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Physicians adding fees for services that once were free

More practices charge for services such as phone consultations and filling out forms, adding a little revenue but risking a backlash.

By Robert Kazel, amednews staff. March 24/31, 2003.

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Ben Alvarez, MD, a Lyndhurst, Ohio, obstetrician-gynecologist, was withdrawing cash from a bank machine when he had an epiphany. If a bank can charge an administrative fee for certain services, why couldn't a physician practice do the same?

Dr. Alvarez, medical director of Beachwood OB GYN Inc., thought a modest annual patient fee could provide some cushion, and patients wouldn't mind paying it. "When we are at an ATM, we cough it up and nobody knows what it's for."

He isn't the only physician thinking this way. As pressure increases on insurance reimbursements and more of physicians' time is spent on nonbillable tasks, administrative fees for patients are looking appealing to more practices. Consultants and medical societies are reporting more frequent calls from physicians asking for advice on fee structures.

These may be specific fees for transferring records, resolving insurance problems, giving advice on the telephone or via e-mail or filling out forms. Or the fee may be a single annual charge -- for example, Dr. Alvarez's clinic instituted a $30 payment to defray overhead.

Such fees can bolster income but also represent an unfamiliar domain in which practices may alienate patients or violate insurance contracts. Consultants and medical associations are advising doctors who want to explore fee strategies to do it with care and expect a possible backlash -- as happened at Dr. Alvarez's clinic.

In fact, some consultants say backlash is more probable than possible.

"Some patients have been very upset," said Fran Lavallette, president of Healthcare Facilitators, a practice management consulting firm in Ocoee, Fla. "You're going to get some patients who are going to get really ticked off at it and leave the practice, but you have to gauge that against how much time you're spending on [nonbillable chores]."

For doctors, improving the bottom line is made difficult by the number of patient demands that are unreimbursed, including telephone calls, Lavallette said. "We're still in a Marcus Welby mentality and everybody's gracious on the phone, but patients don't expect to be charged like they would be for an attorney's or an accountant's time."

Some doctors are working on changing that expectation.

"I don't mind looking the patient in the eye and saying, 'You've got to be charged for this,' " Allen Dennison, MD, an internist in Barrington, R.I, said about fees for filling out forms or giving phone advice. "Most patients are sympathetic. I don't think they expect me to do it for free."

Dr. Dennison charges $2 a minute for phone calls as long as the patient's insurance permits it. He also charges $15 to $20 to fill out forms for summer camp, or patients' moves to nursing homes or assisted living centers.

"People are spending thousands and thousands of dollars to live in a senior care community," he said. "It's not unfair to ask them to spend 15 bucks to [have me] fill out medical information."

The AMA has affirmed that it's the right of physicians to set their own fees so long as they aren't excessive. The AMA has said doctors should do simple insurance tasks without charge but should get paid for complex administrative services required by payers.

However, physicians must be sure managed care contracts, and government health programs, don't prohibit surcharging. Doctors may be able to renegotiate terms in their contracts with private plans, said Robert Erra, managing director of Minneapolis-based Clark Bardes Consulting.

Many physicians are interested in introducing new fees but cautious about doing so. Paul Williams, DO, a family physician in Harrisburg, Pa., and president of the Pennsylvania Academy of Family Physicians, said he had considered fees for after-hours telephone calls or filling out forms, but has mixed feelings. "Part of the dilemma physicians find themselves in is they're considered a learned profession," he said. "On the other hand, you have to look at the bottom line."

In Dr. Dennison's 18-physician practice, he's the only physician to charge for telephone and family consultations, though other fees are standard for the practice.

As Dr. Alvarez's Beachwood clinic learned, however, charging fees can come at a high price.

Backlash

Dr. Alvarez and the three other owners of the practice agreed on the new surcharge. Beginning last April, patients were asked to pay the $30 fee with their insurance co-payment.

Beachwood's staff told anyone who asked that the charge supported "extras" such as patient seminars, pamphlets, appointment reminders and even computer modems in the waiting room. Very few patients objected to the fee, Dr. Alvarez said.

But before long, Beachwood found the smoldering ire of one patient was igniting a media flash fire. Sharon Forsch, a 59-year-old former kindergarten teacher who had seen one of the group's doctors for 15 years, went for a Pap test and balked at paying the new fee. Forsch questioned, for instance, why she had to pay for other patients' videos about pregnancy.

After being billed repeatedly for the fee, Forsch contacted a Cleveland newspaper. One of the several stories that ensued was headlined, "Extra charges make patients ill." The brouhaha led to a swift reaction from Medical Mutual of Ohio, the insurer to Forsch and 4,000 other Beachwood patients: The insurer said the fee violated its contract and threatened to drop the doctors from its network.

The practice cried foul, claiming that the previous summer it had openly discussed the surcharge with the insurer's executives. "There was a lot of love in the room when we explained it to them," Dr. Alvarez said. "They lost the lovin' feeling."

After new meetings between Dr. Alvarez, the practice's attorney and Medical Mutual executives, the practice kept the fee, but consented to formally inform all its patients that they had the choice to pay the surcharge or not, that it would not affect their relationship with the practice, and that refunds for surcharges paid in the past would be given on request. Further, no one would be turned away if they declined to pay, and the practice would stop billing patients repeatedly. After the first batch of 5,000 letters of explanation went out, Dr. Alvarez said, 35 patients requested refunds.

"The physicians made the mistake in poor execution," said Michael Taddeo, vice president of network management for Medical Mutual. For example, he said, patients got the impression the surcharge could end up in collection if left unpaid.

Despite the complexities, it's likely more doctors will try surcharges. Some already have called local and state medical societies for guidance.

"Doctors are very interested in putting these types of fees in place," said Almeta Cooper, general counsel of the Ohio State Medical Assn. "There is nothing illegal or improper about charging an administration fee as long as it's not covered by the physician's contract, it's reasonable, and patients are given notice."

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