Doctor-vs.-doctor battles have continued to erupt in several states over who gets top billing when it comes to billing patients.
Pathologists have gotten under the skin of dermatologists by petitioning the states — successfully in some cases — to pass laws restricting the practice of referrals or “pass-through” billing, in which dermatologists and other non-pathologists charge patients for slide work that is done elsewhere.
Pathologists say that this practice of billing can easily become bilking because dermatologists “mark up” the price on the patient’s bill. Dermatologists accuse pathologists of trying to corner a market and restrict trade, adding that there’s nothing wrong with a modest markup when the patient benefits by dealing — often more cheaply — with only one party.
War of Words
With both sides vying for tightening healthcare dollars, the battle has escalated into a full-blown war of words between pathologists and non-pathologists. Many pathologists accuse dermatologists of conducting ethical breaches when they mark up any patient’s bill. For their part, dermatologists say that pathologists want to squeeze as much money as possible out of patients by directly billing them or their insurers with no discount, and that the pathologists don’t care about the patients paying more because they have no contact with the patients.
“The pathologist feels no guilt, it seems,” said Joel Schlessinger, M.D., a dermatologist in private practice in Omaha, NE, one of the battleground states. Meanwhile, Dr. Randy Eckert, chair of the Government and Professional Affairs for the College of American Pathologists, said that some non-pathologists are engaging in “profiteering.”
Potential for Unethical Behavior
The potential for ethical abuse exists on both sides, according Robert Jensen, a professor emeritus of accounting at Trinity University and an expert on accounting fraud.
“It depends on the ethics of the person doing it,” said Clay Cockerell, M.D., Past President of the American Academy of Dermatology (AAD), whose vantage point comes from his background as both a clinical dermatologist and a dermatopathologist.
When a patient seeks services, dermatologists have several billing options, although those choices are often dictated by insurers. They can refer pathology services to an outside lab. The pathology lab can charge either the dermatologist or the insurance carrier, with perhaps an additional co-pay to the patient. In the first case, the dermatologist marks up the bill to the patient or insurer; in the latter, the dermatologist has a clean financial break from the lab.
Medicare doesn’t pay for work that isn’t performed by the dermatologist. Sometimes, the doctor reads the patient’s slides, in which case he’ll seek payment if a report is filed. In other cases, doctors’ offices have a lab on premises, often known as a “pod,” and keep the accounting in-house. The Department of Health and Human Services has discovered some cases of fraud in that arrangement, finding that they have skirted anti-kickback laws. These laws make it illegal to “knowingly and willfully offer to pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by Federal health care programs,” according to a 1999 Office of Inspector General opinion.
“I have used pathology services and we have done billing for patients for as long as I have been in practice — 29 years,” said David Tart, M.D., a dermatologist in private practice in Hickory, NC. In all that time, there have been “no problems.”
“I send it to the lab. I file it to insurance,” Dr. Tart explained. “You never see a bill from the pathologist. I take care of it for the patient. I handle the entire affair. I’m at risk if I screw it up. [If] the patient doesn’t have insurance and doesn’t pay me, I don’t get paid. If the patient has an issue with pathology [a false-positive, for instance], the patient sees me. I’m the patient’s advocate.”
In recent years, pathologist groups have said that this practice is, on its face, wrong. “If dermatologists are reading their own slides, then I am all for them getting paid,” said Dr. Eckert. “If they’re purchasing services for a discount, marking them up and making a profit on them, then that is unethical, and I’m against that.”
Dermatologists in the Crosshairs
Dermatologists have been stung by the allegations, and in some cases have been caught by surprise by the legal actions taken by the pathologists. “They’re like maniacs on a mission about this,” Dr. Cockerell said. “They’re very intensely focused.” He added, however, that the thought isn’t unanimous within the specialty. “There are quite a few pathologists out there who are not in line with this.”
Pathologists have called the practice “fee splitting,” and in some corners the term has taken hold, much to the dismay of some dermatologists. “It is absolutely wrong to call this ‘fee splitting,’” insisted Dr. Tart.
The term is touchy because the American Medical Association forbids it. “Payment by or to a physician solely for the referral of a patient is fee splitting and is unethical,” reads the AMA’s ethics policy. “A physician may not accept payment of any kind, in any form, from any source, such as a pharmaceutical company or pharmacist, an optical company or the manufacturer of medical appliances and devices, for prescribing or referring a patient to said source.”
Dr. Tart said fee splitting would take place if a pathologist sent a dermatologist, say, $20 each time he got a specimen from the skin doctor.
How the AMA Ethics Rule Applies
Both sides point to another AMA ethics rule dealing with lab work. “The physician’s ethical responsibility is to provide patients with high-quality services,” it reads. “This includes services that the physician performs personally and those that are delegated to others. A physician should not utilize the services of any laboratory, irrespective of whether it is operated by a physician or non-physician, unless she or he has the utmost confidence in the quality of its services. A physician must always assume personal responsibility for the best interests of his or her patients. Medical judgment based upon inferior laboratory work is likewise inferior . . . . As a professional, the physician is entitled to fair compensation for his or her services. A physician should not charge a markup, commission, or profit on the services rendered by others. A markup is an excessive charge that exploits patients if it is nothing more than a tacked on amount for a service already provided and accounted for by the laboratory.”
“It does not say that a markup is unethical,” Dr. Tart remarked. He did allow that some dermatologists may take advantage of a loophole. “Some doctors will look for the cheapest pathology services to make the most profit on,” he said. “That is clearly unethical.” He said he wouldn’t go out to any lab that will charge the lowest prices. “I must have my patient’s best interests in mind, and I must know the quality of the lab, if that’s possible,” he said.
To that end, Dr. Tart sends his specimens by courier to a lab 100 miles away, not to the nearest one. “This is where I get the best value for my patient,” he said. “It’s not my ethical duty to make my buddy in town happy.”
Practice Differences Among Regions
The practice of referrals varies from region to region. Dr. Cockerell said dermatologists in the Northeast are more likely to send the slides out, whereas those in Western or Plains states are less likely — perhaps, he said, because labs are fewer and farther away, and as a result, the dermatologist may prefer to read the specimen himself. Dr. Eckert, of the pathology group, said the frequency of the practice is irrelevant. “Whether it’s common in locations or not, it is unethical,” he said, adding that it’s no less so “simply because something is done by a lot of people.”
The Legislation’s Effect
Scott Dinehart, M.D., a dermatologist in Little Rock, AR, said the pending legislation would affect few dermatologists in his state, but he opposed it nonetheless. “It’s a slippery-slope thing,” Dr. Dinehart said. “Once you start monkeying with these kinds of issues legislatively, a few years from now there will be legislation saying we can’t even read slides.” According to Dr. Dinehart, state legislators weren’t pleased to discuss the issue because it was about “doctors fighting over money. It wasn’t a quality of care issue. It wasn’t an access issue.”
The move to ban referrals failed in Minnesota, where the task was left to the state medical association, which left it up to the dermatologist. The case was an attempt to keep pathology work within the state, and appeared to pit “local pathologists vs. national,” according to David Glaser, a Minneapolis attorney who specializes in healthcare regulation and litigation. “It was almost xenophobia.”
Dr. Schlessinger said the legislative move would restrict where he could send his slides. “Most of the dermatologists use pathologists outside the state of Nebraska,” he said. “There are only three board-certified pathologists in the state.” He would rather send his slides to a dermatopathologist, who is more knowledgeable than a pathologist, but a law may tie his hands, he said. “I would be unable to choose which dermatopathologist I would send the specimen to on a daily basis,” Dr. Schlessinger said. “I participate in 20 insurance companies, and each has a different pathology arrangement. Some are very onerous and have very poor pathology choices.”
Saving time and Money
“Physicians are searching for ways to generate revenue for their practices,” Dr. Eckert, who is with the pathology side, said. “One of the ways is by marking up services provided by the physicians. They see that as a mechanism for generating revenue.”
Dermatologists counter by saying that pathologists see changes in direct billing practices as their own way to generate revenue, and Dr. Eckert didn’t disagree. “Pathologists are not immune to any of the economic pressures,” he said.
Dermatologists additionally argue that a markup — and “markup,” they stress, isn’t a dirty word — makes sense for everyone involved, including the pathologist. “They can sometimes bill the patient directly for the service, and a lab like mine can bill the doctor,” Dr. Cockerell said. “If we bill a physician, then the collection rate is 99%. If you send it to an insurance company, there are these appeals and disputes. Generally, it takes three or four times longer.”
“I’m providing value not only to the patient, but to the pathologist,” added Dr. Tart. “He’s going to provide me with one bill at the end of the month, not with bills from 130 insurance companies. It’s much simpler for the pathologist to deal with the biopsy than the insurance companies.”
Dermatologists say the patient would save because they’ll charge less than a pathologist would in a separate bill. Dr. Schlessinger said studies have shown that patients would save about $30 for each biopsy — $120 vs. $150, and in Nebraska, patients could pay as much as $250 per specimen. They say this is possible because they work out deals in which labs agree to a discount price in exchange for bulk.
Not Crossing the Line
This is ethical up to a point, said Mr. Glaser. “There is a legal principle that you can’t pay for referrals,” he said. “But you can be a low-cost provider.” If one pathology company can do it more cheaply than another, that’s o.k., he said. But “if you think they’re paying a kickback, then you have a legitimate beef. That line is fuzzy.” This is why judging the issue is on a “classic case-by-case” basis, Mr. Glaser continued. “There’s nothing wrong with the notion that you would sell a service and have it marked up . . . If you don’t have to deal with billing and collection, you’ll gladly take a small discount.” If the dermatologist is truly doing no work, “it’s harder to defend,” he said. “But if the collection is being done, that is real work.”
“Some practitioners may abuse the system,” Dr. Tart acknowledged. “That’s the way of life with electricians and contractors.” But he also used the contractor analogy to explain how it can be simpler for the patient: Wouldn’t you rather pay the contractor a lump sum, knowing he may charge a slight markup, than deal with the carpenter and the plumber and the painter?
Problems collecting bills are “the reality of medical practice whatever your specialty is,” said Dr. Eckert. “I am constantly at risk. To suggest to me that [pass-through billing] improves my financial situation doesn’t work for me.”
Dermatologists, unlike pathologists, have face-to-face relationships with patients, and that can make a difference, they say. Pathologists “don’t have a storefront and they don’t see the patients; they have to depend on referrals,” Dr. Dinehart said. Because of that blind relationship, “they see no reason to decrease the bill because they want to charge the highest amount that insurance will pay,” Dr. Schlessinger added.
“Pathologists mainly perform tests ordered by other physicians, whereas dermatologists have direct patient contact,” Mr. Jensen, the accounting fraud expert, noted. “Fraud and collusion are much more likely under the third-party culture of pathology services. For example, kickbacks are much more likely if pathologists have to compete for orders from other physicians.” Mr. Jensen added, though, that “most pathology tests are standardized, and insurance companies and Medicare know what each test should cost. This does not, however, prevent physicians from ordering more tests than necessary to pad pathologist billings and to request kickbacks for part of those billings.”
“Why shouldn’t two doctors be able to negotiate something amongst themselves?” Dr. Cockerell asked. “To me, it’s the last bastion of capitalism.”
Doctor-vs.-doctor battles have continued to erupt in several states over who gets top billing when it comes to billing patients.
Pathologists have gotten under the skin of dermatologists by petitioning the states — successfully in some cases — to pass laws restricting the practice of referrals or “pass-through” billing, in which dermatologists and other non-pathologists charge patients for slide work that is done elsewhere.
Pathologists say that this practice of billing can easily become bilking because dermatologists “mark up” the price on the patient’s bill. Dermatologists accuse pathologists of trying to corner a market and restrict trade, adding that there’s nothing wrong with a modest markup when the patient benefits by dealing — often more cheaply — with only one party.
War of Words
With both sides vying for tightening healthcare dollars, the battle has escalated into a full-blown war of words between pathologists and non-pathologists. Many pathologists accuse dermatologists of conducting ethical breaches when they mark up any patient’s bill. For their part, dermatologists say that pathologists want to squeeze as much money as possible out of patients by directly billing them or their insurers with no discount, and that the pathologists don’t care about the patients paying more because they have no contact with the patients.
“The pathologist feels no guilt, it seems,” said Joel Schlessinger, M.D., a dermatologist in private practice in Omaha, NE, one of the battleground states. Meanwhile, Dr. Randy Eckert, chair of the Government and Professional Affairs for the College of American Pathologists, said that some non-pathologists are engaging in “profiteering.”
Potential for Unethical Behavior
The potential for ethical abuse exists on both sides, according Robert Jensen, a professor emeritus of accounting at Trinity University and an expert on accounting fraud.
“It depends on the ethics of the person doing it,” said Clay Cockerell, M.D., Past President of the American Academy of Dermatology (AAD), whose vantage point comes from his background as both a clinical dermatologist and a dermatopathologist.
When a patient seeks services, dermatologists have several billing options, although those choices are often dictated by insurers. They can refer pathology services to an outside lab. The pathology lab can charge either the dermatologist or the insurance carrier, with perhaps an additional co-pay to the patient. In the first case, the dermatologist marks up the bill to the patient or insurer; in the latter, the dermatologist has a clean financial break from the lab.
Medicare doesn’t pay for work that isn’t performed by the dermatologist. Sometimes, the doctor reads the patient’s slides, in which case he’ll seek payment if a report is filed. In other cases, doctors’ offices have a lab on premises, often known as a “pod,” and keep the accounting in-house. The Department of Health and Human Services has discovered some cases of fraud in that arrangement, finding that they have skirted anti-kickback laws. These laws make it illegal to “knowingly and willfully offer to pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by Federal health care programs,” according to a 1999 Office of Inspector General opinion.
“I have used pathology services and we have done billing for patients for as long as I have been in practice — 29 years,” said David Tart, M.D., a dermatologist in private practice in Hickory, NC. In all that time, there have been “no problems.”
“I send it to the lab. I file it to insurance,” Dr. Tart explained. “You never see a bill from the pathologist. I take care of it for the patient. I handle the entire affair. I’m at risk if I screw it up. [If] the patient doesn’t have insurance and doesn’t pay me, I don’t get paid. If the patient has an issue with pathology [a false-positive, for instance], the patient sees me. I’m the patient’s advocate.”
In recent years, pathologist groups have said that this practice is, on its face, wrong. “If dermatologists are reading their own slides, then I am all for them getting paid,” said Dr. Eckert. “If they’re purchasing services for a discount, marking them up and making a profit on them, then that is unethical, and I’m against that.”
Dermatologists in the Crosshairs
Dermatologists have been stung by the allegations, and in some cases have been caught by surprise by the legal actions taken by the pathologists. “They’re like maniacs on a mission about this,” Dr. Cockerell said. “They’re very intensely focused.” He added, however, that the thought isn’t unanimous within the specialty. “There are quite a few pathologists out there who are not in line with this.”
Pathologists have called the practice “fee splitting,” and in some corners the term has taken hold, much to the dismay of some dermatologists. “It is absolutely wrong to call this ‘fee splitting,’” insisted Dr. Tart.
The term is touchy because the American Medical Association forbids it. “Payment by or to a physician solely for the referral of a patient is fee splitting and is unethical,” reads the AMA’s ethics policy. “A physician may not accept payment of any kind, in any form, from any source, such as a pharmaceutical company or pharmacist, an optical company or the manufacturer of medical appliances and devices, for prescribing or referring a patient to said source.”
Dr. Tart said fee splitting would take place if a pathologist sent a dermatologist, say, $20 each time he got a specimen from the skin doctor.
How the AMA Ethics Rule Applies
Both sides point to another AMA ethics rule dealing with lab work. “The physician’s ethical responsibility is to provide patients with high-quality services,” it reads. “This includes services that the physician performs personally and those that are delegated to others. A physician should not utilize the services of any laboratory, irrespective of whether it is operated by a physician or non-physician, unless she or he has the utmost confidence in the quality of its services. A physician must always assume personal responsibility for the best interests of his or her patients. Medical judgment based upon inferior laboratory work is likewise inferior . . . . As a professional, the physician is entitled to fair compensation for his or her services. A physician should not charge a markup, commission, or profit on the services rendered by others. A markup is an excessive charge that exploits patients if it is nothing more than a tacked on amount for a service already provided and accounted for by the laboratory.”
“It does not say that a markup is unethical,” Dr. Tart remarked. He did allow that some dermatologists may take advantage of a loophole. “Some doctors will look for the cheapest pathology services to make the most profit on,” he said. “That is clearly unethical.” He said he wouldn’t go out to any lab that will charge the lowest prices. “I must have my patient’s best interests in mind, and I must know the quality of the lab, if that’s possible,” he said.
To that end, Dr. Tart sends his specimens by courier to a lab 100 miles away, not to the nearest one. “This is where I get the best value for my patient,” he said. “It’s not my ethical duty to make my buddy in town happy.”
Practice Differences Among Regions
The practice of referrals varies from region to region. Dr. Cockerell said dermatologists in the Northeast are more likely to send the slides out, whereas those in Western or Plains states are less likely — perhaps, he said, because labs are fewer and farther away, and as a result, the dermatologist may prefer to read the specimen himself. Dr. Eckert, of the pathology group, said the frequency of the practice is irrelevant. “Whether it’s common in locations or not, it is unethical,” he said, adding that it’s no less so “simply because something is done by a lot of people.”
The Legislation’s Effect
Scott Dinehart, M.D., a dermatologist in Little Rock, AR, said the pending legislation would affect few dermatologists in his state, but he opposed it nonetheless. “It’s a slippery-slope thing,” Dr. Dinehart said. “Once you start monkeying with these kinds of issues legislatively, a few years from now there will be legislation saying we can’t even read slides.” According to Dr. Dinehart, state legislators weren’t pleased to discuss the issue because it was about “doctors fighting over money. It wasn’t a quality of care issue. It wasn’t an access issue.”
The move to ban referrals failed in Minnesota, where the task was left to the state medical association, which left it up to the dermatologist. The case was an attempt to keep pathology work within the state, and appeared to pit “local pathologists vs. national,” according to David Glaser, a Minneapolis attorney who specializes in healthcare regulation and litigation. “It was almost xenophobia.”
Dr. Schlessinger said the legislative move would restrict where he could send his slides. “Most of the dermatologists use pathologists outside the state of Nebraska,” he said. “There are only three board-certified pathologists in the state.” He would rather send his slides to a dermatopathologist, who is more knowledgeable than a pathologist, but a law may tie his hands, he said. “I would be unable to choose which dermatopathologist I would send the specimen to on a daily basis,” Dr. Schlessinger said. “I participate in 20 insurance companies, and each has a different pathology arrangement. Some are very onerous and have very poor pathology choices.”
Saving time and Money
“Physicians are searching for ways to generate revenue for their practices,” Dr. Eckert, who is with the pathology side, said. “One of the ways is by marking up services provided by the physicians. They see that as a mechanism for generating revenue.”
Dermatologists counter by saying that pathologists see changes in direct billing practices as their own way to generate revenue, and Dr. Eckert didn’t disagree. “Pathologists are not immune to any of the economic pressures,” he said.
Dermatologists additionally argue that a markup — and “markup,” they stress, isn’t a dirty word — makes sense for everyone involved, including the pathologist. “They can sometimes bill the patient directly for the service, and a lab like mine can bill the doctor,” Dr. Cockerell said. “If we bill a physician, then the collection rate is 99%. If you send it to an insurance company, there are these appeals and disputes. Generally, it takes three or four times longer.”
“I’m providing value not only to the patient, but to the pathologist,” added Dr. Tart. “He’s going to provide me with one bill at the end of the month, not with bills from 130 insurance companies. It’s much simpler for the pathologist to deal with the biopsy than the insurance companies.”
Dermatologists say the patient would save because they’ll charge less than a pathologist would in a separate bill. Dr. Schlessinger said studies have shown that patients would save about $30 for each biopsy — $120 vs. $150, and in Nebraska, patients could pay as much as $250 per specimen. They say this is possible because they work out deals in which labs agree to a discount price in exchange for bulk.
Not Crossing the Line
This is ethical up to a point, said Mr. Glaser. “There is a legal principle that you can’t pay for referrals,” he said. “But you can be a low-cost provider.” If one pathology company can do it more cheaply than another, that’s o.k., he said. But “if you think they’re paying a kickback, then you have a legitimate beef. That line is fuzzy.” This is why judging the issue is on a “classic case-by-case” basis, Mr. Glaser continued. “There’s nothing wrong with the notion that you would sell a service and have it marked up . . . If you don’t have to deal with billing and collection, you’ll gladly take a small discount.” If the dermatologist is truly doing no work, “it’s harder to defend,” he said. “But if the collection is being done, that is real work.”
“Some practitioners may abuse the system,” Dr. Tart acknowledged. “That’s the way of life with electricians and contractors.” But he also used the contractor analogy to explain how it can be simpler for the patient: Wouldn’t you rather pay the contractor a lump sum, knowing he may charge a slight markup, than deal with the carpenter and the plumber and the painter?
Problems collecting bills are “the reality of medical practice whatever your specialty is,” said Dr. Eckert. “I am constantly at risk. To suggest to me that [pass-through billing] improves my financial situation doesn’t work for me.”
Dermatologists, unlike pathologists, have face-to-face relationships with patients, and that can make a difference, they say. Pathologists “don’t have a storefront and they don’t see the patients; they have to depend on referrals,” Dr. Dinehart said. Because of that blind relationship, “they see no reason to decrease the bill because they want to charge the highest amount that insurance will pay,” Dr. Schlessinger added.
“Pathologists mainly perform tests ordered by other physicians, whereas dermatologists have direct patient contact,” Mr. Jensen, the accounting fraud expert, noted. “Fraud and collusion are much more likely under the third-party culture of pathology services. For example, kickbacks are much more likely if pathologists have to compete for orders from other physicians.” Mr. Jensen added, though, that “most pathology tests are standardized, and insurance companies and Medicare know what each test should cost. This does not, however, prevent physicians from ordering more tests than necessary to pad pathologist billings and to request kickbacks for part of those billings.”
“Why shouldn’t two doctors be able to negotiate something amongst themselves?” Dr. Cockerell asked. “To me, it’s the last bastion of capitalism.”
Doctor-vs.-doctor battles have continued to erupt in several states over who gets top billing when it comes to billing patients.
Pathologists have gotten under the skin of dermatologists by petitioning the states — successfully in some cases — to pass laws restricting the practice of referrals or “pass-through” billing, in which dermatologists and other non-pathologists charge patients for slide work that is done elsewhere.
Pathologists say that this practice of billing can easily become bilking because dermatologists “mark up” the price on the patient’s bill. Dermatologists accuse pathologists of trying to corner a market and restrict trade, adding that there’s nothing wrong with a modest markup when the patient benefits by dealing — often more cheaply — with only one party.
War of Words
With both sides vying for tightening healthcare dollars, the battle has escalated into a full-blown war of words between pathologists and non-pathologists. Many pathologists accuse dermatologists of conducting ethical breaches when they mark up any patient’s bill. For their part, dermatologists say that pathologists want to squeeze as much money as possible out of patients by directly billing them or their insurers with no discount, and that the pathologists don’t care about the patients paying more because they have no contact with the patients.
“The pathologist feels no guilt, it seems,” said Joel Schlessinger, M.D., a dermatologist in private practice in Omaha, NE, one of the battleground states. Meanwhile, Dr. Randy Eckert, chair of the Government and Professional Affairs for the College of American Pathologists, said that some non-pathologists are engaging in “profiteering.”
Potential for Unethical Behavior
The potential for ethical abuse exists on both sides, according Robert Jensen, a professor emeritus of accounting at Trinity University and an expert on accounting fraud.
“It depends on the ethics of the person doing it,” said Clay Cockerell, M.D., Past President of the American Academy of Dermatology (AAD), whose vantage point comes from his background as both a clinical dermatologist and a dermatopathologist.
When a patient seeks services, dermatologists have several billing options, although those choices are often dictated by insurers. They can refer pathology services to an outside lab. The pathology lab can charge either the dermatologist or the insurance carrier, with perhaps an additional co-pay to the patient. In the first case, the dermatologist marks up the bill to the patient or insurer; in the latter, the dermatologist has a clean financial break from the lab.
Medicare doesn’t pay for work that isn’t performed by the dermatologist. Sometimes, the doctor reads the patient’s slides, in which case he’ll seek payment if a report is filed. In other cases, doctors’ offices have a lab on premises, often known as a “pod,” and keep the accounting in-house. The Department of Health and Human Services has discovered some cases of fraud in that arrangement, finding that they have skirted anti-kickback laws. These laws make it illegal to “knowingly and willfully offer to pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by Federal health care programs,” according to a 1999 Office of Inspector General opinion.
“I have used pathology services and we have done billing for patients for as long as I have been in practice — 29 years,” said David Tart, M.D., a dermatologist in private practice in Hickory, NC. In all that time, there have been “no problems.”
“I send it to the lab. I file it to insurance,” Dr. Tart explained. “You never see a bill from the pathologist. I take care of it for the patient. I handle the entire affair. I’m at risk if I screw it up. [If] the patient doesn’t have insurance and doesn’t pay me, I don’t get paid. If the patient has an issue with pathology [a false-positive, for instance], the patient sees me. I’m the patient’s advocate.”
In recent years, pathologist groups have said that this practice is, on its face, wrong. “If dermatologists are reading their own slides, then I am all for them getting paid,” said Dr. Eckert. “If they’re purchasing services for a discount, marking them up and making a profit on them, then that is unethical, and I’m against that.”
Dermatologists in the Crosshairs
Dermatologists have been stung by the allegations, and in some cases have been caught by surprise by the legal actions taken by the pathologists. “They’re like maniacs on a mission about this,” Dr. Cockerell said. “They’re very intensely focused.” He added, however, that the thought isn’t unanimous within the specialty. “There are quite a few pathologists out there who are not in line with this.”
Pathologists have called the practice “fee splitting,” and in some corners the term has taken hold, much to the dismay of some dermatologists. “It is absolutely wrong to call this ‘fee splitting,’” insisted Dr. Tart.
The term is touchy because the American Medical Association forbids it. “Payment by or to a physician solely for the referral of a patient is fee splitting and is unethical,” reads the AMA’s ethics policy. “A physician may not accept payment of any kind, in any form, from any source, such as a pharmaceutical company or pharmacist, an optical company or the manufacturer of medical appliances and devices, for prescribing or referring a patient to said source.”
Dr. Tart said fee splitting would take place if a pathologist sent a dermatologist, say, $20 each time he got a specimen from the skin doctor.
How the AMA Ethics Rule Applies
Both sides point to another AMA ethics rule dealing with lab work. “The physician’s ethical responsibility is to provide patients with high-quality services,” it reads. “This includes services that the physician performs personally and those that are delegated to others. A physician should not utilize the services of any laboratory, irrespective of whether it is operated by a physician or non-physician, unless she or he has the utmost confidence in the quality of its services. A physician must always assume personal responsibility for the best interests of his or her patients. Medical judgment based upon inferior laboratory work is likewise inferior . . . . As a professional, the physician is entitled to fair compensation for his or her services. A physician should not charge a markup, commission, or profit on the services rendered by others. A markup is an excessive charge that exploits patients if it is nothing more than a tacked on amount for a service already provided and accounted for by the laboratory.”
“It does not say that a markup is unethical,” Dr. Tart remarked. He did allow that some dermatologists may take advantage of a loophole. “Some doctors will look for the cheapest pathology services to make the most profit on,” he said. “That is clearly unethical.” He said he wouldn’t go out to any lab that will charge the lowest prices. “I must have my patient’s best interests in mind, and I must know the quality of the lab, if that’s possible,” he said.
To that end, Dr. Tart sends his specimens by courier to a lab 100 miles away, not to the nearest one. “This is where I get the best value for my patient,” he said. “It’s not my ethical duty to make my buddy in town happy.”
Practice Differences Among Regions
The practice of referrals varies from region to region. Dr. Cockerell said dermatologists in the Northeast are more likely to send the slides out, whereas those in Western or Plains states are less likely — perhaps, he said, because labs are fewer and farther away, and as a result, the dermatologist may prefer to read the specimen himself. Dr. Eckert, of the pathology group, said the frequency of the practice is irrelevant. “Whether it’s common in locations or not, it is unethical,” he said, adding that it’s no less so “simply because something is done by a lot of people.”
The Legislation’s Effect
Scott Dinehart, M.D., a dermatologist in Little Rock, AR, said the pending legislation would affect few dermatologists in his state, but he opposed it nonetheless. “It’s a slippery-slope thing,” Dr. Dinehart said. “Once you start monkeying with these kinds of issues legislatively, a few years from now there will be legislation saying we can’t even read slides.” According to Dr. Dinehart, state legislators weren’t pleased to discuss the issue because it was about “doctors fighting over money. It wasn’t a quality of care issue. It wasn’t an access issue.”
The move to ban referrals failed in Minnesota, where the task was left to the state medical association, which left it up to the dermatologist. The case was an attempt to keep pathology work within the state, and appeared to pit “local pathologists vs. national,” according to David Glaser, a Minneapolis attorney who specializes in healthcare regulation and litigation. “It was almost xenophobia.”
Dr. Schlessinger said the legislative move would restrict where he could send his slides. “Most of the dermatologists use pathologists outside the state of Nebraska,” he said. “There are only three board-certified pathologists in the state.” He would rather send his slides to a dermatopathologist, who is more knowledgeable than a pathologist, but a law may tie his hands, he said. “I would be unable to choose which dermatopathologist I would send the specimen to on a daily basis,” Dr. Schlessinger said. “I participate in 20 insurance companies, and each has a different pathology arrangement. Some are very onerous and have very poor pathology choices.”
Saving time and Money
“Physicians are searching for ways to generate revenue for their practices,” Dr. Eckert, who is with the pathology side, said. “One of the ways is by marking up services provided by the physicians. They see that as a mechanism for generating revenue.”
Dermatologists counter by saying that pathologists see changes in direct billing practices as their own way to generate revenue, and Dr. Eckert didn’t disagree. “Pathologists are not immune to any of the economic pressures,” he said.
Dermatologists additionally argue that a markup — and “markup,” they stress, isn’t a dirty word — makes sense for everyone involved, including the pathologist. “They can sometimes bill the patient directly for the service, and a lab like mine can bill the doctor,” Dr. Cockerell said. “If we bill a physician, then the collection rate is 99%. If you send it to an insurance company, there are these appeals and disputes. Generally, it takes three or four times longer.”
“I’m providing value not only to the patient, but to the pathologist,” added Dr. Tart. “He’s going to provide me with one bill at the end of the month, not with bills from 130 insurance companies. It’s much simpler for the pathologist to deal with the biopsy than the insurance companies.”
Dermatologists say the patient would save because they’ll charge less than a pathologist would in a separate bill. Dr. Schlessinger said studies have shown that patients would save about $30 for each biopsy — $120 vs. $150, and in Nebraska, patients could pay as much as $250 per specimen. They say this is possible because they work out deals in which labs agree to a discount price in exchange for bulk.
Not Crossing the Line
This is ethical up to a point, said Mr. Glaser. “There is a legal principle that you can’t pay for referrals,” he said. “But you can be a low-cost provider.” If one pathology company can do it more cheaply than another, that’s o.k., he said. But “if you think they’re paying a kickback, then you have a legitimate beef. That line is fuzzy.” This is why judging the issue is on a “classic case-by-case” basis, Mr. Glaser continued. “There’s nothing wrong with the notion that you would sell a service and have it marked up . . . If you don’t have to deal with billing and collection, you’ll gladly take a small discount.” If the dermatologist is truly doing no work, “it’s harder to defend,” he said. “But if the collection is being done, that is real work.”
“Some practitioners may abuse the system,” Dr. Tart acknowledged. “That’s the way of life with electricians and contractors.” But he also used the contractor analogy to explain how it can be simpler for the patient: Wouldn’t you rather pay the contractor a lump sum, knowing he may charge a slight markup, than deal with the carpenter and the plumber and the painter?
Problems collecting bills are “the reality of medical practice whatever your specialty is,” said Dr. Eckert. “I am constantly at risk. To suggest to me that [pass-through billing] improves my financial situation doesn’t work for me.”
Dermatologists, unlike pathologists, have face-to-face relationships with patients, and that can make a difference, they say. Pathologists “don’t have a storefront and they don’t see the patients; they have to depend on referrals,” Dr. Dinehart said. Because of that blind relationship, “they see no reason to decrease the bill because they want to charge the highest amount that insurance will pay,” Dr. Schlessinger added.
“Pathologists mainly perform tests ordered by other physicians, whereas dermatologists have direct patient contact,” Mr. Jensen, the accounting fraud expert, noted. “Fraud and collusion are much more likely under the third-party culture of pathology services. For example, kickbacks are much more likely if pathologists have to compete for orders from other physicians.” Mr. Jensen added, though, that “most pathology tests are standardized, and insurance companies and Medicare know what each test should cost. This does not, however, prevent physicians from ordering more tests than necessary to pad pathologist billings and to request kickbacks for part of those billings.”
“Why shouldn’t two doctors be able to negotiate something amongst themselves?” Dr. Cockerell asked. “To me, it’s the last bastion of capitalism.”
