Need a Loan? See Your Doctor!

Need cash for a new car? to put a new roof on the house? Forget about the credit union and the bank. Don't pawn the wedding ring. Just make an appointment with your doctor. No collateral needed. No application. The FTC has recently confirmed what we should have known all along: Doctors routinely "lend" large sums of money to their patients, much of it interest free.

When I asked a patient (not a real case) how he was going to pay for his visit recently, he said he was starting a new business and wondered whether he could pay me at his next visit. I said no. Sounds like a worthy cause, but for all I know he may really plan to use the money to buy a new home theater system, or some cocaine. I do not want my patients to incur hardship, but this starts to sound like I am in the loan business. What's more I do not know the patient's credit rating; I have no collateral; and I do not charge interest on unpaid balances.

If all the money owed health care providers in this country constitutes loans, we must be collectively one of the largest lenders in the US. Such "loans" must total in the billions.

The Federal Trade Commission intends to implement the "Red Flag Rule," well, someday. According to this rule any business that functions as a lender must implement policies and procedures to fight identity theft. If you think this will only apply to banks, savings and loans, mortgage companies and pawn shops, think again. The FTC apparently defines as lending the practice of delaying collecting of the balance due until after the explanation of benefits has been received. Allowing patients to slowly pay their medical bills over time, regardless of whether interest accrues, may also constitute lending in the eyes of the FTC, making doctors and other health care providers subject to its provisions when it goes into effect November 1. This makes at least the second time the FTC has pushed back the implementation date, perhaps in response to pressure from the likes of the AMA, which wants the FTC to exempt doctors from the rule. Read more from the AMA. I often disagree with the AMA, but not in this case. Health care providers dislike identity theft as much as anyone, but doctors are not lenders, and the federal government should not conscript us into law enforcement.

If you are a health care provider and want to concentrate on what you do best, treating your patients, you may be able to sidestep the Red Flag Rule by collecting your fee at the time of service. You will not be alone: Anna Mathews reported in the August 5, 2009 Wall Street Journal that American physicians increasingly require payment of their full fee, not just the co-payment, at the time of service rather than waiting for the patient's insurer to determine what the balance should be after considering deductibles and other factors. Most physicians seem to cite the fact that they collect little on such balances, but I am moving my psychiatric practice in that direction for a few other reasons as well:

1) I do not trust health insurance companies to pay. I have opted out of Medicare. I do not contract with any insurer.

2) Patients building large balances owed also build an incentive to leave my practice. After one or two missed payments I am hooked: If I continue to treat them without requiring payment, the balance increases. If I threaten discharge for non-payment, the patient can seek treatment elsewhere and may never pay me. And my growing resentment could adversely affect their treatment.

3) Under federal law and at least some state law (including Washington State where I practice: RCW 48.43.600) insurers who determine they have reimbursed providers by mistake can demand repayment from doctors months or years after the fact, leaving it to the doctor to collect from the patient what amounts to another involuntary "loan" (or, by that time, more likely a gift). As I understand the law, however, if the patient pays the physician directly and the insurer reimburses the patient, the insurer has no recourse but to collect from the patient directly.

4) Insured patients as a group, precisely because they spend less out of pocket for medical care, deserve less of a financial break than uninsured patients, who traditionally must pay up front. It would not be fair to my patients who pay cash for me to increase their fees to cover losses related to balance billing of insured patients. If anything insured patients can better afford to pay at the time of service.

But I have gone even further: I require patients I treat with Suboxone to make monthly visits once the transition from whatever opiates they were addicted to. When a new patient starts treatment I require payment for the first three visits and the last visit ever, like when you rent an apartment and pay for the first month and the last month. This discourages patients from disappearing right after I order their next month prescription. If they stop treatment the right way by informing me directly either I refund that advance payment or, if the patient tells me they do not plan to return, I do not need to collect payment for that visit.

I am heartened to hear how many physicians now demand payment at the time of service. We are not lenders. We are not police. And we are not the bailout for the health care crisis. By failing to require payment we only enable a broken system. I feel for patients who cannot afford either insurance or medical care, but only patients, not providers, experiencing the adverse consequences of delays and denials in reimbursement, have the power to force change.