Medical Billing Behind the Scenes

I wrote the blog post below on the Survivor Pediatrics blog titled “What I wish parents Knew about Medical Billing”. I didn’t post it here on PediatricInc because placing it here would have been like preaching to the choir.

To my surprise, the post has gotten a lot of attention and I’ve received a lot of great feedback from people in the healthcare industry (those that actually live this day by day) as well as non-clinical or non-medical people.

So I decided to post a summary here on PediatricInc, not to tell you all what you already know, but rather to enlist you in sharing this message with your community, your audience and your parents.

Below is a summary, but you can check out the entire article by visiting the other pedia-tastic blog Survivor Pediatrics.


At a restaurant, generally you’ll get an itemized check that shows all the things you’ve ordered. Doctors do the same thing, but they do it in the medical chart.

Virtually every doctor who accepts health insurance uses codes (called CPT codes) that are assigned to every task they and their staff performs. Everything from a simple blood draw, to immunizations, to the ear check, to specimen handling — all these things are “coded” separately.


Parents often think when they are looking at the bill that the doctor is nickel-and-diming parents, when in reality, it is the insurance company that requires the doc to show their work in this matter.

The health insurance company doesn’t accept the doctor telling them, “I did a well visit — pay me our agreed-upon fee.” They want to know all the things the doctor did during a patient’s visit so they can decide how much they ought to pay the doctor for his/her services.

Since most patients (or in the pediatrician’s case, parents) don’t pay the doctors directly, but rather the health insurance company, they want to know what took place during the visit so they know how much they ought to pay the doctor.

It is the same as going to the restaurant and getting billed for all the side and extra orders. Although the main meal is accompanied by other things, like french fries or a salad, refills, side orders, substitutions and additions to the order are billed as extra.

Health care services are a la carte as well.


As a practice, we consider that treating patients based on what the insurance covers and what it doesn’t, instead of treating by what the patient actually needs, is an unethical way to practice medicine.

I believe it is  time to start lifting the curtain, showing people what is under hood or giving people a behind the scene tour  on why things are the way they are.

Unless we start telling parents how things are and giving them this insight, they will continue to believe we are the reason the system is broken. We all know that is not true. And we all know who really is to blame.

For the full post, click here

Medical Practice: Understand The Business

Because to compete in this new, value-driven and aggressive health care market place, our doctors will require our leadership to carefully rethink each component of the business. For our survival requires bold and decisive actions

public-speaking-firstpointI was talking to a friend the other day who’s trying to get a public speaking business going. He was telling me about one of his recent gigs and how several people came up to him after his presentation to ask him for his presentation slides.

He told me he was happy that people thought his material was good; but at the same time, he was offended that someone wanted him to hand over the slides he worked so hard on. He said that most of the people that came up to him were college professors, as if saying, “how dare they want my material.”

I told him I thought he was looking at it the wrong way.

I told him he had a big problem. He wanted to get this new public speaking career off the ground, but nobody knows who he is. He has all this great content, but nobody knows he has it.

By not sharing the slides, I told him, he missed an opportunity to let others know about his work. Those professors probably teach hundreds of kids in a given year. If five professors share the presentation with their students, my friend could have potentially had several hundred people now know who he is.

I asked him, “What is your business? How do you make money?” He responded by saying, “speaking.” Right! “So you are not going to lose any money by giving the slides away.” I said. Give them to anybody that wants it. Heck, tell them to share it with anybody they want. Just make sure all your contact information is on the deck (i.e. email, website, Twitter, Facebook, blog, everything).

“But what if those professors steal my work?”

I said, “let’s think about this… if people “steal” his stuff, if anything, that is validation that his stuff is really good. If nobody bothers, then he has bigger problems.

But let’s give people the benefit of the doubt. Let’s say they don’t steal his stuff (I would argue this is safe assumption considering professors are keen about plagiarism), but instead they share it with everybody. At least by sharing the slides, he has a better chance of jump-starting the business. Whereas by not sharing the content there is NO chance he will get known.

The turning point for my friend was understanding that his business was speaking, not the slides. However, he could use the slides as an advertising vehicle to promote his work.


Google does it best

A perfect example of understanding this notion is Google. What is Google’s business? Gmail? Google Maps? Search? Google Chrome? Google Earth? No! Their business is advertising.  Would Google have become the giant it is if they charged for search? Probably not.

googleappsSo, how does Google drive usage? By creating all these cool services that drive eyeballs. And eyeballs drive advertising dollars.

Google understands their business.


Know the business

There is a lot of talk about how the Obama administration is going to reform health care. I suspect regardless of the final outcome, consumers of health care will have their skin in the game one way or another. Consequently, patients will discern more than ever price vs. value vs. outcome. 

As medicine becomes more a more like a traditional business, we as practice leaders need to understand what drives our businesses. Like Google and my speaker friend, we need to comprehend what drives value vs. what drives revenue vs what is contributory.

Because to compete in this new, value-driven and aggressive health care market place, our doctors will require our leadership to carefully rethink each component of the business. For our survival requires bold and decisive actions.


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A Practice Manager’s Perspective on Health Care Reform

If Americans want the highest quality of care at the lowest possible price, there is going to be some trade offs.


health-reformWhen I decided to start the blog, I made a commitment not to complain about how bad things were in the health care industry without at least providing some resolution to the issue at hand. 

So, when I was asked last week to give a practice manager’s perspective on health care reform, how doctors  ought to be paid, and what needs to change so people can get the best quality of care at the lowest possible price, I jumped on the opportunity to give my point of view on what needs to be done to move forward with health care reform.  

Trade Offs 

If Americans want the highest quality of care at the lowest possible price, there is going to be some trade offs. Health care is expensive to provide. How much does a person have to pay to become a doctor? How much does it cost to research and develop a drug or a vaccine?  How much does a doctor have to pay for malpractice insurance, rent, highly qualified employees, equipment, and all the other things that go along with providing care?


There is a lot of talk about reducing the cost of health care. And although I agree cost is an issue, I think we need to be careful not to pursue the lowest possible price while comprising quality health care. Otherwise, we will run into the Wal-Mart model. A product at Wal-mart is in fact the best quality one can get at the lowest possible cost. But we know that in order to provide the lowest possible price, quality is compromised. If one wants a higher quality product, then Wal-Mart is not the place. In other words, you get what you pay for. Health care is no different.  

An example of health care delivered at the lowest possible price is MinuteClinic. Their prices may be a little more affordable than visiting a primary care private practice (although their prices are not much less than our practice), but there is a trade off. Nurse practitioners staff MinuteClinics. In fairness, nurse practitioners do have advance degrees, but they certainly do not go through the rigorous training and cost that an MD has to endure to become a physician.

MinuteClinic’s model allows them to reduce health care cost because of several factors. For starters, they do not staff MD’s. Secondly, MinuteClinic can leverage the synergy afforded by CVS, a multi-million dollar corporation. The model also forgoes continuity of care, referral coordination, coordination of care, chronic disease management, counseling, and many other issues that primary care physicians deal with on a day-to-day basis.

 You see the trade off?

It is not about how much your make, but how much you spend

In financial business matters, we often hear experts say, it is not always about how much you make, but rather how much you spend.  Thus, before we can discuss payment reform concerning how doctors should be paid, we need to examine what drives cost in health care, particularly for private practice doctors.

Insurance Companies = Increase in Cost = Bad

We can achieve savings – and as a result drive the cost of health care downward –  by removing many of the excesses that hinder our ability as service providers to deliver health care. Therefore, I would consider removing the power health insurance companies have over doctors. Insurance carriers make up rules that suit themselves, and then change them whenever it is to their advantage, which happens frequently. 

To give you an idea of how many changes insurance carriers make, take a look at the Verden Group’s report (here), which outlines insurance carrier’s changes. Keep in mind the report only highlights quarterly results. Susanne Madden, president and CEO of The Verden Group, gave a great interview that summarizes the challenges primary care faces when dealing with insurance companies. You can check out the interview here.

Our small pediatric office of two doctors deals with about 80 different insurance companies. Each company has it own rules, forms, pre-requisitions, fee schedule, reimbursement rates and many other unique things for us to do in order to be paid. The larger insurance company have different product offerings within each plan. This adds to the complexity and uniqueness of each plan. We have patients, for example, that work for the same company and insured by the same insurance carrier, yet the insurance policy pays out differently for the same services.

Managing this process drives cost upward. By removing the administrative burden of dealing with insurance companies, doctors could increase revenues by spending less on administrative cost. The extra money and time can be spent caring for patients, which increases quality of care.  

The problem with insurance companies is that they decide the rules and make changes to their rules at will without letting anybody know about them. There’s no transparency in pricing; no transparency in contracting; no transparency in rules.

Who should set reimbursement fees?

Insurance companies ought not to be allowed to set reimbursement fees. They have a conflict of interest when deciding what is appropriate reimbursement for medical care. Therefore, in order for doctors to offer the best care possible, they must be paid fairly for their services without a third entity –who has a conflict of interest- decide what is proper compensation for their work.

 Malpractice insurance = increase in cost = Bad

Malpractice insurance is another area that should be looked at as well in an effort to reduce the cost of health care. Doctors spend outrages amounts of money on malpractice insurance. According to the AMA, 20 states have a true malpractice crisis. The reason for the high cost of malpractice insurance, is because of the US legal system; which does very little to protect honest doctors.

The current legal system encourages health care providers to practice medicine defensively. More often than not, test, labs, referrals are not necessary, thus in an abundance of caution, a physician will move forward with an unnecessary treatments to reduce the liability of a medical malpractice suit.

I do acknowledge that medical negligence does exist and some doctors are more careful than others. But what I am suggesting is that if doctors were protected from the legal system, they would not have to practice medicine defensively. Consequently, malpractice insurance premiums would decrease and as a result, so would health care cost. I also believe quality would improve because the doctor can focus without the distraction of a potential lawsuit.

But wait… there is more.

I’ve only begun to scratch the surface of how I think health care ought to be reformed. But from a practice manager’s perspective, these are the two main issues I consider hinder medical offices’ ability to provide high quality care at an affordable price.

Our leaders, the ones that can reform health care, are required to understand more than ever the need to carefully rethink each component of the health care system. For the survival will require bold and decisive actions.

How would you start to put health care reform on the right path?