How do doctors make money for Dummies
In this country there are many ways to pay physicians, the three main ways are fee-for-service, capitation, and salary.
A fee-for-service is whatever service the physician performs will have a fee attached to each service. The more services they do, the more revenue their practice will generate. This gives doctors an incentive to perform more test or procedures on patient and increase the quality of care by ording a more expensive test versus a cheaper test.There is risk attached, for example if a doctor is experiencing a low volume of patients for that month it could effect their practice and over all income. Enough bad months plus extra payments they make such as loans or rent etc. could result in a financial deficit for the physician and the risk of losing their practice.
Capitation means physicians get paid per person in their practice. For example, a doctor may be responsible for 1000 patients and the insurance company agrees to pay the physician $25 dollars a month per patient. The doctor will be paid the same amount every month regardless of what type of care the patient recieves. This allows a more consistant income, however, the incentive to perform on the job decreases. So if a doctor has a high volume month then they aren’t being paid as much as they should, however if they have a low volume month then they don’t face the risk that fee for service practitioners experience. A downside to this method, is it taht physicans could set up for a selection. The doctor may not be aware of this, but they may have a preference for healthier patients because they would do less work for the same price versus dealing with very ill patients who require alot of care that the doctor won’t be fully compensated for.
Salary, is an agreement to be paid a certain amount per year for a certain amount of work. This is most common in scenarios where physicians group grouped together in a pratice and they bill an insurance for their collectivly then take the money and divide it among the group. Each memeber would be paid based on salary. This isn’t very favorable for smaller businesses, typically larger practices benefit from this form of payment.
After the provider visits with a patient their is paperwork required for each visit in order for them to get paid. On average, an hour with a patient could result in 30 mintues of paper work to file to the insurance companies in order to be reimbursed for their serves aka and insurance claim. In today’s healthcare system charting and paperwork has been converted to be completed electronically but even coding can be tedious for providers. As a result, many physicians outsource their billing for efficiency, increase in quality time with the patient, and increase cash follow. These companies now deal with billing the insurance and dealing with claims. Some of the tasks that come with billing are: filing claims within the 90 day time period, inputting the correct codes to insure better reimbursement, looking into why claims were denied, contacting patients who aren’t paying for their services aka collections that the doctor had to deal with before and much more. Now that doctors no longer have to worry about these tasks they can spend more time seeing patients and treating patients aka “core competency” rather than stress over these issues if they hadn’t outsourced their billing. Especially with Obamacare and the shortage of physicians, they will be forced to see more patients and as a result, they won’t be able to keep up with the billing which increases the demand to outsource their billing.
A big way these physicians make their money is through coding. These codes can be found in their progress/operative note which are the notes the doctors take when they see their patients for a consultation. The progess note contains the medical history of the patient, the medication they are taking, the assessment, the diagnosis, and the plan on how to treat the patient. These codes and notes are sent to the insurance companies by the doctor or the biller to be reimbursed for their time towards the management and the care of the patient. The work the doctor performs is transferred into an actual code for the insurnace companies to consider. So the type of evaluation and management performed by the doctor will be translated into CPT codes and the diagnosis the doctor assigns the patients are translated by ICD codes. These codes are necessary to fill out the CMS 1500 form along with the patient’s insurance information and demographic information which is sent to the payor aka insurance companies for reimbursment. These claims can either be accepted, where the insurnace companies will pay the physician, or rejected to be sent back because it was filled out incorrectly to be resubmitted when the mistake is corrected.
