By Thomas F Taylor MD

Published January 2000

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The payors always begin by offering a "reasonable" reimbursement after negotiation - which invariably is one-sided in that they offer a scheduled reimbursement which is really non-negotiable. They then allow a period of time - never increasing the rates - and always adding costs in the form of paperwork, "documentation," copying expenses, or by whatever name; for which they do not reimburse. The next step is to gradually decrease the reimbursement rates and to increase the overhead in the form of "paperwork." In time, and after the physicians - who really do not know what it costs to do business - find out that the costs of taking care of the insurer's patients exceed the reimbursement for that care. They end up subsidizing the medical care out of their own pockets.

I have seen this in the Medicaid program in Kansas, and, as a matter of fact, it was cheaper not to bill for the services because that added an additional cost - the reimbursement was a great deal less, counting all costs - than what it cost to take care of the patient.  The same thing is happening with Medicare now - and this is the reason a lot of physicians are not able to take care of these people and still stay in business. Again the providers are subsidizing the system.

When dealing with the insurers or with the federal government remember that they have a different agenda - they really are not willing nor are they able to deal "on a level playing field" with the providers of medical care. Their "bottom line" is the dollar and the providers always end up subsidizing the insurance programs - whether administered by private insurers or by government.