I saw two patients last week on the same morning for identical tests whose divergent stories generated an interesting debate amongst my staff regarding healthcare rights and the cost of providing the same.
For some background pertinent to this discussion, I perform a diagnostic test in my office called an Electromyogram (EMG) which quantifies the electrical function of muscles and nerves, and is used by my surgical colleagues to assist in their decision whether or not to operate. Depending on the diagnostic question, the test can take anywhere from 30 minutes up to 2 hours to perform, interpret and generate a report, the average encounter lasting about 45 minutes. Currently, we are reimbursed via rates we negotiate with the various insurance carriers, all of which are fixed at a rate that is some percentage of Medicare reimbursement rates (generally ranging from 80% of Medicare for most state Medicaid products to 125% of Medicare for some private insurance products). Without getting into the minutia of medical cost accounting, there are real costs to our group related to my performance of the test on any given patient such that, below a certain reimbursement level, we actually lose money. Further, if a patient cancels his or her test at the last minute and I am not able to move another patient into the cancelled appointment time, no revenue is generated for that appointment.
The first patient showed up for her test and had a state Medicaid insurance plan such that she paid nothing for her insurance plan. She was not even required to pay an office “co-pay” so she had no “out-of-pocket” costs for her medical care. When my nurse explained the EMG test, including the need to use rubbing alcohol on her skin in areas where I would be inserting an electrical needle, she declined the test. When asked why, she indicated she had just spent $120 on a “spray-on-tan” the day before and did not want to cause streaking of the tan. In our region, the going rate for this type of tan is $60 per application and she required two such applications to achieve her desired result. She was rescheduled and later did complete the test and our practice was eventually reimbursed at the contract rate of 80% of the standard Medicare reimbursement rate.
The second patient was a single mother of two who worked two jobs, making just enough to fail to qualify for the state Medicaid insurance just described, but not enough to afford the cost of insurance through the PPACA exchange in our state. She determined that her monthly insurance premium and $5000 deductible was more than she could afford. She requested our “self-pay rate”, which I further reduced to 95% of our Medicare rate after hearing her situation.
Most of my staff were disgusted with the behavior of the first patient and admired the behavior of the second. A few wanted me to further reduce the charges to the second. I pointed out that if I saw only patients like the first or second patient, I would have to lay-off 30% of my current staff, this after salary reductions all around. Others noted the first patient’s behavior was very rational from the standpoint of her personal cost accounting. A $120 spray-on-tan has financial priority over a $0 EMG test, despite the fact that the subsequent test did reveal a finding that caused my partner to correctly modify his treatment plan (i.e. the test turned out to be medically beneficial to her health).
The two isolated cases presented here are an insufficient basis upon which to form healthcare policy. In both of these cases, the EMG test results caused a better surgical decision to be made for each patient, so in that sense, both tests were medically necessary. In both cases my frugal office manager argues that we lost money. The cases did generate very good questions by our staff such as: How much should a necessary test cost a patient? How much should our practice get reimbursed for performing a necessary test? Essentially, who should pay for necessary healthcare? Is healthcare a right such that someone is obligated to provide the necessary service? What makes a service necessary? Should everyone have some (financial) skin in the game? Unfortunately, we generated several more great questions but no consensus answers.
Except for one: The only consensus opinion that my staff formed after considering these two examples was that one’s co-pay should approach the local cost of a spray-on-tan, but just a single application not a double.