Doctors' Fee Autonomy: Legal Or Ethical Dilemma?

The cost of healthcare is a pressing issue for many, and the fees charged by doctors are a significant factor in this. While doctors are expected to adhere to relevant laws and ethical standards, the reality is that the fees they charge are influenced by a range of factors, including the rising costs of running a practice, insurance coverage, and the consolidation of the healthcare system. In some cases, doctors have been known to charge extra or hidden fees, which can have financial consequences for patients, especially when these fees are not adequately disclosed beforehand. The question of whether doctors can increase their fees without any legal constraints is a complex one, involving not just the law but also ethical considerations and the dynamics of the healthcare industry.

Doctors face rising costs

• Demographic trends and clinical factors: An aging population, higher patient acuity, and chronic disease conditions have led to a rise in inpatient utilization, with Medicare and Medicaid reimbursements falling below the costs of providing these services.
• Resource-intensive services: Hospitals provide essential, yet costly, services such as emergency care and behavioral health, which are not offered by other healthcare providers.
• Technology: Cardiac Magnetic Resonance Imaging (cMRI) machines, for example, cost hospitals an average of $3.2 million each, with additional expenses for maintenance, upgrades, and staff training.
• Labor costs: Hospitals' labor costs have increased significantly, with a total of $839 billion in expenses, and they often rely on expensive contract labor.
• Administrative expenses: Inappropriate practices by commercial health insurers have significantly increased hospitals' administrative costs.
• Consolidation of the healthcare system: Large hospital systems are acquiring smaller clinics and healthcare providers, allowing them to charge facility fees and increase patient costs.
• Reimbursement challenges: Hospitals face issues with reimbursement, made worse by crises like cyberattacks and regulatory changes that add operational burdens.
• Hidden fees: Doctors are facing hidden fees imposed by payment processors and insurance companies, which can amount to billions of dollars annually and are often passed on to patients.

To address these rising costs, hospitals and healthcare systems must navigate a complex landscape of financial constraints, operational challenges, and the need to provide essential services to their communities.

Passing costs to patients

Doctors are facing increasing costs to run their practices, and some are passing these costs on to patients. In 2021, almost 60% of medical practices said they were compelled to pay fees for electronic payments, and this number has only increased. These fees can be as high as 5% of the total electronic payment, which, with more than $2 trillion in medical claims being paid electronically each year, add up to billions of dollars annually.

Some doctors are seeking to raise their rates in response to these fees, which would ultimately be paid by patients. This is especially true for doctors who do not accept insurance and instead charge patients directly. In the United States, doctors who accept Medicare as payment fall into two categories: those that "accept assignment" and those that do not. Those that accept assignment agree to a fee schedule and not to charge more than the recommended amount for any given service. Doctors who do not accept assignment believe their services are worth more than what the fee schedule allows. However, Medicare has set a limit, known as the limiting charge, on how much these non-participating providers can charge. At present, the limiting charge is 15%, and some states choose to limit it even further.

In addition to electronic payment fees, doctors also face other rising costs. For example, in the early 2000s, the federal government began cutting Medicare payments to doctors for non-invasive cardiac tests performed in a cardiologist's office. However, they kept their payments flat or increased them for the same tests if they were performed in a hospital-based outpatient facility. As a result, large hospital systems are acquiring clinics, physician groups, and urgent care and imaging centers, which then become outpatient departments of the hospitals. This allows the hospitals to charge higher fees for the same services, passing the costs on to patients.

While some doctors may be justified in raising their rates due to increasing costs, it is essential to consider the potential impact on patients. Passing costs to patients can create a barrier to accessing healthcare, especially for those who are uninsured or underinsured. It is crucial for doctors to adhere to professional ethical standards and sound business practices when setting their fees. They should charge only for the services they personally render or supervise and avoid charging excessive or unnecessary fees.

Payment processors and fees

Payment processors are companies that manage the logistics of processing card payments for businesses. Examples of payment processors include Square, Stax, Helcim, and Zelis. Payment processors charge fees for their services, which can vary depending on the processor and the pricing structure. These fees are typically a percentage of the transaction amount, ranging from 1.5% to 3.5% on average, but can also include flat fees or transaction fees.

In the context of doctors' fees, payment processors have been known to charge fees for electronic payments, which can be as high as 5%. This has led to concerns and disputes, with some doctors feeling compelled to pay these fees to receive their earnings. Payment processors may also charge additional fees for specific services, such as monthly statement fees, payment gateway fees, minimum monthly fees, setup and equipment fees, and chargeback fees.

It is worth noting that the choice of payment processor and pricing structure can impact the overall cost of processing fees. Interchange-plus processors charge a consistent markup but pass on varying interchange fees to the merchant. Flat-rate processors combine interchange fees, assessment fees, and markups into a set amount, which can result in higher credit card fees. Subscription-based or membership-based pricing models charge monthly or annual subscription fees, sometimes with fixed per-transaction fees, and do not take a percentage of sales.

To minimize costs, businesses can negotiate lower rates with payment processors, especially if they have high transaction volumes or a strong history of sales. Additionally, encouraging the use of debit cards for payments can help reduce overall transaction costs, as debit card transactions typically incur lower fees than credit cards.

Laws to curb surprise medical bills

Doctors are expected to conduct themselves as honest and responsible professionals, adhering to relevant laws, ethical standards, and sound business practices. While there are no explicit mentions of laws restricting doctors from increasing their fees, various laws and ethical guidelines govern medical fees and billing practices to protect patients from unfair or excessive charges.

In the United States, the No Surprises Act protects individuals with group or individual health plans from receiving surprise medical bills for most emergency services, even if they are obtained out-of-network and without prior approval. It also bans out-of-network cost-sharing for most emergency and some non-emergency services, ensuring that patients are not charged more than in-network cost-sharing. Additionally, it establishes an independent dispute resolution process for payment disputes between plans and providers and provides new dispute resolution opportunities for uninsured and self-pay individuals. The Act also requires health care providers to give patients a clear notice explaining their billing protections and the process to follow if they believe their rights have been violated.

State laws also play a role in curbing surprise medical bills. For example, California law protects consumers from surprise medical bills when they receive non-emergency services at an in-network facility and are treated by an out-of-network provider without their consent. In such cases, consumers are only responsible for paying their in-network cost-sharing, and medical providers are prohibited from sending out-of-network bills. Other states, like Maine, have considered bills to outlaw certain facility fees to curb rising healthcare costs.

While the No Surprises Act provides a federal framework, it is essential to note that state surprise billing laws may offer additional or more specific protections, as long as they provide at least the same level of consumer protection as the federal law. Therefore, it is advisable to refer to the specific laws in one's state to understand the full extent of protections against surprise medical bills.

Medicare and Medicaid

Medicaid offers benefits that are not normally covered by Medicare, such as nursing home care and personal care services. People with Medicaid usually don't pay anything for covered medical expenses but may owe a small co-payment for some items or services. Additionally, if someone has both Medicare and qualifies for full Medicaid coverage, their state will pay their Medicare Part B monthly premiums, and may also pay for their share of costs like deductibles, coinsurance, and copayments.

In recent years, there has been a rise in fees and other patient costs due to the growing consolidation of the American healthcare system. Large hospital systems are acquiring smaller clinics, physician groups, and urgent care and imaging centers, which then become outpatient departments of the hospitals. This allows hospital systems to charge higher "facility fees" for services at these smaller facilities, which are not located on hospital campuses. These facility fees are often rolled up into the overall medical bill, and hospitals argue that they are necessary to cover their overhead costs.

It is important to note that the issue of fees and billing practices is a complex one, with insurance companies, payment processors, and other middlemen also playing a role in driving up costs for doctors and patients.

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