There has been recent concern over the ethics of client billing versus direct billing of pathology services used by dermatologists. The subject of a front-page article in The Wall Street Journal1 nearly 2 years ago, and our Skin & Aging cover story in June, so-called “direct billing” is the focus of much commentary and ongoing legislation/regulation.2-6 It is being questioned and argued in state legislatures, and currently nine states (California, Iowa, Louisiana, Montana, Nevada, New Jersey, New York, South Carolina and Rhode Island) require direct billing to payers for certain pathology services. Four states prohibit markups and a dozen more require physicians to disclose what they pay for tests in bills to patients and insurers.
The controversy revolves mainly around speculation that dermatologists may be profiting by overcharging patients for interpretations of skin biopsies that are performed by pathologists at a discount.
But for all the hoopla, there was little to no objective data on the practice, no published information on the impact of this practice on patients’ costs until our Dr.Score survey (conducted on www.drscore.com) sought to obtain some initial data on pathologists’ charges for skin biopsies compared to dermatologists’ charges.7
Client Billing Explained
Client billing involves clinicians’ charging patients for pathologists’ services that were performed by pathologists. (See Figure 1). Using client billing, a treating physician may realize a profit by charging a patient more for a laboratory service than the physician paid to have the service done.
Advantages of Client Billing
Dermatologists billing patients directly for dermatopathology services done by a dermatopathologist may be the most convenient method of billing and has the potential to save patients money because of discounted fee schedules dermatology offices receive from pathology laboratories.
Convenience. Client billing can be more convenient and less confusing for patients. One advantage of this approach is that patients receive only one bill from a familiar physician, the treating dermatologist, rather than multiple bills from unknown labs. The dermatologist already has to bill the patient for the office visit and for performing the biopsy; it may be more convenient for patients to receive one collective bill for a service rather than multiple bills associated with one visit.
In network. Another benefit of client billing to patients is that when they see an “in-network” dermatologist, the biopsy can be sent to the dermatopathology laboratory of choice without worry that it is an “out-of-network” laboratory.
More efficient. Client billing is more efficient because patients provide their demographic and insurance information to the dermatologist; thus, the pathologist doesn’t have to obtain this information. This saves administrative staff time and hassle because client billing allows the lab to send one statement to the dermatologist, summarizing the services for the period, which is usually 1 month.
Pathologist avoids non-payment risk. When the pathologist allows the dermatologist to bill the patient, the pathologist is essentially guaranteed payment for the service by the dermatologist. In the client billing arrangement, the dermatologist is at risk for nonpayment while the pathologist is certain he/she will be paid.
Cost advantages. The reduction in risk for non-payment probably contributes to the low charges pathologists offer dermatologists for the service. Current procedural terminology (CPT) code 88305 is used to report interpretation of skin biopsies as well as more complex colon, breast and liver biopsy specimens.
This may also explain in part the higher charges in pathologists’ direct billing compared to dermatologists’ direct and client billing.
Ethical Concerns
A number of issues are brought up by those who think client billing is unethical. (See Table 1.)1
Excessive markups. The major public concern is that patients might be overcharged by markups added in the client billing process.1
Based on the limited data obtained in this study, however, it appears that client billing markups do not add to the overall cost of care. On the contrary, we found that on average, charges were lower with client billing. If there is an ethical problem with client billing, it does not appear to be related to higher costs to patients.
Selecting services based on cost, not on quality. It is the physician’s ethical responsibility to provide the patient with high-quality pathology/laboratory services based on the quality of those services, not purely on the cost.
We believe a physician should be able to select the appropriate pathologist or laboratory depending on his or her interpretation of the best available service for that particular patient. In the case of dermatology, this often means utilizing a pathologist or reference laboratory that offers specialized dermatopathology services.
To this point, a recent bill was introduced into Congress (still pending) that defines as a component of patients’ rights the right of a dermatologist to send patients’ specimens for appropriate dermatopathology study.
It is our position that it is unethical for insurance companies to dictate what lab dermatologists should send their biopsies to without the knowing if that lab can provide the best care for their patients, just as it would be unethical for dermatologists to use low-price labs without considering the quality of expertise required for their patient simply to maximize their profit margin.
Are Concerns Legitimate?
To determine whether patients are in fact charged more in a client billing situation than they would be if billed directly, Dr. Score performed a small survey to obtain initial data on what pathologists and dermatologists are charging patients for skin biopsy interpretation.
DrScore Study Method
Private practice, non-academic, dermatologists and pathologists whose contact information was listed in the DrScore.com physician listing database7 were contacted. The DrScore database contains listings for 229 private practice dermatologists and 213 private practice pathologists in North Carolina. All the numbers in the database were called.
While the names of the participating dermatology and pathology practices were known by the research associate conducting the telephone surveys, this information was not shared with other team members. In addition, no identifiable private information was recorded as part of the data analyzed. The only information that was recorded was the specialty of the survey participant and the amount charged for processing and interpreting skin biopsies. The survey had approval of the intramural human subjects review board.
Private dermatologists in the state of North Carolina were called and asked what they charge for interpreting skin biopsies. They were told a study was being conducted due to the recent regulations dealing with client billing. They were asked whether they interpreted their biopsies in the office or sent them out for interpretation. If interpreted in the office, they were asked how much they charged. If the specimens were sent out for interpretation, they were asked how the patient was billed — by the office, or by the lab the specimen was sent to — and what those charges were.
The pathologists’ offices were called and asked if they interpreted skin biopsies sent from dermatologists’ offices. If they did, they were asked how much they charged for interpretation. The pathologists’ offices were not told that this was a formal study.
The mean cost was calculated for all three categories: the charge for the pathologist to interpret skin biopsies, the cost for the dermatologist to interpret the skin biopsy in the office, and the charge of the dermatologist to send the biopsy out to be interpreted.
The charges were normalized to the mean charge for pathologists’ billing patients directly. Outlier values were not included in the mean used to normalize the data.
ANOVA and Turkey-Kramer analyses were done to assess the statistical significance of observed differences.
Survey Results
A total of 442 phone calls were made. (See Figure 2, below.) A total of 213 private pathologist offices were called, and 48 (23%) reported how much they charge patients for interpretations of skin biopsies.
A total of 229 private dermatology offices were called; 105 (46%) reported how much patients were charged for biopsies. Of the 46% of dermatologists who responded:
- 50% were not able to give an exact price because they sent their pathology out, the pathologist directly billed the patient, and the dermatologist was unaware of how much the pathologist then charged the patient.
- 19% sent specimens to an outside pathologist who directly billed and knew the price.
- 9% interpreted skin biopsies on-site and directly billed patients.
- 22% sent out for pathology and billed their patients (client billing).
The range for the dermatologists who interpreted in the office and directly billed was 0.53 to 1.33 relative to pathologists, with a mean of 0.87 and median of 0.68 (Figure 3, above). The range for dermatologist offices who client billed was 0.53 to 1.5 relative to pathologists, with a mean of 0.80 and a median 0.8. As reported by dermatologists, the charge range for pathologists who billed patients directly was 0.53 to 1.33 of the mean reported by pathologists (mean 0.98, median 1.06).
A total of 213 private pathologists’ offices were called, and 48 (23%) reported how much they charged patients for interpretations of skin biopsies. The range of prices the pathologist charged patients for interpretation was 0.55 to 1.66. The mean was 1.0 (all values were normalized to this mean) and the median was 1.0.
Significant differences between the dermatology client billing, dermatology direct billing, and pathology direct billing group means were found by ANOVA (F-test p= 0.008). A Turkey-Kramer (TK) test used to compare group means among all pairs found a significant lower cost for dermatology client billing compared to pathology direct billing (difference in means=15%, 95% Simultaneous C.I.=5%, 35%), as well as dermatology client billing and dermatology direct billing (differences in means= 18%, 95% simultaneous C.I.=1%, 34%). No significant difference between pathology and dermatology direct billing groups existed.
Major Finding: Client Billing Saves Patients Money
The mean cost of dermatologists’ interpreting biopsies in the office and billing patients was 98% of the mean cost of pathologists’ billing those patients. The mean cost for dermatologists’ billing patients for interpretations done by outside pathologists (so-called “client billing”) was 80% of the mean cost of pathologists’ billing those patients.
The initial data suggest that having a dermatologist bill for biopsies read by a pathologist does not result in higher costs to patients. Lower charges by pathologists when billing dermatologists as compared to having pathologists bill patients directly may be explained in part by lower billing costs and the reduced risk of unpaid bills.
Study Limitations
Our study does have limitations. Despite the good response rate, some practices were not willing to share prices and information over the phone. Also, we analyzed the charges that offices reported, not actual bills, or what the patient or insurance company directly paid. The close concordance for pathologists’ direct charge reported by dermatologists and by pathologists gives limited evidence that the costs we found are valid.
Two outliers were left out of the calculations. One pathology lab reported charging 6.5 times the mean rate for pathologists for interpretation of skin biopsies. One dermatologist reported sending biopsy specimens for pathology interpretation but not charging patients anything for the interpretation. Had we included these outliers, the savings with client billing would have been even larger. This study only investigated billing activity in North Carolina and therefore is regionally localized; a larger, more nationally representative sample would be preferable.
Potential for bias existed because we informed dermatology offices of our purpose but did not (nor need to do) to obtain data from pathologists. A study of actual costs to patients would be beneficial but was beyond the scope of this initial attempt to obtain data on client billing practices.
Nevertheless, for insured patients, higher cost is a practical impossibility because of set limits (allowables) on reimbursements. Under the Medicare system of allowables, costs cannot exceed what Medicare pays. Despite this, Medicare has rules preventing client billing. The rationale for these rules is unclear.
Private insurance companies in North Carolina have supported client billing, perhaps because they realize it is less costly. Allowing the market to operate and allowing caring physicians to contract with each other without interference does not appear to increase patients’ cost of dermatopathology services.
There has been recent concern over the ethics of client billing versus direct billing of pathology services used by dermatologists. The subject of a front-page article in The Wall Street Journal1 nearly 2 years ago, and our Skin & Aging cover story in June, so-called “direct billing” is the focus of much commentary and ongoing legislation/regulation.2-6 It is being questioned and argued in state legislatures, and currently nine states (California, Iowa, Louisiana, Montana, Nevada, New Jersey, New York, South Carolina and Rhode Island) require direct billing to payers for certain pathology services. Four states prohibit markups and a dozen more require physicians to disclose what they pay for tests in bills to patients and insurers.
The controversy revolves mainly around speculation that dermatologists may be profiting by overcharging patients for interpretations of skin biopsies that are performed by pathologists at a discount.
But for all the hoopla, there was little to no objective data on the practice, no published information on the impact of this practice on patients’ costs until our Dr.Score survey (conducted on www.drscore.com) sought to obtain some initial data on pathologists’ charges for skin biopsies compared to dermatologists’ charges.7
Client Billing Explained
Client billing involves clinicians’ charging patients for pathologists’ services that were performed by pathologists. (See Figure 1). Using client billing, a treating physician may realize a profit by charging a patient more for a laboratory service than the physician paid to have the service done.
Advantages of Client Billing
Dermatologists billing patients directly for dermatopathology services done by a dermatopathologist may be the most convenient method of billing and has the potential to save patients money because of discounted fee schedules dermatology offices receive from pathology laboratories.
Convenience. Client billing can be more convenient and less confusing for patients. One advantage of this approach is that patients receive only one bill from a familiar physician, the treating dermatologist, rather than multiple bills from unknown labs. The dermatologist already has to bill the patient for the office visit and for performing the biopsy; it may be more convenient for patients to receive one collective bill for a service rather than multiple bills associated with one visit.
In network. Another benefit of client billing to patients is that when they see an “in-network” dermatologist, the biopsy can be sent to the dermatopathology laboratory of choice without worry that it is an “out-of-network” laboratory.
More efficient. Client billing is more efficient because patients provide their demographic and insurance information to the dermatologist; thus, the pathologist doesn’t have to obtain this information. This saves administrative staff time and hassle because client billing allows the lab to send one statement to the dermatologist, summarizing the services for the period, which is usually 1 month.
Pathologist avoids non-payment risk. When the pathologist allows the dermatologist to bill the patient, the pathologist is essentially guaranteed payment for the service by the dermatologist. In the client billing arrangement, the dermatologist is at risk for nonpayment while the pathologist is certain he/she will be paid.
Cost advantages. The reduction in risk for non-payment probably contributes to the low charges pathologists offer dermatologists for the service. Current procedural terminology (CPT) code 88305 is used to report interpretation of skin biopsies as well as more complex colon, breast and liver biopsy specimens.
This may also explain in part the higher charges in pathologists’ direct billing compared to dermatologists’ direct and client billing.
Ethical Concerns
A number of issues are brought up by those who think client billing is unethical. (See Table 1.)1
Excessive markups. The major public concern is that patients might be overcharged by markups added in the client billing process.1
Based on the limited data obtained in this study, however, it appears that client billing markups do not add to the overall cost of care. On the contrary, we found that on average, charges were lower with client billing. If there is an ethical problem with client billing, it does not appear to be related to higher costs to patients.
Selecting services based on cost, not on quality. It is the physician’s ethical responsibility to provide the patient with high-quality pathology/laboratory services based on the quality of those services, not purely on the cost.
We believe a physician should be able to select the appropriate pathologist or laboratory depending on his or her interpretation of the best available service for that particular patient. In the case of dermatology, this often means utilizing a pathologist or reference laboratory that offers specialized dermatopathology services.
To this point, a recent bill was introduced into Congress (still pending) that defines as a component of patients’ rights the right of a dermatologist to send patients’ specimens for appropriate dermatopathology study.
It is our position that it is unethical for insurance companies to dictate what lab dermatologists should send their biopsies to without the knowing if that lab can provide the best care for their patients, just as it would be unethical for dermatologists to use low-price labs without considering the quality of expertise required for their patient simply to maximize their profit margin.
Are Concerns Legitimate?
To determine whether patients are in fact charged more in a client billing situation than they would be if billed directly, Dr. Score performed a small survey to obtain initial data on what pathologists and dermatologists are charging patients for skin biopsy interpretation.
DrScore Study Method
Private practice, non-academic, dermatologists and pathologists whose contact information was listed in the DrScore.com physician listing database7 were contacted. The DrScore database contains listings for 229 private practice dermatologists and 213 private practice pathologists in North Carolina. All the numbers in the database were called.
While the names of the participating dermatology and pathology practices were known by the research associate conducting the telephone surveys, this information was not shared with other team members. In addition, no identifiable private information was recorded as part of the data analyzed. The only information that was recorded was the specialty of the survey participant and the amount charged for processing and interpreting skin biopsies. The survey had approval of the intramural human subjects review board.
Private dermatologists in the state of North Carolina were called and asked what they charge for interpreting skin biopsies. They were told a study was being conducted due to the recent regulations dealing with client billing. They were asked whether they interpreted their biopsies in the office or sent them out for interpretation. If interpreted in the office, they were asked how much they charged. If the specimens were sent out for interpretation, they were asked how the patient was billed — by the office, or by the lab the specimen was sent to — and what those charges were.
The pathologists’ offices were called and asked if they interpreted skin biopsies sent from dermatologists’ offices. If they did, they were asked how much they charged for interpretation. The pathologists’ offices were not told that this was a formal study.
The mean cost was calculated for all three categories: the charge for the pathologist to interpret skin biopsies, the cost for the dermatologist to interpret the skin biopsy in the office, and the charge of the dermatologist to send the biopsy out to be interpreted.
The charges were normalized to the mean charge for pathologists’ billing patients directly. Outlier values were not included in the mean used to normalize the data.
ANOVA and Turkey-Kramer analyses were done to assess the statistical significance of observed differences.
Survey Results
A total of 442 phone calls were made. (See Figure 2, below.) A total of 213 private pathologist offices were called, and 48 (23%) reported how much they charge patients for interpretations of skin biopsies.
A total of 229 private dermatology offices were called; 105 (46%) reported how much patients were charged for biopsies. Of the 46% of dermatologists who responded:
- 50% were not able to give an exact price because they sent their pathology out, the pathologist directly billed the patient, and the dermatologist was unaware of how much the pathologist then charged the patient.
- 19% sent specimens to an outside pathologist who directly billed and knew the price.
- 9% interpreted skin biopsies on-site and directly billed patients.
- 22% sent out for pathology and billed their patients (client billing).
The range for the dermatologists who interpreted in the office and directly billed was 0.53 to 1.33 relative to pathologists, with a mean of 0.87 and median of 0.68 (Figure 3, above). The range for dermatologist offices who client billed was 0.53 to 1.5 relative to pathologists, with a mean of 0.80 and a median 0.8. As reported by dermatologists, the charge range for pathologists who billed patients directly was 0.53 to 1.33 of the mean reported by pathologists (mean 0.98, median 1.06).
A total of 213 private pathologists’ offices were called, and 48 (23%) reported how much they charged patients for interpretations of skin biopsies. The range of prices the pathologist charged patients for interpretation was 0.55 to 1.66. The mean was 1.0 (all values were normalized to this mean) and the median was 1.0.
Significant differences between the dermatology client billing, dermatology direct billing, and pathology direct billing group means were found by ANOVA (F-test p= 0.008). A Turkey-Kramer (TK) test used to compare group means among all pairs found a significant lower cost for dermatology client billing compared to pathology direct billing (difference in means=15%, 95% Simultaneous C.I.=5%, 35%), as well as dermatology client billing and dermatology direct billing (differences in means= 18%, 95% simultaneous C.I.=1%, 34%). No significant difference between pathology and dermatology direct billing groups existed.
Major Finding: Client Billing Saves Patients Money
The mean cost of dermatologists’ interpreting biopsies in the office and billing patients was 98% of the mean cost of pathologists’ billing those patients. The mean cost for dermatologists’ billing patients for interpretations done by outside pathologists (so-called “client billing”) was 80% of the mean cost of pathologists’ billing those patients.
The initial data suggest that having a dermatologist bill for biopsies read by a pathologist does not result in higher costs to patients. Lower charges by pathologists when billing dermatologists as compared to having pathologists bill patients directly may be explained in part by lower billing costs and the reduced risk of unpaid bills.
Study Limitations
Our study does have limitations. Despite the good response rate, some practices were not willing to share prices and information over the phone. Also, we analyzed the charges that offices reported, not actual bills, or what the patient or insurance company directly paid. The close concordance for pathologists’ direct charge reported by dermatologists and by pathologists gives limited evidence that the costs we found are valid.
Two outliers were left out of the calculations. One pathology lab reported charging 6.5 times the mean rate for pathologists for interpretation of skin biopsies. One dermatologist reported sending biopsy specimens for pathology interpretation but not charging patients anything for the interpretation. Had we included these outliers, the savings with client billing would have been even larger. This study only investigated billing activity in North Carolina and therefore is regionally localized; a larger, more nationally representative sample would be preferable.
Potential for bias existed because we informed dermatology offices of our purpose but did not (nor need to do) to obtain data from pathologists. A study of actual costs to patients would be beneficial but was beyond the scope of this initial attempt to obtain data on client billing practices.
Nevertheless, for insured patients, higher cost is a practical impossibility because of set limits (allowables) on reimbursements. Under the Medicare system of allowables, costs cannot exceed what Medicare pays. Despite this, Medicare has rules preventing client billing. The rationale for these rules is unclear.
Private insurance companies in North Carolina have supported client billing, perhaps because they realize it is less costly. Allowing the market to operate and allowing caring physicians to contract with each other without interference does not appear to increase patients’ cost of dermatopathology services.
There has been recent concern over the ethics of client billing versus direct billing of pathology services used by dermatologists. The subject of a front-page article in The Wall Street Journal1 nearly 2 years ago, and our Skin & Aging cover story in June, so-called “direct billing” is the focus of much commentary and ongoing legislation/regulation.2-6 It is being questioned and argued in state legislatures, and currently nine states (California, Iowa, Louisiana, Montana, Nevada, New Jersey, New York, South Carolina and Rhode Island) require direct billing to payers for certain pathology services. Four states prohibit markups and a dozen more require physicians to disclose what they pay for tests in bills to patients and insurers.
The controversy revolves mainly around speculation that dermatologists may be profiting by overcharging patients for interpretations of skin biopsies that are performed by pathologists at a discount.
But for all the hoopla, there was little to no objective data on the practice, no published information on the impact of this practice on patients’ costs until our Dr.Score survey (conducted on www.drscore.com) sought to obtain some initial data on pathologists’ charges for skin biopsies compared to dermatologists’ charges.7
Client Billing Explained
Client billing involves clinicians’ charging patients for pathologists’ services that were performed by pathologists. (See Figure 1). Using client billing, a treating physician may realize a profit by charging a patient more for a laboratory service than the physician paid to have the service done.
Advantages of Client Billing
Dermatologists billing patients directly for dermatopathology services done by a dermatopathologist may be the most convenient method of billing and has the potential to save patients money because of discounted fee schedules dermatology offices receive from pathology laboratories.
Convenience. Client billing can be more convenient and less confusing for patients. One advantage of this approach is that patients receive only one bill from a familiar physician, the treating dermatologist, rather than multiple bills from unknown labs. The dermatologist already has to bill the patient for the office visit and for performing the biopsy; it may be more convenient for patients to receive one collective bill for a service rather than multiple bills associated with one visit.
In network. Another benefit of client billing to patients is that when they see an “in-network” dermatologist, the biopsy can be sent to the dermatopathology laboratory of choice without worry that it is an “out-of-network” laboratory.
More efficient. Client billing is more efficient because patients provide their demographic and insurance information to the dermatologist; thus, the pathologist doesn’t have to obtain this information. This saves administrative staff time and hassle because client billing allows the lab to send one statement to the dermatologist, summarizing the services for the period, which is usually 1 month.
Pathologist avoids non-payment risk. When the pathologist allows the dermatologist to bill the patient, the pathologist is essentially guaranteed payment for the service by the dermatologist. In the client billing arrangement, the dermatologist is at risk for nonpayment while the pathologist is certain he/she will be paid.
Cost advantages. The reduction in risk for non-payment probably contributes to the low charges pathologists offer dermatologists for the service. Current procedural terminology (CPT) code 88305 is used to report interpretation of skin biopsies as well as more complex colon, breast and liver biopsy specimens.
This may also explain in part the higher charges in pathologists’ direct billing compared to dermatologists’ direct and client billing.
Ethical Concerns
A number of issues are brought up by those who think client billing is unethical. (See Table 1.)1
Excessive markups. The major public concern is that patients might be overcharged by markups added in the client billing process.1
Based on the limited data obtained in this study, however, it appears that client billing markups do not add to the overall cost of care. On the contrary, we found that on average, charges were lower with client billing. If there is an ethical problem with client billing, it does not appear to be related to higher costs to patients.
Selecting services based on cost, not on quality. It is the physician’s ethical responsibility to provide the patient with high-quality pathology/laboratory services based on the quality of those services, not purely on the cost.
We believe a physician should be able to select the appropriate pathologist or laboratory depending on his or her interpretation of the best available service for that particular patient. In the case of dermatology, this often means utilizing a pathologist or reference laboratory that offers specialized dermatopathology services.
To this point, a recent bill was introduced into Congress (still pending) that defines as a component of patients’ rights the right of a dermatologist to send patients’ specimens for appropriate dermatopathology study.
It is our position that it is unethical for insurance companies to dictate what lab dermatologists should send their biopsies to without the knowing if that lab can provide the best care for their patients, just as it would be unethical for dermatologists to use low-price labs without considering the quality of expertise required for their patient simply to maximize their profit margin.
Are Concerns Legitimate?
To determine whether patients are in fact charged more in a client billing situation than they would be if billed directly, Dr. Score performed a small survey to obtain initial data on what pathologists and dermatologists are charging patients for skin biopsy interpretation.
DrScore Study Method
Private practice, non-academic, dermatologists and pathologists whose contact information was listed in the DrScore.com physician listing database7 were contacted. The DrScore database contains listings for 229 private practice dermatologists and 213 private practice pathologists in North Carolina. All the numbers in the database were called.
While the names of the participating dermatology and pathology practices were known by the research associate conducting the telephone surveys, this information was not shared with other team members. In addition, no identifiable private information was recorded as part of the data analyzed. The only information that was recorded was the specialty of the survey participant and the amount charged for processing and interpreting skin biopsies. The survey had approval of the intramural human subjects review board.
Private dermatologists in the state of North Carolina were called and asked what they charge for interpreting skin biopsies. They were told a study was being conducted due to the recent regulations dealing with client billing. They were asked whether they interpreted their biopsies in the office or sent them out for interpretation. If interpreted in the office, they were asked how much they charged. If the specimens were sent out for interpretation, they were asked how the patient was billed — by the office, or by the lab the specimen was sent to — and what those charges were.
The pathologists’ offices were called and asked if they interpreted skin biopsies sent from dermatologists’ offices. If they did, they were asked how much they charged for interpretation. The pathologists’ offices were not told that this was a formal study.
The mean cost was calculated for all three categories: the charge for the pathologist to interpret skin biopsies, the cost for the dermatologist to interpret the skin biopsy in the office, and the charge of the dermatologist to send the biopsy out to be interpreted.
The charges were normalized to the mean charge for pathologists’ billing patients directly. Outlier values were not included in the mean used to normalize the data.
ANOVA and Turkey-Kramer analyses were done to assess the statistical significance of observed differences.
Survey Results
A total of 442 phone calls were made. (See Figure 2, below.) A total of 213 private pathologist offices were called, and 48 (23%) reported how much they charge patients for interpretations of skin biopsies.
A total of 229 private dermatology offices were called; 105 (46%) reported how much patients were charged for biopsies. Of the 46% of dermatologists who responded:
- 50% were not able to give an exact price because they sent their pathology out, the pathologist directly billed the patient, and the dermatologist was unaware of how much the pathologist then charged the patient.
- 19% sent specimens to an outside pathologist who directly billed and knew the price.
- 9% interpreted skin biopsies on-site and directly billed patients.
- 22% sent out for pathology and billed their patients (client billing).
The range for the dermatologists who interpreted in the office and directly billed was 0.53 to 1.33 relative to pathologists, with a mean of 0.87 and median of 0.68 (Figure 3, above). The range for dermatologist offices who client billed was 0.53 to 1.5 relative to pathologists, with a mean of 0.80 and a median 0.8. As reported by dermatologists, the charge range for pathologists who billed patients directly was 0.53 to 1.33 of the mean reported by pathologists (mean 0.98, median 1.06).
A total of 213 private pathologists’ offices were called, and 48 (23%) reported how much they charged patients for interpretations of skin biopsies. The range of prices the pathologist charged patients for interpretation was 0.55 to 1.66. The mean was 1.0 (all values were normalized to this mean) and the median was 1.0.
Significant differences between the dermatology client billing, dermatology direct billing, and pathology direct billing group means were found by ANOVA (F-test p= 0.008). A Turkey-Kramer (TK) test used to compare group means among all pairs found a significant lower cost for dermatology client billing compared to pathology direct billing (difference in means=15%, 95% Simultaneous C.I.=5%, 35%), as well as dermatology client billing and dermatology direct billing (differences in means= 18%, 95% simultaneous C.I.=1%, 34%). No significant difference between pathology and dermatology direct billing groups existed.
Major Finding: Client Billing Saves Patients Money
The mean cost of dermatologists’ interpreting biopsies in the office and billing patients was 98% of the mean cost of pathologists’ billing those patients. The mean cost for dermatologists’ billing patients for interpretations done by outside pathologists (so-called “client billing”) was 80% of the mean cost of pathologists’ billing those patients.
The initial data suggest that having a dermatologist bill for biopsies read by a pathologist does not result in higher costs to patients. Lower charges by pathologists when billing dermatologists as compared to having pathologists bill patients directly may be explained in part by lower billing costs and the reduced risk of unpaid bills.
Study Limitations
Our study does have limitations. Despite the good response rate, some practices were not willing to share prices and information over the phone. Also, we analyzed the charges that offices reported, not actual bills, or what the patient or insurance company directly paid. The close concordance for pathologists’ direct charge reported by dermatologists and by pathologists gives limited evidence that the costs we found are valid.
Two outliers were left out of the calculations. One pathology lab reported charging 6.5 times the mean rate for pathologists for interpretation of skin biopsies. One dermatologist reported sending biopsy specimens for pathology interpretation but not charging patients anything for the interpretation. Had we included these outliers, the savings with client billing would have been even larger. This study only investigated billing activity in North Carolina and therefore is regionally localized; a larger, more nationally representative sample would be preferable.
Potential for bias existed because we informed dermatology offices of our purpose but did not (nor need to do) to obtain data from pathologists. A study of actual costs to patients would be beneficial but was beyond the scope of this initial attempt to obtain data on client billing practices.
Nevertheless, for insured patients, higher cost is a practical impossibility because of set limits (allowables) on reimbursements. Under the Medicare system of allowables, costs cannot exceed what Medicare pays. Despite this, Medicare has rules preventing client billing. The rationale for these rules is unclear.
Private insurance companies in North Carolina have supported client billing, perhaps because they realize it is less costly. Allowing the market to operate and allowing caring physicians to contract with each other without interference does not appear to increase patients’ cost of dermatopathology services.
