ER Doctors Not In-Network – Costs Can Escalate

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When Luke Adami, 6, sustained a gash to his chin on a playground, his parents rushed him to an emergency room at an in-network facility, Valley Hospital in New Jersey. The parents, Greg and Madeleine Adami, asked about a plastic surgeon to sew him up. Mr. Adami recalled: “You go to a hospital that’s in-network, your kid’s bleeding. What are you going to say?”

The nurse did not mention that the surgeon she called was out-of-network and would charge a separate fee. Neither did the plastic surgeon say anything about costs when he came in.

The surgeon billed the Adamis $4,878 for eight stitches that were coded as “open wound, jaw, complicated.” “When I looked at the bill, I laughed and I told the surgeon’s office, ‘Process this claim with my insurer. I’m not paying out-of- pocket,’  Mr. Adami said. “The hospital has control over who they bring in. But I do not.”

Patients have no choice about which physician they see when they go to an emergency room, even if they have the presence of mind to visit a hospital that is in their insurance network. In the piles of forms that patients sign in those chaotic first moments is often an acknowledgment that they understand some providers may be out-of-network.

But even the most basic visits with emergency room physicians and other doctors called in to consult are increasingly leaving patients with hefty bills. More and more, doctors who work in emergency rooms are private contractors who are out-of-network or do not accept any insurance plans.

While patients have complained of surprise out-of-network charges in hospitals from some other specialists — particularly anesthesiologists, radiologists and pathologists — the situation with emergency room doctors is even more troubling, patient advocates say. For one thing, patients cannot be expected to review provider networks in a crisis, and the information to do so is usually not readily available anyway.

When emergency medicine emerged as a specialty in the 1980s, almost all E.R. doctors were hospital employees who typically did not bill separately for their services. Today, 65 percent of hospitals contract out that function. And some emergency medicine staffing groups — many serve a large number of hospitals, either nationally or locally — opt out of all insurance plans.

As more insurance plans contract with narrower networks of doctors to form offerings tailored to the Affordable Care Act, insurers have acquired greater leverage in cutting payments to physicians. While an insurer would have little power to drive a hard bargain with a major hospital that the company needs in its network, it can often pick and choose among physicians, excluding some or offering rates so low that many doctors say their practices are unsustainable.

Dr. Jeffrey Bettinger, chairman of the reimbursement committee of the American College of Emergency Physicians, said that out-of-network emergency room doctors were an unusual phenomenon and expressed doubt that the practice was widespread. When it occurred, he added, it was typically because of insurers’ unwillingness to pay doctors a reasonable rate compare to what they pay hospitals for their services.

Hospital charges for emergency care vary widely. A recent study found that hospital charges for a visit involving a serious medical issue in California varied between $275 and $6,662, just for the facility fee. “Much of the variation we observe may in fact be entirely random,” wrote the authors, emergency physicians at the University of California San Francisco Medical Center. But that variation often does not directly affect patients, since most hospitals participate in the big insurance plans in their area, and patients tend to know which are in their network, so the insurer covers most of the bill.

But it is a different matter with emergency room doctors who bill out-of-network fees, experts say.

When Dr. Michael Schwartz’s daughter went to an emergency room in the Philadelphia suburbs for a reaction to a medication in 2010, she went to an in-network hospital, Bryn Mawr. She was there for a few hours on a cardiac monitor. While most of her care was covered by his family’s insurer, Capital Blue Cross, a bill of more than $2,000 from the out-of-network E.R. physicians for cardiac monitoring was not.

“I tried to negotiate with the physician group, but they wouldn’t budge,” said Dr. Schwartz, a pediatrician, who ended up paying $1,200, the amount his plan required for his share of out-of-network care. “It was ridiculous. I’m a physician and I understand how this works. There was no sign saying, ‘Our physicians are out-of-network.’

Emergency physicians say they are not to blame. “In general, E.R. physicians try to align themselves with whatever networks their hospitals are in, but sometimes the rates pale compared to what is offered to the hospitals,” said Dr. Bettinger of the emergency physicians’ group. That often leads to protracted negotiations, he said, but eventually the insurers and the doctors come to agreement and sign a contract.

In the meantime, patients are stuck with out-of-pocket charges. Regulations created by the Affordable Care Act specify that insurers must use the best-paying among three methods for reimbursing out-of-network physicians dispensing emergency care: pay the Medicare rate; pay the median in-network amount for the service; or apply the usual formula they use to determine out-of-network reimbursement, which often depends on “usual and customary rates” in the area.

But in most states, doctors can then bill patients for the difference between their charge and what the insurer paid.

There’s No Place Like A Medical Home

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A new approach to primary care, patient-centered medical homes save money, reduce unnecessary services and improve patients’ health.

Joe McDonald, 70, of Fairfax, Va., really likes his primary-care doctor. And it’s no wonder. The retired finance manager can get same-day appointments at the Fairfax Family Practice, e-mail his physician or drop by the practice’s walk-in clinic, even on weekends. On a secure Web site, McDonald renews prescriptions and reviews test results. Everything is “right at my fingertips,” he says.

McDonald’s doctor alerts him when he is due for a colonoscopy or other screening. While the physicians in the practice refer the tough cases to specialists, they help patients manage chronic conditions, from diabetes to heart disease. And they perform some procedures right in the office, such as the removal of moles and the casting of broken bones.

Most important to McDonald: His physician has taken the time to get to know his patient. “I get that one-on-one personal relationship with him,” he says.

Fairfax Family Practice is one of 12 offices of Fairfax Family Practice Centers, which includes 120 providers, among them nutritionists and physical therapists. And it is on the forefront of a growing trend called “patient-centered medical homes.” Studies indicate that this approach to primary care saves money, reduces unnecessary services and improves health.

Medical homes are a modern-day version of the old-fashioned family doctor, who performed a wide range of medical services and offered emotional as well as clinical support. This updated model of primary-care delivery organizes all facets of a patient’s care. Doctors, nurses, care managers and medical assistants typically work as a team to oversee a patient’s care. Medical homes coordinate all referrals to specialists, and then track those visits. They help patients manage medications prescribed by all doctors. Medical homes also coordinate care among facilities, following the patient from hospital to rehabilitation facility to home. They use electronic medical record systems to track their own performance and their patients’ health and outcomes, and to provide patients with online access to their physicians and personal medical records.

To call itself a medical home, a practice must get certification from the National Committee for Quality Assurance, a nonprofit health care accreditation organization. There are 6,800 certified medical homes, up from 28 in 2008. “Medical homes are the fastest-growing delivery system innovation,” says Andy Reynolds, an assistant vice-president at the committee.

A big reason for the surge: After noting evidence that the patient-centered approach pays off, insurers and health plans are willing to pay primary-care doctors in these practices a bit more. Today, it’s common for insurers to pay primary-care practices $50 or more per patient each year to give more personalized care.

Among the positive research, a study of a medical home pilot at some of the 26 medical centers of Seattle-based Group Health Cooperative—which combines hospitals, medical practices and health plans—found that the quality of care was higher and patients were more satisfied than at the cooperative’s other centers. The study evaluated chronic illness care, medication monitoring and other quality measures. And for every $1 invested, Group Health saved $1.50 by reducing emergency-room and hospital use. The results persuaded the cooperative to expand the medical home model to all of its medical centers.

Getting a Boost From Government

The federal Affordable Care Act has “provided a lot of oomph” to medical homes, says Marci Nielsen, chief executive officer of the Patient-Centered Primary Care Collaborative, an association of health care providers. The law is spurring changes to how health care is paid for—away from fee-for-service payments that encourage more services and toward models that promote cost efficiencies while improving medical outcomes.

The new law is financing demonstration programs that pay providers a single payment for “bundles” of services during an episode of care. Pilots also are testing extra payments to providers who can prove better outcomes on selected measures. And they’re evaluating team-based approaches, such as medical homes, by paying doctors more to cover patient education and care coordination.

Medicare is testing the value of medical homes. In one program, Medicare is paying 1,200 medical practices in Maine, Michigan, Minnesota, New York, North Carolina, Pennsylvania, Rhode Island and Vermont to provide health care in a medical home to more than 900,000 beneficiaries. In another, Medicare is paying 500 medical practices in Arkansas, Colorado, Kentucky, New Jersey, New York, Ohio, Oklahoma and Oregon an average of $240 a year per patient.

In Vermont, medical homes have been taken to a new level, thanks to a state-organized effort called Blueprint for Health. Medicare, Medicaid and private health insurers are making per-patient payments each month to support medical homes. As a result, all Vermonters have access to a medical home, which includes roaming “community health teams.”

Vermont’s community health teams are made up of nurses, health coaches, nutritionists, social workers and mental health professionals. Doctors can refer a patient to a team, which visits patients at home if, for example, the patient is newly diagnosed with depression or diabetes. The team can arrange for a patient’s transportation to a doctor’s appointment or pay for new prescriptions for patients who can’t afford them.

Sheila Sharp, 64, of Shelburne, Vt., was referred to a health team when she wanted to lose weight and start exercising after she retired last summer. “My doctor was concerned about my weight,” says Sharp, a retired preschool owner, who has high blood pressure and cholesterol.

The community health team’s health coach and nutritionist helped Sharp to plan menus and create an exercise regimen. The exercise plan includes a fitness app for her smart phone. Sharp, who has lost 20 pounds, says she “wouldn’t have made this change without” the team’s help.

If you’d like to find a medical home, make sure the practice is recognized by the National Committee for Quality Assurance. Go to for a list of medical homes in your state. If you live in a state where Medicare is piloting medical homes, you can ask your primary-care doctor if he or she participates in the Comprehensive Primary Care Initiative or the Multi-Payer Advanced Primary Care Practice demonstration.

Social Security’s Hidden Medicare Penalty

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Most people who use online retirement or Social Security programs come to the incorrect conclusion about when to start their first payment for Social Security benefits. For starters, the raw data from for specific ages may mislead first-time filers on the size of their Social Security checks. Worse are the values for spousal benefits.

People need to understand the relationship between Social Security and Medicare. The fact that Social Security is subject to a reduction from Medicare premiums is unknown to many people planning for retirement. They think that their Social Security paycheck will be what appears on the SSA report for various ages. A low earning spouse may get up to 50% of the high earning spouse’s full-retirement-age Social Security, but both spouses have the same Medicare reductions. That means that the low earning spouse’s benefit gets hit extra hard by the Medicare reduction percentage wise.

It isn’t just the fact that Social Security payments are reduced by Medicare premiums. It’s also because Medicare costs have increased at a faster rate than the Social Security inflation adjustment, as the Senior Citizens League attests on beating inflation:

“The Senior Citizens League analyzed typical expenses for older adults this spring and found that, while overall inflation has remained low in recent years, other costs are climbing at a sharper rate. From 2000 to 2014, for example, monthly Medicare Part B premiums grew 131%; during that same period, the Social Security cost-of-living adjustment increased benefits just 41%.”

The net pay from Social Security has grown at a much slower rate than 41%. Suppose a spouse now gets $600 gross spousal benefit from SS and has a $105 premium deduction for Medicare Part B leaving a net of a $495 paycheck. In 2000, the gross Social Security was $425 and the deduction for Medicare was $45 netting $380. That means the net increased from $380 to $495, a 30% increase. This is far from the 41% increase in prices over the same period.

It’s even worse for anyone who has Part D Medicare for drugs or is a higher income person who pays more than three times as much for Medicare Part B or has to take out income tax. About half of the gross Social Security is subject to income tax for middle income people, but 85% is taxable for higher income people.

A person who has a full-retirement-age (around 66) benefit of $1,000 would get $1,320 at 70. That’s a 32% increase in gross benefit. But the net benefit after considering a Medicare reduction of $105 is 36% higher for someone starting at 70 rather than 66. Spousal benefits are between a third and a half of the primary earner’s full-retirement-age benefit, so subtracting Medicare costs (which are the same for both spouses) from the spousal benefit is even more painful. Some readers with higher income will have Medicare Part B and D costs totaling $405 instead of $105 for low-income retirees.

Many people believe that the amount of money they will get from Social Security over their retirement isn’t any different whether they start at 62 at a lower value or start at 70 at a higher value. That’s because the differences in gross Social Security for different ages to start were actuarially determined to be the same up to a unisex death age of approximately 80 years old. However, life-expectancies have increased significantly meaning far more people are going to live beyond 80, especially women. And, as mentioned, the actuarial computation is based on the gross, not net, payments from Social Security.

The gain from delaying the start of Social Security is even higher for those with a spouse that can benefit from Social Security’s quirks; using suspend, file and suspend, or file a restricted application strategies.

Warning: When using a retirement planning program, be sure to input the net value for Social Security after accounting for Medicare deductions, not the raw number you read from the SSA report. Failure to do so can terribly mislead people about retirement income as well as the best age to start Social Security, particularly those with a spouse.

The lifetime income gains from Social Security are correctly said to provide the lowest cost longevity insurance available. With longer lives and taking into account Medicare deductions, it’s almost a sure bet, not a 50/50 one, to delay that first payment. That’s just another reason to be very careful when choosing a Social Security strategy.

The absolute minimum savings for retirement should be to have savings enough for retirement support before a delayed start of Social Security to the full-retirement-age (66-67) or, even better, 70.

And it’s also advisable to have a year of retirement living expenses set aside as an emergency reserve. There are many uncertainties in retirement planning. The list is endless. Don’t let an unplanned event, such as a medical emergency, new roof or major car repair take you by surprise.