Phyllis I.

Phyllis I.

Community Member

May 10, 2011

Negotiated rates and real costs.

If a doctor's office can sustain itself on the (lower) negotiated rates in their contract with an insurance provider, why don't they offer the same lower rates to uninsured patients? Many individuals burden emergency rooms or go without medical care simply because they can not afford the inflated rates charged at a doctor's office, which in reality is not realized from insured patients.

Comments

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Let's Talk Cost

Let's Talk Cost commented on May 13, 2011

Community Admin

Doctors, what do you think? Do you think you could offer the same negotiated rates to patients without insurance?

Frank P.

Frank P. commented on May 23, 2011

Community Member

I've worked with physicians for more than 25 years, and every physician practice that I know of will accept less than the full charge if an uninsured patient is willing to pay. Most will accept some average rate paid by all insurers, agreeing to discount the remainder once payment is received. We refer to this as a prompt pay discount.

We cannot reduce our charges to a subset of patients, however, for possible reprisal from insurers. Some insurance contracts contain "most favored nation" language stating that any charge discounts given to any patients must be passed along to the insurer. Medicare and the Federal Government can also become involved if there is discriminatory pricing against governmentally-insured patients.

So what seems like a simple question - can a physician offer the same negotiated rates to patients without insurance, is actually complex, like most things in this business.

E. W.

E. W. commented on May 16, 2011

Community Member

Because the provider is going to write off the difference between what they're billing and what they agreed to accept as a "loss" directly off their taxable income. Hospitals are even worse given the much larger disparities between what they bill and what they agree to accept from insurance.

They get a lower tax bill as well reimbursement for the rest from other sources (presuming insurance and the patient actually pay their bill which is generally true except for the ER doctors who have to treat whoever comes through the door regardless of ability to pay).

The real losers are the taxpayers who take it in the shorts several times over and the paying patients who are stuck with higher premiums and "costs" due to those who can not or will not pay their fair share but will consume far more services.

I wouldn't have a problem with providers writing off the difference between their real costs and what they collect. But writing off the difference between a bill that was inflated 5-10x to preserve desired profits and what they *AGREED* to accept by contract is just outright fraud.

Frank P.

Frank P. commented on May 23, 2011

Community Member

E. W.

Although hospitals sometimes tout the charity care they provide each year in newspaper ads, the same is not true of the overwhelming majority of physician practices. Because most physician practices account on a cash basis, there is no reporting or tax deductible expense for contractual writedowns. The "top line" or revenue for physician practices is cash receipts net of all writedowns, contractual writeoffs, and even bad debt.

The tax deductible expenses medical practices record are the same as for most small businesses - personnel, supplies, rent, insurance, etc.

Raja B.

Raja B. commented on May 21, 2011

Community Member

Our practice actively sets rates to the uninsured based on prevailing insurance reimbursement levels which are negotiated. Indeed "retail" is now being set by insurers. The real pain experienced by the uninsureds, is the amount of discount offered by hospitals, perhaps 15%, which is miniscule, whereas the hospitals are forced to write off maybe half (more or less) by insurers. The only way to prevent this is to sign on with BC for a high-deductible HSA, say $5000 ore even $10,000 deductible, making premiums affordable and yet avoiding catastrophic and unregulated costs, as the final bill is decided by BC and not the hospital.