The Montclair Times

The Doctor Is Out: Physicians Severing Ties With Insurance Plans To Go It Alone

The Montclair Times — Thursday, May 19, 2005


The breast surgeon charges $350 for a mammogram. Cancer patients can put their $5,000 mastectomies on their Visas.

Elliott takes cash, check or credit card -- but not insurance.

Fed up with low reimbursements and paperwork hassles, she dropped out of HMOs and other insurance plans.

Business couldn't be better. She now gets three times what insurance was paying for mammograms. Her Montclair Breast Center recently unveiled its new $2 million MRI, a diagnostic weapon typically found in teaching hospitals. It is the crown jewel of a practice Elliott dreamed of in her residency.

"You can't give quality care when you're getting $100 for a mammogram,'' she said. "I couldn't be the kind of doctor I trained to be under managed care."

It used to be only a few elite Manhattan specialists shunned insurance and expected patients to foot the bill. Now, the practice is spreading throughout New Jersey. Your surgeon, your family practitioner and even your dermatologist are dropping out of insurance plans -- and asking you to pay.

Tens of thousands of patients here have already been affected -- patients who are paying more for the same care or are discovering they can't afford their regular doctor anymore even if their insurance picks up part of the bill for a doctor not in their plan.

Some doctors now find themselves discussing the cost of a hernia operation or heart bypass with patients, much like the guy at the Gulf station pricing a brake job.

"The insurance companies made medicine a business, not the doctors," said Hackensack surgeon Robert D. Degroote. "So that's how we have to look at it."

Before severing his ties with most insurance plans, Degroote's finances were so bad that he and his surgical partners had to give up their salary for six weeks, he said. Now, they no longer joke about opening a Dunkin' Donuts franchise if their practice fails.

"The quality of life has vastly improved,'' said Degroote, whose practice has 4,200 patients. "We're able to provide better care.''

If the trend continues, experts fear it will create a two-tiered system, where the best doctors will be available only to the wealthy. Everyone else will have to make do with the pool of doctors left in their plan. It's especially troubling because it comes as families are struggling to pay sharp increases in health insurance -- and they're now having to dig even deeper to pay doctors who won't accept those pricey plans.

Count Melvin Freedenberg among the miffed.

Last month, the 62-year-old Ridgewood man learned that his Fair Lawn surgeon had dropped his insurance plan, which costs him $750 a month. He needs an operation, but he can stay with the surgeon he trusts only if he's willing to spend $1,500 or more for the procedure. A surgeon in his plan would cost him just his $30 co-pay.

"Some of these doctors deserve what they get,'' he said. "Others should have a sign in their office that says 'Greed before patient care.'''

The internists, neurologists and surgeons leaving insurance plans say it's the only way to keep their practices afloat financially. Free of insurance companies, physicians see medicine returning to the glory days, when their opinions weren't questioned by HMO bureaucrats and when their salaries justified the cost of medical school, hellish residencies and emergency calls at 2 a.m.

Last month, David P. Bleeker, a Hackensack internist, told 1,000 patients he no longer accepted United Healthcare. He ditched three other plans last fall. Valley Hospital Chief of Surgery Thomas N. Ahlborn participates only in Medicare and the insurance plan for hospital employees. Neurologist Patricia G. Klein believes her patients are benefiting -- even if they are paying more now that she's out of most plans.

"My staff is much less stressed and I have more time with patients," said Klein, who practices in Westwood and Hackensack.

The doctors have found a way to profit, in large part, on the backs of the insurance companies they've just defected from. That's because many of their patients now have to use their insurance's out-of-network benefit, which allows them to visit doctors not in their plan. The benefit not only pays doctors more generously, patients are also paying more for the care.

Arthur L. Caplan, a medical ethics expert at the University of Pennsylvania, worries that as doctors around the nation drop out of insurance to remedy their financial woes, patients will pay the price.

"Patients," he said, "are getting caught in the middle.''

'Charging a fair fee'

Convincing the public that doctors are underpaid when they earn five times that of the average New Jersey worker is a challenge, admits Degroote, a vascular surgeon.

In his Summit Avenue waiting room, where he's displayed a framed 1999 cover of New York Magazine ranking him as a top surgeon, Degroote says he knows patients aren't sympathetic to doctors who gripe about their income.

But he feels he more than earns the $225,000 he averages a year. He works 70 to 80 hours a week and performs some of the riskiest surgeries. When the beeper goes off, he's there.

"What we're talking about is charging a fair fee on the risk we take, the amount of training we have undergone and the experience we've accumulated,'' he said.

Many physicians have reached that conclusion, said Staci Berger, political director of NJ Citizen Action, a patient advocacy group.

"Specialty doctors are saying 'People need us, so they're going to come to us on our terms,'Ye'' Berger said.

This month, Berger herself had to charge $105 to her credit card to cover a doctor visit -- it's usually just a $10 co-payment -- because she couldn't find a hand specialist near her who accepted her plan. It's the same with her dermatologist and chiropractor.

"If the managed care plans aren't paying a reasonable amount, more doctors are going to make these kind of business decisions," she said.

With his practice struggling in 2002, Degroote enrolled in a two-day course to better understand the finances of medicine.

He divvied up all the appendectomies and gall bladder surgeries, and distilled the essence of medicine into a number. Each office visit, each surgery, was assessed an amount based on the work required, the practice's expense and the risk incurred.

"It changed the entire way I look at medicine,'' he said.

Degroote discovered that in 1992, Medicare paid surgeons $3,566.24 for repairing a ruptured abdominal aneurysm, one of the riskiest surgeries. Ten years later, doctors got 33 percent less -- $2,413.09. Other insurance plans paid even less -- about $1,800, Degroote said. After meeting salaries, overhead and malpractice premiums, Degroote calculated his profit at $439.28.

"You start to ask yourself is it worth it,'' he said. Particularly when he read that CEOs of health insurance companies were taking home an average of $15.1 million a year.

Degroote's practice now charges $8,000 for the same surgery.

"It's a fair price,'' he said. (That's just the surgeon's fee. A patient's insurance would still cover hospital, physical therapy and other costs.)

Degroote has become a cult hero of sorts to his colleagues. He's in demand at medical conferences from Allendale to Atlantic City, where he encourages doctors to think like accountants.

He acknowledges that physicians willingly signed contracts with insurance companies and agreed to the rates they set.

"We're not asking for sympathy," he said. "We have no one to blame but ourselves. But the bottom line is nobody of any quality will be practicing medicine if it keeps going this way.''

The financial pressures on doctors are mounting. Malpractice rates continue to skyrocket. The government recently announced plans to cut Medicare payments 26 percent by 2011. Any changes in Medicare have implications that extend well beyond the 41 million elderly and disabled Americans it insures -- many insurance companies look at Medicare reimbursements when setting their own rates.

Christy Bell, senior vice president of health care management for Horizon Blue Cross Blue Shield of New Jersey, acknowledges doctors have felt "a great deal of frustration."

"Doctors have gone through a difficult time with reimbursement and that's because most of us base some form of it on Medicare," Bell said.

Still, Bell doesn't believe masses of doctors are defecting. In fact, networks are gaining physicians he said. Aetna, for example, has added 1,000 doctors to its North Jersey network, said spokesman Walt Cherniak.


By canceling their insurance contracts, Degroote and other doctors have found a more profitable source of income: a patient's out-of-network benefits.

Patients with these benefits can go to any doctor outside of their plan -- as long as they're willing to pick up far more of the cost. If insurance denies the claim, the patient has to pay the entire bill.

Some physicians, like Elliott, require patients to pay their bills in full and leave it to the patients to persuade their insurance companies to reimburse them. Others will submit a claim to the insurer, then bill the patient for the balance.

The out-of-network option has traditionally been offered as a safety net -- so customers know, for instance, they can go to a top specialist if a family member suffers a catastrophic illness. The insurance dropouts have discovered that many patients in North Jersey have plans with these benefits.

Melvin Freedenberg is such a patient. Instead of a $30 co-pay to cover the cost of his surgeon, he'll have to pay a $1,500 deductible before his out-of-network benefits kick in. After that, his insurance will pay 80 percent of the "reasonable'' cost, while he must pay the rest.

However, patients often find themselves at odds with their insurers over what constitutes a "reasonable'' fee. Typically, insurers pay far less than 80 percent of the doctor's bill, leaving patients to pay much more.

Freedenberg, who owns a small business selling minivans, said he can handle the bill. But he wonders what will happen to those who can't.

"The medical insurance program seems to be so broken and getting more confusing," he said.

Michele K. Guhl, president of New Jersey Association of Health Plans, disagrees. "Insurance was never intended to cover everything,'' she said. "It's about protecting people from those big financial hits.

"If everyone has the good, solid basic coverage, then those who can afford the extras are fine," she said. "Is it better for everyone to have a Chevy or a few to have a Lexus?"

But experts wonder how much more patients can pay in a state where premiums are already among the nation's highest. Last year, 220,000 insured New Jersey residents spent 25 percent of their income on insurance, prescriptions and all other medical costs, according to Families USA, a national patient advocacy group. That's 22 percent more people than four year ago.

Premiums could rise even higher, experts warn, if insurance companies begin to feel pinched by the increasing number of out-of-network fees they're paying.

"Working families are squeezed by runaway health care costs,'' said Ron Pollack, executive director of the group. "Workers are paying much more in premiums but are receiving less coverage.''

But Degroote said not all his patients are paying his full charge. More than half are Medicare patients and some are in Medicaid - coverage he still accepts. Ten percent are charity care cases for which his group receives nothing. And he is willing to negotiate his bill with other patients.

Dropping out of insurance plans is a gamble. Doctors under contract with insurance plans are listed in the plans' physician directories, practically guaranteeing that patients will call.

Dr. David P. Bleeker realized he could lose many patients now that he's severed his ties with some plans.

He encouraged his patients to stay on and pay the $65 he now charges for an office visit - about $20 to $30 more than insurance had paid. He told his patients most of the cost would be covered by their out-of-network benefits.

When he still accepted insurance, Bleeker had to put in 12-hour days treating 35 patients. "I was so wasted and burned out on those days," he said.

Now, he sees about one-third of that caseload.

"We're turning the clock back 20 years to a time when a doctor didn't have to rush with patients and got paid for their care,'' he said. "What a concept.''

Darren J. Elzie, a Weehawken resident, plans to stay with Bleeker, even if insurance doesn't reimburse him.

So his doctor is worth $65 a visit? "Hell, yeah,'' he said.


The patients who entrust their treatment to the Montclair Breast Center are convinced they're getting their money's worth. They say the aggressive screening and private consultations with a radiologist can't be found elsewhere.

Five years ago, Elliott dropped all insurance except Medicare.

"It became more and more apparent that we couldn't provide the care we wanted if we stayed in managed care,'' Elliott said.

"It's much more rewarding for me now,'' she said. "Post-op patients call me at home. I'm happy to give out my cell number.''

At her center, mammograms are read instantly by a highly trained breast imager who is in no hurry, she said. In most other facilities, patients rarely talk to a radiologist and results are phoned in or mailed - a day or a week later.

The center's 5,000 or so patients may have an ultrasound as well as a mammogram, a practice she believes identifies more cancers even if some experts criticize it as overly aggressive. High-risk patients can have an MRI, Elliot said, which a study last year concluded can find breast cancers that mammograms miss.

Gail Pearlstein is convinced that paying with her own money saved her life. For years, she had undergone routine breast cancer screening at another center, the fee entirely covered by insurance. Three years ago, a radiologist there detected a change in her breast tissue, she said.

"They told me to wait six months and come back for a follow-up," she said.

She called Elliott's office -- and got in that day. An ultrasound detected a sizeable tumor. A biopsy confirmed the breast cancer.

"What if I had waited?'' she said. "Where would I be today?''

She charged her lumpectomy -- $2,500 -- to her credit card. She's not even sure if insurance ever reimbursed her.

"Isn't your health worth it?'' Pearlstein asked.

If the center charged $100 for screening, Elliott insists she couldn't afford her equipment. If she relied on insurance to pay for surgeries, she'd have to increase patient volume. That means less time to discuss complicated treatment options with anxious patients and shorter post-op visits.

It would, frankly, mean a lower income, Elliott acknowledges. But if surgeons and radiologists aren't making attractive salaries, no one will specialize in breast care, she says. There's solid evidence that fewer radiologists are enrolling in breast imaging fellowships, turned off by the reimbursement rates and risk of malpractice claims in one of the most litigious areas of medicine.

But does a higher cost of care translate to a better quality of medicine?

"To say that quality depends upon what you pay is unsupported,'' warns D. David Dershaw, director of breast imaging at Memorial Sloan-Kettering Cancer Center in New York.

While there will always be in-demand specialists patients flock to with charge cards in hand, many physicians won't have the star power to attract patients willing to spend more than their usual co-pay, said Caplan, who studies medical ethics.

"It's just not sustainable,'' he said.

New Jersey's largest insurer is about to make it harder for these insurance dropouts -- come July, Horizon Blue Cross Blue Shield plans to limit out-of-network benefits.

"There's a huge shift coming,'' said Bell, whose company insures 3.1 million residents. "It's been easy to go out of network. We would like it more attractive to providers to be in network.''

Blue Cross's plan is to make patients who use the out-of-network benefit pay even more of the cost. It'll become so expensive, patients will be less likely to stray from the physicians in their plan. Insurers believe that will, in turn, force doctors back to the fold.

NJ Citizen's Berger predicts that a battle in Trenton will erupt over the proposal. Lawmakers and patient advocates will fight it, she insists.

Doctors say they will not back down.

"I'm to the point that if I had to accept a fee that's unreasonable, I'm not going to practice anymore," Degroote said.

In fact, last week, doctors filed a class-action suit against Horizon, claiming they were underpaid millions because the insurer had set unfairly low reimbursement rates for out-of-network doctors.

Bleeker dismisses Horizon's proposal as just another fear tactic by insurance companies trying to keep doctors in line.

"Doctors," he said, "are learning they have nothing to lose and everything to gain if they stay out of managed care.''

Mary Jo Layton is a staff writer for The Record of Hackensack.


With more patients paying more as their doctors drop out of insurance plans, experts suggest a few ways to become a savvier consumer:

1. Since more doctors are setting their own prices, patients must be comfortable discussing -- and negotiating -- the cost of their treatment. Keep in mind that if your out-of-network plan states that insurance will cover 70 or 80 percent of the doctor's "reasonable" fee, most insurers are going to pay far less. Challenge your insurance company. Many doctors are also willing to negotiate the final bill.

2. Start a health-care flexible spending account through your employer. Most companies offer this benefit, which allows people to set aside pretax earnings to cover the cost of eyeglasses, contact lenses, prescription drugs and other out-of-pocket expenses. Ask your pharmacist to provide a list of last year's total prescription bill to determine how much to budget in the savings account. Any balance in the account, however, will be forfeited at the end of the year.

3. Before switching insurance plans, find out whether the plan you are considering allows you to see an out-of-network doctor. If it doesn't, ask for a list of providers -- and call them to ensure they are accepting new patients.

Source: Families USA

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