How Should Doctors Get Paid? – Part 5

A Country Doctor’s Proposal for Health Insurance Reform.

In the forty years since I started medical school, I have worked in Socialized medicine, student health, a cash-only practice and a traditional fee for service small group practice. The bulk of my experience has been in a Government-sponsored rural health clinic, working for an underserved, underinsured rural population.

Today, I will pull together the threads from my previous posts in the series “How Should Doctors Get Paid?” I will make a couple of concrete suggestions, borrowing from all the places I have worked and from the latest trends among the doctors who are revolting against the insurance companies by starting Concierge Medicine and Direct Primary Care practices.

Because I am a primary care physician, I will mostly speak of how I think primary care physicians should be paid.

I will expand on these concepts below, but here are the main points:

1) Have the insurance company provide a flat rate in the $500/year range to patients’ freely chosen Primary Care Provider, similar to membership fees in Direct Care Medical Practices.

2) Provide a prepaid card for basic healthcare, free from billing expenses and administration.

3) Unused balances can be rolled over to the following years, letting patients “save” money to cover copays for future elective procedures.

4) Keep prior authorizations for big-ticket items, both testing and procedures, if necessary for the health of the system.

5) Keep specialty care fee-for-service.

6) Have a national debate about where health care ends and life enhancement begins and who should pay for what.

Health insurance needs to be simple to understand and administer. It needs to promote wellness, and it needs to remove barriers from seeking advice or care early in the course of disease. It needs to empower patients to use health care services wisely by aligning patients’ and providers’ incentives.

Health insurance should not be deceptive. It should not promise to pay for screenings (colonoscopies and mammograms) and stop paying if the screening reveals a problem (colon polyps or breast cancer). It should offer patients the right to set their own priorities for their health while demanding concern for our fellow citizens’ right to also receive care.

Health insurance is not like anything else we call insurance; all other insurance products cover the unexpected and not the expected. Most people never collect on their homeowners’ insurance, and most people never total their car. Health insurance, on the other hand, is expected by many to be like a bumper-to-bumper warranty that insulates us from every misfortune or inconvenience by covering everything from the smallest and most mundane to the most catastrophic or esoteric.

What would it look like if Johnny or Fido puts mud prints on the living room wallpaper and Dad makes a claim on his homeowner’s policy? Or if Sally spills chocolate ice cream on the beige upholstery of Mommy’s new car and the auto insurance has to pay to have the seats recovered?

In today’s healthcare, everything is potentially a covered service, and there are no incentives to limit one’s claims against the insurance companies. I believe we need to make patients view healthcare spending as their business, and the money as their money.

My proposal for payment reform in healthcare can work in a single-payer system or with multiple payers, both public and private insurers:

Have the insurance company provide a flat rate to patients’ freely chosen Primary Care Provider, not the $3 per member per month we used to get from the HMOs of yore but real money. Something in the order of $500/year would be more reasonable for the primary care physician to manage a patient’s health care. This would cover maintenance of a patient-focused and updated medical record, care coordination, management of medication and communication issues, access to medical triage and treatment capacity and one yearly visit for personalized screenings and care planning. For a panel of 1,500 to 2,000 patients, this would bring in $750,000 to $1,000,000.

Keeping in mind that the annual per capita health expenditure in this country is $8,500, that would gobble up a mere 5.9% of the pie. The billing for this would be very simple; just a head count multiplied by the monthly fee. For comparison, physician practices in the United States now spend $82,975 per physician per year interacting with payers, according to the Commonwealth Fund. Roughly speaking, that means doctors spend more than one hour every day working to pay the billing department and to do the free work we perform for the insurance companies. Imagine the improvements in patient service an extra hour a day per physician would make possible.

The advantage with this kind of system is that it would promote shared resource stewardship between doctors and patients. Primary care doctors would be incentivized to maintain large enough panels of patients to get the basic funding, but they would need to maintain patient satisfaction with their service in order to keep that funding.

Like cash-only Direct Primary Care practices, with a financial foundation covering basic operating costs and with elimination of billing expenses, practices receiving insurance money up front can keep the total visit costs low. With overhead already covered, per-visit cost could be almost in line with today’s patient copayments.

I believe that under this model, primary care could do a much better job being responsive to patients’ needs than in today’s $7 per minute hamster-wheel race for the insurance money.

Provide a prepaid card, similar to EBT cards for food stamps, or department store gift cards, that patients can use for the average number of annual visits (3-4) with their primary care physician and a basic amount for laboratory tests as well as “blanket approved” ancillary services like initial visits with counselors, dietitians and physical therapists. Again, no billing, so we could do much more for less money.

Beyond the basic level of primary care, higher copayments and prior authorizations could indeed have a role. Money from the basic allotment not spent in a given year could be rolled over to cover future copays, such as for elective surgeries. This would help reduce the tendency to spend down the account every year with a “use it or lose it” mentality.

Specialty providers should not be paid by capitation, as some people have suggested, because the market forces that would make it necessary for primary care doctors to maintain a satisfied (and healthy) patient population would not work as patients often wouldn’t know how to rate their specialist until they needed the care. By that time it may be too late to “vote with your feet” and go elsewhere. Who would sign up with a brain surgeon, just in case he needed one?

At the risk of offending my specialist colleagues, the hassles of insurance billing and prior authorizations must seem at least a little easier to bear when you make your living doing fifteen minute cataract surgeries for $3,000 each than when you treat complicated diabetes, hypertension and heart disease in fifteen minute intervals for less than $100.

For catastrophic illnesses, like cancer, eliminate copayments altogether and provide monies to reduce barriers to care, like transportation to daily radiation treatments, which can be burdensome on patients and families.

This may be controversial, but we as the country that spends twice what other countries spend on health care need to talk openly about setting priorities. Going back to the example of homeowners’ insurance above, if all my neighbors make insurance claims to essentially pay for redecorating their homes, and my premium goes up, do I have the right, or even the obligation, to speak up and say that they are hurting their neighbors when their claims increase all our premiums?

Some of the difficult conversations we need to have concern the shifting definition of disease in our culture. Things that used to be seen as normal aging or just life in general have gradually become diseases, especially when new and expensive drugs are marketed directly to consumers. This is why I propose that diseases like cancer should be better covered than runner’s knee, benign enlargement of the prostate (and this is a sixty year old male talking) or restless leg syndrome (even though it was described by a Swede from my Alma Mater). Even temper tantrums are a disease now, and I can think of several $200/month drugs doctors prescribe for them. And, by the way, most newer brand-name drugs seem to cost at least $200-250/month. We all need to be aware of what tests and treatments cost, so we can assess their value.

As a Swedish American, I can honestly say that health care with no market forces is not an ideal system, but for market forces to have a chance to work, consumers (patients) must think of the money they spend as theirs, not someone else’s. Before that money landed in the insurance companies’ or Government coffers, it was on the top line of each of our pay stubs. We need a healthcare system that keeps us thinking of our nation’s healthcare budget as our own.

11 Responses to “How Should Doctors Get Paid? – Part 5”


  1. 1 Peter Elias May 4, 2014 at 3:02 am

    I continue to enjoy your posts. My best to you and your family.

    • 2 acountrydoctorwrites May 4, 2014 at 7:22 am

      Thanks, Peter. We both love what we do and I think we both write about our experience partly to help others see the sides of medicine that get overlooked today – and partly as an affirmation for ourselves that there is still great hope for our profession.
      Best to you, too.

  2. 3 Jill C. May 4, 2014 at 4:00 am

    Amen! This makes so much sense. I am an internist (now reduced to a “PCP”) with a solo practice mix of direct pay, Medicare, and a single HMO. I have been able to reduce my insurance hassles to a minimum and now have so much more time for patient care. The direct pay is a retainer of $300 per year and $40 per visit. Most of these patients are underinsured with high deductibles, and so it’s cheaper for them to just do everything out of pocket. We use discount cash labs (we’re talking $10 panels) and know all the $4 formularies in town for meds. Patients take ownership of their care and are able to prioritize their healthcare needs how they want. It’s been a great solution for the patients who are able to do it, but it’s not feasible for my geriatric patients or the lower income patients who are tethered to an HMO. If Medicare and other insurers would get on board with this, it could save the practice of medicine. Also we PCP’s would have a much better chance of being able to stay in practice for the long haul without burning out or going under, and perhaps even would be able to retire one day. Please continue to write as I always look forward to your posts :).

  3. 4 drkaren May 4, 2014 at 6:15 am

    This makes a lot of sense! Is it similar to what Ben Carson has proposed?

  4. 6 Michael Hein (@Heindoc) May 4, 2014 at 10:44 am

    A nicely reasoned list of ideas for how physicians ought to get paid. I do agree that in addition to the insurance companies paying the $500 DCP-like payment to providers, that the the same policy would need to be a high deductible plan, so that we (patients) would no longer have the “bumper-to-bumper warranty on a rental car” mentality. An alternative is to remove the legislative barriers to direct primary care practices that exist right now in many states and have the primary care providers market themselves directly to patients and skip the $500 annual payment from the insurers all together. Additionally, your insights about the BioMedicalization of our civilization – the continual redefining of common human conditions as disease – are spot-on. Until we as a society choose or are forced to roll-back this force, it will be very difficult to reduce (not slow the growth) healthcare expense in this country and the rest of the world. I did write more about biomedicalization on my blog at: http://www.heindoc.com

    • 7 acountrydoctorwrites May 4, 2014 at 1:02 pm

      I think if we have patients pay the retainer fee, families that live paycheck to paycheck might have trouble always keeping up. Having a portion of the insurance premium entrusted for them to spend is a social equalizer between the haves and have-nots.

  5. 8 Darla May 5, 2014 at 1:11 am

    Makes a lot of sense to me, a family physician.

  6. 9 Robert May 9, 2014 at 9:49 pm

    It’s really sad to me that doctors have to spend so much of their time on non-medical issues, like payment. I’ve heard many people say that Obamacare and socialized medicine will ruin many small offices and physicians because it will turn them into debt collectors. I wish we could allow our physicians to focus on medicine instead of the business end.

  7. 10 Gary May 21, 2014 at 2:34 pm

    With all due respect, I am a country doctor ophthalmologist in rural central Florida. I am somewhat offended by your comments concerning $3000 cataract surgeries- this is not the norm where I practice. First let’s discuss this price. My average cataract case is in his 80’s with Medicare. Would you kindly go to your local carrier Medicare website and type in procedure code 66984- where I work, I am allowed to collect about $687.00.If the patient has Medicaid, which I do not accept, then I write off 20%. Yes the actual procedure may only take 20 minutes. But I have to drive to the hospital, do the paperwork and dictation and speak with the family- so let’s assume that 1 case will take me an hour. Now let’s throw in the preop evaluation, explanation of the surgery, review of 8 pages of consent forms, and then all postop care (basically any eye charge will create a Medicare dispute during this time) for 90 days. Any time Uncle Harry’s eye itches or scratches or he worries about his eye, we may get a call from an out of state family member necessitating another visit! When I started 25 years ago I think we did collect about $1800 and the actual surgery did take considerably longer. Also I am aware that there are some cataract cowboys who like to throw in additional non Medicare approved procedures (like femtosecond laser) so they can collect cash on the side from the patient- if the patient agrees to pay for these noncovered services! I wonder about the relationship you have with the specialties you refer to. Brother we are all in this together. I am the only ophthalmologist in this county with hospital privileges. So I am on call 10 days a month- the other days I refuse to answer the ER phone due to liability issues. If my name is on the chart and the patient goes bad, I am liable (same with that cataract patient- probably lose one million dollars if he goes blind from infection or undetected retinal disease). In our area we are losing specialists. I am sorry to say this, but I can make more money doing eye regular exams through the day and selling glasses.
    I run a small efficient office with a skeleton crew. We do not do prior authorizations- it is offensive that I need to use my MD degree/knowledge/experience to convince an insurance company nurse that a patient needs a brain scan or cataract surgery. If the local hospital gives me a problem about scheduling a scan, I send the patient to that hospital’s ER- they get paid for the scan- should’nt they be responsible for filling out all the proper paperwork- and they also get paid for the ER visit! Please tell me what prior authorization for cataract surgery is? I simply do my routine eye exam and collect or file so I am paid for this service. If I tell the patient you are blind from cataract and I recommend cataract surgery, why do I need to do need to do any more work? The insurance company works for the patient. The patient needs to go home and call their insurance company or complain to the state insurance commissioner- it is not my problem- I do not get paid for filling out extra forms nor do I have the staff to do it!
    Yes the quality of care is declining- everywhere. Funny thing happened last week- on Friday I admitted an 85 yo women with multiple medical problems with an acute corneal ulcer requiring round the clock hourly antibiotic eyedrops- the next day the hospital compliance officer called me and stated that the patient does not meet Medicare criteria for admission! She said the patient could get round the clock eyedrops in a skilled nursing facility- only problem is, if I admit her directly into a SNF (nursing home), Medicare does not cover that! So we waited out the weekend and i discharged her home monday- hopefully she will be able to put in a sufficient amount of eyedrops to control the eye infection- otherwise she will have to go from her home to a nursing home and the nursing home will have to drive her to my office everyday!

  8. 11 Randy June 26, 2014 at 12:45 pm

    Overall I like your proposal with a few exceptions.
    1. With the $500 a year retainer a PCP could easily have a panel less than 1,000 and do quite well. 1,500 to 2,000 patients is too many to provide the best care and too stressful on the provider.
    2. I believe for the $500 per year more than one visit should be included. Perhaps this fee could entitle a patient to a $10 co-pay per visit to give value to the encounter and include all basic labs and some basic procedures.
    3. I think the pre-paid card would add a layer of hassle. Can they use it at another provider’s practice, the hospital? Cynically, I believe the would pre-paid card would be enticing for providers to render more services than needed. Cash on the table.
    4. Fee-for-service in specialty care is part of the problem now. I don’t know how to fix it but it is not sustainable.

    Thanks. I’m going to follow you.


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