Dilemmas of cash-based practice

cashI write in response to a recent post on KevinMD and the comments that followed. A primary care physician named Ashley Maltz discussed advantages and disadvantages of a cash-based practice. I appreciate her evenhanded tone: she prefers this model yet expressed concern for patients who can’t use it. In the comments section, several physicians extolled the virtues of cash-pay, but patients were mixed. It’s attractive for those who can afford it, while it worries, and maybe angers, those who can’t.

I enjoy the personal and patient benefits of a mostly cash-pay psychiatric practice (I also see some patients under Medicare). I like running my own small business, keeping clinically useful paper charts as opposed to a ponderous EHR, and protecting my patients’ privacy.  Billing is simple enough that I do it myself. There is also an argument for keeping the relationship dyadic, i.e., 2-person, in psychotherapy. Third party payers can complicate the therapeutic relationship in a domain where clarity is paramount.  Most of my private practice colleagues likewise avoid insurance panels.  It’s become the norm in my field.

Yet we’re all painfully aware that most of the seriously mentally ill can’t come to our offices.  They are relegated to county clinics, training settings, and to the rare private practitioner who still accepts public insurance.  Like Dr. Maltz, I’m saddened that

those on Medicaid or disability programs cannot be seen for cash by medical providers for medical care. Most of these people do not have the financial means to seek alternative types of care. Thus, they are seen in large community clinics with overworked providers and limited resources.

Some critics of cash-based psychiatric practice exaggerate, painting a picture of high-society shrinks getting rich off the worried well.  They point to real or imagined $400/hr psychiatrists calming the Silicon Valley nouveau riche. Others like Allen Frances M.D. provide a more balanced critique, noting that individual psychiatrists gravitate toward more functional patients, but that we are only a small part of a very large puzzle.  It appears that as a society we prefer not to pay for treatment of the seriously disturbed, but only for the jails and prisons they occupy after committing minor property and lifestyle crimes due to their condition.

Our situation in psychiatry is a harbinger for primary care.  There’s no denying the advantages of cash-based practice; it serves both doctors and patients very well.  Yet cash-based primary care practices, like psychiatric practices, exclude many patients who can’t afford them. They can’t comprehensively serve the primary care or psychiatric needs of a population.  Even more obviously, almost no one can pay out of pocket for more elaborate medical care, such as major surgery or a lengthy ICU stay.

There’s a basic tension between health care as a private transaction and health care as a public good. Regarding the former, we can show our compassion by offering some free or low-fee care, or by treating some publicly insured patients under Medicare or Medicaid. This way we avoid elitism and do our part for the less fortunate. However, we must recognize that no matter how charitable we are as individual physicians, many more are in need of our services than our charity can accommodate. The private transaction model of medical care cannot save sick people from dying in the street. Universal access to health services is needed.

While taxpayer-funded Medicare and Medicaid cover many patients who cannot otherwise afford care, our current backstop is EMTALA, the 1986 federal law requiring hospital Emergency Departments to evaluate and treat emergencies regardless of ability to pay. According to the Centers for Medicare & Medicaid Services, 55% of U.S. emergency care now goes uncompensated, costing hospital systems tens of billions annually. Much of this cost is shifted to paying patients, inflating medical bills for everyone else. One way or another, society (i.e., we) pay to keep our fellow Americans alive and relatively well. It would be far more economical, not to mention humane, to offer universal access earlier, before health problems progress to emergencies — just as it would be to treat the seriously mentally ill before they need to be imprisoned.

It’s no surprise that many patients who are otherwise sympathetic to the plight of demoralized, burned-out doctors draw the line at a cash-based care model that excludes them. In order to ally with these patients, those of us with cash-based practices should at minimum acknowledge the need for a two-tier model, public and private. Better yet, we need to think hard about who provides services in the universal-access public tier. Should this be all of us at some point in our careers, i.e., a type of “doctor draft” or public service requirement? Should these services be ceded to PAs and NPs? Or can we “let the market decide”, such that these services are provided by physicians who aren’t sharp, ambitious, or economically secure enough to hang a shingle — or for whatever reason prefer not to?  These hard questions must be answered if we’re to be intellectually honest and admit that the physician’s role in society is more than entrepreneur.

Image courtesy of sheelamohan at FreeDigitalPhotos.net

17 comments to Dilemmas of cash-based practice

  • Susie

    offering universal access to all before simple issues escalate to full blown crisis would be by far and away the most humane response – but it comes at a cost – and I think we have lost some of our humanity in being able to offer a fellow human suffering in their time of need. I remember a day when we used to provide the local homeless person with a meal and a warm jumper when they came to our door, now there are so many homeless where I work that I just have to walk on by feeling shit that I cannot help. what as become of mankind that we have become so greedy that all that matters is how much money we make?

  • Lisa

    I have been a pediatric RN for 18 years and am currently a few months away from completing my DNP, with a concentration in pediatrics. Primary care is my love and is where I plan to practice when I graduate.

    Before returning to school, I spent the past 7 years of my career working as a care coordinator for children with special health care needs. To qualify for services through the agency which employed me, families had to be financially as well as clinically eligible. This meant most were on Medicaid. I saw on a daily basis how much harder it was for them to find providers willing to see them, because they were on Medicaid, than for those with private insurance. This was particularly true for mental health services. I saw all too often how a failure to provide adequate mental health care led to getting in trouble with the law. A cycle which of course carries over into adulthood and serves to populate our jails.

    I believe you speak the truth when you say the trend towards accepting cash paying patients will soon be common in primary care as well. Concierge practices are becoming increasingly more common. I think our health care non-system fails in so many ways and it saddens me.

    Your post was beautifully written, about a subject I feel passionately about. I am curious, however, as to what you meant by your comment at the end that care for the underserved might be “relegated to PA’s and NP’s”? I would hope more for a system where PA’s and NP’s work collaboratively, respecting each other’s own unique strengths and perspectives, as opposed to a more divisive system and mind-set where only certain types of patients see certain types of providers.

    I actually have private insurance and choose to see an NP for my own health care.

    • Hi Lisa,
      I meant no offense, although I see how I might be read that way. Systems of care, corporate or public, seek the least costly employee who can do the job. Since PAs and NPs currently cost less to hire than primary care MDs, and practice in a similar scope, they may be hired preferentially by such systems. Some view this process as deskilling (which you may also find offensive). Another way to look at it is that physicians may abandon employment for greener pastures if others step up to take their place. Unfortunately, market forces sometimes militate against interdisciplinary collaboration. Thanks for writing.

    • On second thought, “relegated” implies a value judgment about PAs and NPs that doesn’t add anything to my point — and besides, I already used the word further up the post. I changed “relegated” to “ceded”.

  • I don’t know why physicians should assume the responsibility for rationing. After all that is what this system is. For decades both the free market proponents and the single-payer proponents have used the term “cost shifting” to suggest that insured or private pay patients bear the burden of the total cost of care. That is in fact wrong. Most Americans pay what is essentially a tax for health care and governments and managed care companies decide how it will be spent. Managed care companies and pharmaceutical benefit managers decide how they can best make money out of that system. Congress has essentially invented multi-billion dollar companies to “manage” the cost of care and they have done a very poor job of it. The only thing they are very good at is rationing psychiatric and addiction services at a faster rate than anything else.

    I have spent nearly my entire career taking care of public sector patients. The majority of that care was provided free to the government or some health care company that also wasted plenty of my time with prior authorizations and talking to pro-business utilization review physicians. I provided all of that time free on an involuntary basis and watched these companies provide low quality care in an inefficient manner. A lot of the effort was directed toward shifting the care of severely ill patients to the state. It was just a matter of time before the states adopted the same management strategies and just decided to ration care and close down hospitals.

    Cash-based models are not only necessary but I would see them as being the most ethical. The first time professional societies accepted the idea that a pro-business reviewer with no responsibility to the patient could deny care we were on a slippery slope. It is coming to its ultimate end with so-called collaborative care and the treating physician directing care like a utilization reviewer. It is no accident that a professional society that accepts managed care will welcome collaborative care with open arms.

  • Nemo

    Interesting points on either side. I have a question, as a cash-pay physician, do you treat mostly mentally ill patients or mostly those “worried well”?

    • Hi Nemo,
      “Worried well” is a contradiction in psychiatry: if you are worried, you are not well. Worry is one of the things we treat. “Mental illness” can also be hard to define. As I wrote in my post, patients with very severe problems often can’t afford to see me, although I do treat a few with bipolar disorder or schizophrenia. Most of my patients are depressed and/or anxious, and would probably say they are neither “mentally ill” nor well. I have yet to meet anyone who happily (and repeatedly!) pays $200 to see a doctor when they feel completely well. Thanks for writing.

      • Nemo

        Ok since “mentally ill” or “patients with severe problems” in your part of the world might inspire images of unwashed panhandlers, allow me to rephrase. Among your paying clients, do you see mostly those who experience depressions, bipolar disorders, psychosis, eating disorders, addictions, anxiety disorders, and other debilitating symptoms? Or do you see mostly those who are having a temporary life crisis because they currently dont like their boss, their job, their spouse, their mistress, their house, their mother in law etc. ..?

        • The former. Many have depression, ongoing anxiety, and/or addiction (most commonly to alcohol). They may also have miserable interpersonal lives, repeatedly choose bad partners, forever get into conflicts at work, or unwittingly sabotage themselves in other ways. Bipolar and eating disorders, and psychosis, are unusual in my practice, but I’ve treated all of these. One patient committed suicide last year, thankfully a very rare event. Like most psychiatrists, I tend not to see people for isolated issues that don’t point to a larger pattern. An otherwise happy person having a temporary life crisis, e.g., not liking her boss, would usually see a therapist or counselor who is less expensive and more pragmatic. But I wouldn’t turn her away if she called.

  • Anonymous

    Very good conversation. I have a large primary care practice run by myself and one Physician Assistant. We have practiced together as a team for about ten years and have built trust in the community and each other. Primary care( be it psychiatry/Internal Medicine ) access and quality will not be solved without PA’s/NPs involvement, especially given the economic models. I see the opposite of teamwork occurring. I see NP’s going out alone and opening clinics. Worse, I see hospital owned primary care clinics firing PA’s because the doctors protest as the hospital will not pay them or give them RVU credit when the PA sees patients. Insane. Primary care will be “relegated” to PA’s and NP’s working in retail clinics alone. This is also insane. Work together. Work as a team. Once trust exists, most of what a doctor does a PA can do but there are differences. Frankly, in my practice our female PA loves woman’s health and does almost all of this for our practice. In addition, we consider hybridizing to concierge medicine or direct pay. We value our PA so much that if patients don’t want to be in the more expensive practice—where the doc covers hospitalization, etc—they can join a more affordable PA lead but doc supervised practice for a few hundred dollars a year. We have a nutritionist as well and may get a psychologist. The weakness I see in psychiatry is too much drugs and not enough cognitive therapy. If that were my field I would have a NP/PA and a psychologist as well as a total team approach. Some may need more drug based decisions or the complexity of the doc, but the options are greater in this model. Also, in psychiatry or primary care forming a connection with a person is very personal and I suspect more key than the degree of the provider. Again, more options. Forming a true team gives a practice more therapeutic and financial options, including concierge/direct. It shocks me how little it is done. Jim Gigante, MD

  • Dinah Miller, MD

    Nice synopsis of a troubling issue.

  • Jennifer

    Ha! You haven’t yet met the $500/45 minute psychiatrists in NYC. They most certainly exist. However I would like to make another point – not only can the severely ill often have difficulty paying such a high (dare I say absurd and egotistical?) fee, a very large proportion (think 400+ calls to high calibre psychiatrists with openings in their private practice) of those same private pay psychiatrists will not consider seeing someone with a history of suicidality, let alone schizophrenia or the like. While it is valid to say that worry is something treated by this profession, it is important to note that many of these psychiatrists opt to only treat this population, regardless of the patient’s ability to pay.

    • Hi Jennifer,
      I’d heard of Manhattan psychiatrists charging $400-500 but you’re right, I’ve never met one. The critic I cited was referring to the Bay Area, and it was the first I’d read of such fees here. Since many of us have websites listing our fees, it’s easy enough to confirm that many San Francisco area psychiatrists charge about half this, i.e., $200-250, for a 45-50 minute psychotherapy session. That’s still more expensive than many people can afford, especially on a regular basis.

      Your larger point about cherrypicking probably warrants its own post. My initial thoughts are that it’s likely influenced by supply and demand (of doctors or patients, depending on one’s perspective), and the risk-tolerance of the practitioner. I work with many patients who have past or current suicidal feelings — it goes with depression, I can’t imagine excluding it — as well as some with psychotic and/or manic histories. On the other hand, I turn away callers who seek adult ADHD evaluations. There’s a balance, I suppose, between being an open-door mental health resource, and choosing one’s preferred practice focus. Thanks for writing.

  • EastCoaster

    You talked about keeping insurance companies out of the psychotherapy relationship. How many of your patients submit their bills to a PPO for reimbursement? I’m curious about how many of your patients can afford to pay your full fee and how much you think the process of the patient seeking reimbursement from their insurance is also an intrusion on the dyadic relationship?

    What kind of documentation do you provide those patients? Do you find that this affects your documentation and coding? e.g., more likely to come up with an Axis I disorder (using the language of DSM IV – since I’ve never seen a copy of the DSM V) ?

    • I don’t know the exact number, but I’d estimate that roughly half my non-Medicare patients seek insurance reimbursement. Nearly all pay my full fee. If I stopped taking Medicare, I’d see more sliding-scale patients.

      Who ultimately pays the fee is often important, although I wouldn’t call it an intrusion. Rarely, a patient who receives insurance reimbursement has expressed guilt over using health coverage “meant for more serious problems.” More often I hear this concern when the patient’s family (parents, etc) pay for treatment. Naturally, I’ve also heard the converse: patients who feel entitled to coverage by another party, whether an insurance company or their family. Any such attitude can be useful to discuss.

      However, in all these situations the patient still pays me. If he or she forgets to bring a check two weeks in a row, or mutters something about the expense, or decides to pay me months in advance, I’ll know about it and can explore it with them. In contrast, if I bill insurance directly, as I do with Medicare, important aspects of the dyadic relationship are obscured, and transference can be complicated by triangulation with the third party. I don’t think of this as a grave error, just something I’d sooner avoid if I can.

      I print monthly statements for all non-Medicare patients. For those seeking reimbursement, the statement includes procedure codes, a diagnosis code, and my NPI and tax identification numbers. Such statements are commonly called “super-bills,” although they don’t seem especially “super” to me. Following a change in CPT procedure codes a couple years ago, a few patients also request a separate CMS-1500 statement that breaks out the “medication” and “therapy” aspects of my fee, as these are reimbursed under separate codes. It’s additional work, and makes absolutely no sense from my perspective, but I supply these as well. It’s extremely rare that I slightly overcode a diagnosis; I more often undercode at the patient’s request, e.g., non-specific anxiety or depression, in the interest of privacy. More on this in two posts from 2013; you commented then too. Take care.

  • David Bresch MD

    Wow. A lot of perjorative material. Psychiatrists eat their young. There are plenty of psychiatrists and physicians who have the courage” to hang a shingle AND accept insurance.

    That said, what a doctor charges is none of anyones business, $500 for 45 minutes sounds low to me if I were taking cash. I have never had a cash practice but it has its own problems and no one knows what the doctor’s overhead is, very innocent choices can enslave docs to much higher overheads. IFF a doctor allows the free market to decide his income, why can’t he choose his rates?

    Though I have never had a cash practice, I have had cash patients. The difference between cash-paying patients and non cash-paying patients is mostly related to function, not diagnosis. Cash patients can afford cash sure, but they also have stable incomes or sources of support. The funny thing is that in MY world, insured patients are HIGH-functioning patients not LOW-functioning ones. And the patients out of luck have no insurance.

  • Ralph Singleton, Foreign Service (Ret)

    I would like to add comment made by Susie in 2016 about PA and NP and yours to Eyal Press on 6/16/2023. The State Department invests a lot of money to keep us healthy no matter where we are stationed. As a foreign service officer for Agency for International Development, who spent 18 years straight overseas in developing countries until retirement, then about 10 years overseas as consultant/trouble shooter. The embassy in most of my countries did not have an American on staff but an American nurse who was either a NP or RN with special additional training. She worked under general guidance of the regional supervising MD who was always available by phone for guidance if needed. I soon had great trust of these RNs who provided great care for minor matters, had list of approved local doctors and hospitals (if any) to use also. I had to be medevaced to another country three times, once with a local doctor to escort me, and entered a local hospital once after the RN heard my symptoms and knew immediately what I had and needed hospital without delay. Our country and health care system would be greatly improved at lower cost by greater trust and use of PA and NP. When this came up several years ago here in Tennessee, the medical profession here opposed it strongly. I wrote a letter to editor about greater use of NPs but it had no impact. My present cardiologist uses a NP and after I learned she was a NP, I no longer felt the need to see the MD after she read the results of EKG or ECG in my semi-annual visit. I think many other specialists as well as my primary physician could benefit from using NP or PA. Our health system costs twice or more than other industrial countries but USA has much worse care/results than in those countries with some form of single payer. Our health system is broken for so many and no signs of any serious reform. Too many people and companies make far too much money with the system as it is, and only a nationwide strike by most of the doctors and nurses could make a change in the system. I’ll be dead long before that happens. I feel better by sounding off to you. Thanks for opportunity to do so.

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