspect of a third-party-free practice is to charge “reasonable fees.” His practice, run with partner James S. Soileau, MD, gradually eliminated its insurance contracts, starting in 2001. By the time the practice eliminated the last carrier, cash customers already comprised the majority of the business, but the bottom line required that the fees stay competitive. Boiled down, Dr. Gianoli said, out-of-network physicians can charge $2 for a service for which an in-network physician charges $5. This is because the physician outside of insurance collects all of the money he or she charges. The in-network provider may collect only $1 of the $5.
R. Anders Rosendahl, MD, a thyroid surgeon in Austin, Texas, understands that many physicians may be afraid to move away from the traditional model for fear that they might not be able to draw enough patients. He countered that although physicians who provide a high quality of care may build a practice more slowly in the first year or so, they will build a base of clients who are looking at quality, rather than professional fees.
“There is a large market for doctors who provide a very high level of care for patients,” Dr. Asher said. He believes his model is more cost effective in the long run. “I order less expensive, invasive tests and procedures than I used to when I worked in more conventional large group and academic settings, and my patients get excellent results with less medications, surgery and side effects,” he said.
As for hospitals shying away from using “opted-out” surgeons, Dr. Rosendahl performs nearly all of his surgeries at three Austin-area hospitals at which he is on staff.
“Who says you have to be traditional?” he said. “Why don’t we do what works?”
Dr. Rosendahl switched to a third-party-free practice in February 2003 when he relocated from Houston to Austin. He said his practice usually draws one of two responses from competing or referring physicians. The first is a curious envy, with physicians eager to learn more about how the operation works for him—and could work for them. The other reaction is, admittedly, more cynical, one Dr. Rosendahl described as “a twinge of jealousy that they have not yet made the big decision yet.”
Still, those doctors will often refer patients to him. “The beauty of my practice is how simple it is,” Dr. Rosendahl said. “Nobody comes to my office because of the book that some insurance company gives them. People come to my office because somebody told them it’s a good idea.”