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Health 411: Medical group imposes fee for administrative costs

Medical group imposes a $350 annual fee for administrative costs. The practice is growing, partly because of tasks demanded by the insurance companies.

December 19, 2011|By Lisa Zamosky, Special to the Los Angeles Times
(Tom Grill / Getty Images )

I just received a letter from my cardiologist's medical group saying they will be charging a $350 annual fee for administrative costs. This is the first time I've seen a medical group charging an annual fee to its patients. Is this what the bad economy has come to? The fee appears exorbitant and discriminatory against less wealthy individuals.

Though charging for administrative services isn't yet widely common, the practice is growing, says James Doherty, an attorney who works with physician practices in Columbia, Md.

There are a variety of reasons why, adds Dr. Glen Stream, president of the American Academy of Family Physicians: the bad economy, a downward trend in physician reimbursement and a growing list of administrative tasks heaped onto physician practices by insurance companies.

A 2009 study published in the journal Health Affairs found that when time spent interacting with insurance companies was converted into dollars, practices spent on average $68,274 per doctor per year.

Meanwhile, the cost of operating a practice has increased by 50% over the last decade, according to the Medical Group Management Assn., a national trade group representing nearly 15,000 physician practices. Reimbursement for physician services has failed to keep pace.

"There isn't a practice I go to that isn't trying to figure how to keep costs down," says Ken Hertz, a principal with the Medical Group Management Assn.'s Healthcare Consulting Group.

Under the current system, insurance companies pay only for medical services provided: a physical, say, or a blood draw. But doctors and their staff are increasingly asked to spend time doing other things too: calling insurers to get approval to prescribe a particular medication or filling out forms patients need to qualify for disability or to confirm their child is healthy enough to play sports.

Insurance companies don't pick up the tab for these tasks, and so doctors go uncompensated even as the number of regulatory and administrative burdens placed on them is growing.

Five years ago, if a patient needed assistance obtaining pre-authorization from an insurance company for medical care, the doctor's office could just pick up the phone and get it approved, explains Nancy Davenport-Ennis, chief executive and founder of Patient Advocate Foundation, a national nonprofit based in Hampton, Va. The same process today could require multiple letters with supporting documentation and multiple telephone conversations.

Under the terms of their contracts with insurers and Medicare, physicians cannot charge patients for services for which they are already being paid — they can't double dip, in other words. But the lines dividing what is and what isn't covered by insurers and Medicare can get fuzzy.

If your health plan, for example, won't pick up the tab for your MRI without medical justification, your doctor's office needs to call your insurer before you get the procedure. But that call can take 45 minutes of the office staff's time on the phone, with no compensation.

We took a close look at the letter your doctor's practice, Medical Group of Southern California, sent to its patients. It clearly states that access to care is not dependent upon participation in the new program.

What will be lost for those who opt out is automatic access to some services, such as completing various forms, emailing or faxing records to additional physicians, coordinating specialist referrals, assistance getting insurance coverage for ancillary services and filling prescriptions (as is medically appropriate) without an appointment after multiple refills have been granted.

Those who choose not to pay the annual fee can gain access to administrative assistance on an à la carte basis.

Although the extra charges understandably enrage some patients, others are fine with it once they understand what they're paying for, says Dr. Steven Tabak, a cardiologist and partner in the Medical Group of Southern California.

We also shared the letter's contents with some of our experts.

Davenport-Ennis says that charging an administrative fee causes a problem for certain patients who are financially disadvantaged. "If you add that level of cost-shifting to the care, they'll be out of the practice," she says. She adds that the effects are mitigated as long as there are alternatives for those who cannot afford it.

Charges like these place an added burden on patients already dealing with rising healthcare costs, says Anthony Wright, executive director of Health Access California, a statewide healthcare consumer advocacy coalition. If doctors are struggling financially because insurers are failing to pay for a growing list of administrative requirements, they need to take the issue up with insurers — not impose higher costs on patients.

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