The Provider’s Fee – Public Property

For a long time in American medical history, it was standard practice for a physician to set his own fees. He would often take into account the patient’s ability to pay, and in many cases even barter with a patient. Dr. William Stewart Halsted, founding professor of Johns Hopkins Hospital and pioneer of the inguinal hernia repair, the radical mastectomy, the gallstone removal, and last but far from least, the aseptic technique, was known to do just that. While on summer vacation at his country home, he would often treat local patients in exchange for goods and services. His requests reflected the means of the patient, but his care did not.

He continued this practice for years at High Hampton in North Carolina, and he remained a beloved figure in the Carolina countryside. The preeminent surgeon of his time, he was performing operations on “mountain folk” inside his country home for a price both parties agreed upon as reasonable. It may not have been by the books as we know now, but it was fair. His care improved and preserved the lives of many, and he received for it a price, whether cash or crop, that he and the patient decided was reasonable.

Today, things are different. Dr. Halsted and his contemporaries, operating only in his properly equipped surgical theater, would need to document the indications for the procedure, every detail of the procedure, and his adherence to guidelines and protocols to ensure his reimbursement for the procedure. In many cases the documentation would go through billers on the provider’s end, who would send it to the patient’s insurance company. The insurance company would have a team analyze the documentation for any transgressions that might absolve them from paying for the procedure. If everything was done according to protocol, then Halsted would receive his fee. This is the process which has now become familiar to us, and which has been growing in complexity and scope for the last few decades.

On one end, the individual physician needs the assistance of his biller or billing team to see this process through. Most have neither the time nor the expertise to navigate today’s medico-legal billing process. On the other, patients need insurance companies so that they don’t bear the burden unexpected medical costs on their own, and the insurance companies themselves must oftentimes fight egregious costs in the name of sustainability, which theoretically prevents insurance rates from skyrocketing. While this system is far from perfect -- there is no lack of procedures that go unpaid, and conversely there is an ethically perverse number of patients with mountainous medical debt -- it is a reality that the medical industry is accustomed to and has accepted as a whole. Most participants realize that this struggle over cost should not be central to the care of patients, and as such providers seem to have become comfortable with the fact that there is some external control over the medical financial industry.

What may be less welcomed by modern providers is a practice that has recently sprouted within this very industry. A new firm, which seems to lie somewhere between an auditing and a consulting agency for medium to large-size businesses, has established itself as a vehicle through which “employers set their own hospital bills.” The firm, ELAP Services, contracts with medium and large-size businesses to handle the healthcare bills of their employees.

When an employee receives a healthcare bill, the firm analyzes that bill, as well as the hospital’s financial filings, and determines a price that it believes is reasonable. The employer who has contracted ELAP and is responsible for the healthcare of its employee, then pays to the provider whatever number ELAP suggests. The firm’s rationale is that providers do not have a right to bill these patients more than what they bill Medicare, and it claims that when faced with documentation to this effect, “most hospitals do not fight ELAP.” Furthermore, ELAP has won lawsuits to this effect, including one in Georgia in which a judge “recognized the right of the plan to set rational standards of reimbursement.”

There are a lot of economic considerations to be made here, and a lot of details to be explored, but it would be wise to first look at it the bigger picture. Whereas a physician’s services were once simply his to charge for, today there are parties from every corner of the industry adjusting the numbers to their liking. First it was negotiated rates with private insurance companies, and then negotiation and oversight by the CMS. Now we are entering a time when a business can decide what a healthcare bill will be. “Name your own price”, if you will.

Certainly, affordable healthcare should be a pillar of policy in the United States, but is this really how we want to achieve it? Is it ethically, philosophically, economically, or realistically sustainable to leave providers with such little say in their own fees? One may look at Dr. Halsted and realize that, somehow, all those years ago, he and the his colleagues had figured out a fair system, without the regulations, without the third parties, and most of all, without “name your own price” health plans. He practiced at a time in which hospitals were expanding and medical schools were multiplying, when care was becoming increasingly accessible and effective. Today, the nation’s physician shortage grows and inner city hospitals are being forced to shut their doors, and this nascent system seeks to take even more privilege away from providers. We’re left to wonder if our patients can really afford this.

Sameer Massand's picture

Sameer Massand


Sameer Massand is a medical student and class president at Drexel Med. He’s a reader, writer, amateur historian and above all, an aspiring surgeon. He writes about the intersection of healthcare, economics and politics.

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