Dermpath financial incentives

[icpshootyz]

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This is a question for the attendings out there, private practice dermatologists. I'm a path trained dermatopathologist and we're reaching out to local dermatologists to try and convince them to send to our lab. What we keep running into is dermatologists telling us there's no way our lab could beat the "deals" they're getting from the nearby corporate labs. Now, to me that sounds suspiciously like kickbacks or other not-so-legal arrangements, as there really should be no legal financial incentive to send to one dermpath lab over another. I'm curious to see if anyone would be willing to tell what sort of "deal" they get to send their specimens to a specific lab over another. I'm not referring to TC/PC arrangements where the dermatologist owns/runs a histo lab, these are straight derms with no lab. Anyone?

 

[icpshootyz]

Feel free to PM, I realize most people aren't fond of posting this sort of info. Although that alone should make people think twice about what's going on out there.

 

[porokeratosis]

Dermpath Diagnostics "donates" new Electronic Health Record (EHR) systems to graduating Derm residents and fellows. Establishing a EHR costs thousands of dollars. See website & look in "march news"
http://dermpathdiagnostics.com/news-and-events

I heard that some Dermpath companies also "donate" EHR to established Derm practices. It's basically a "kick-back" for Derms to send their path to the Dermpath company.

 

[icpshootyz]

Dermpath Diagnostics "donates" new Electronic Health Record (EHR) systems to graduating Derm residents and fellows. Establishing a EHR costs thousands of dollars. See website & look in "march news"
http://dermpathdiagnostics.com/news-and-events

I heard that some Dermpath companies also "donate" EHR to established Derm practices. It's basically a "kick-back" for Derms to send their path to the Dermpath company.

This I have definitely heard of, and I know some are trying to get the EHR loophole in the Stark laws eliminated. But the government likes EHR and also finds this a convenient way to have the market pay for it. Personally I agree with yo, Poro, it's a kickback. Anything done in exchange for receiving specimens or clients from another physician is a kickback. We'll see how long the EHR loophole lasts.

 

[asmallchild]

I was told it would be ending this December from a colleague of mine who's starting her own practice but she may be referring to another EHR startup program

 

[MOHS_01]

There's bill client and the EHR arrangement as outlined above. I refuse to participate in either (I may be a slut, but I'm no *****).

 

[porokeratosis]

Client billing is legal in some states & illegal in others. For example, it's legal in Texas and a well-known Dermatopathologist in Dallas uses client billing to his advantage to get Derms to send him specimens.

 

[icpshootyz]

Client billing is legal in some states & illegal in others. For example, it's legal in Texas and a well-known Dermatopathologist in Dallas uses client billing to his advantage to get Derms to send him specimens.

I'm guessing his name rhymes with "Sockerell". Anyway, client billing is one of those terms I've heard but never bothered to figure out what it meant. Anyone care to explain what client billing is and how it works? And does anyone know if it's legal in MA where I am?

 

[itsthepleats]

Client billing is essentially scheme that (in states where it is legal), allows clinicians to bill for pathology services and "negotiate" a price with the pathology lab where the specimens are processed and/or read and then keep the difference. The clinician submits the billing paperwork to insurance and gets paid for the pathology service (let's pretend for global TC/PC that's $130 just for example). They pay the pathology lab the "negotiated" rate (let's say $25 for example) and then the clinician gets to pocket the rest. The numbers for global and the rate they pay the pathologist may differ from the above, but the idea of client billing is that the clinician bills for the pathology work, pays the pathologist less than the revenue their work generates, and then pockets the rest. You can imagine why clinicians love this scheme. Basically they make tons of money for doing NOTHING off of the pathology from their biopsies/excisions. This is illegal for Medicare cases and some insurance cases depending on insurance carrier and the state. Some states have banned this practice all together--I think currently, client billing is illegal in only 19 states. Despite the fact that the AMA and AAD have come out and said that it is unethical for a clinician to bill for work they do not do (and keep the reimbursement for that work), this billing arrangement is rampant in the states that still allow it. Labs enter into this billing arrangement with clients because often times, they will completely lose the business if they don't. As far as I know, client billing is illegal in MA.

 

[reno911]

Client billing is pretty much what is described above.

To be honest, I have never understood the specific outrage over this practice. This exact type of exploitation happens all of the time in our health care system, and it seems weird to single out this one instance of it.

I mean, obviously if I were a pathologist, I wouldn't like it because I would make less money, but I think it is only slightly more complicated than that. I have never done this or even been in a position where it was an option, so I really have no dog in this fight at all. But here are a few things that that I find interesting about the issue.

1. Client billing only works because a pathology group on the other end agrees to provide the service at a super low cost. It seems that most of the outrage related to client billing is reserved for the dermatologist that engages in the practice. There is less outrage directed towards the pathologists that run the labs that provide the service. If pathologists are so opposed to the practice, which they universally seem to be, they could just not offer the service. That, of course, would never happen voluntarily because there will always be someone who will desire the profit that they can generate from client billing. It's basically one giant Prisoner's Dilemma for the pathologists.

If one is opposed to client billing, equal outrage should be directed to the dermatologist (or other specialist sending the specimen) and the pathologist reading the slide. I find that for the most vigorous opponents of client billing, this is rarely the case.

2. I don't see how client billing is really different from a derm group just setting up a lab, hiring a dermatopathologist on their own, and just paying them a very low rate to read the slides. The dermatologists will then split up profits they make off of the pathologist and technical fees. This is just as exploitative of the pathologist as client billing. And the exploitation is unfortunate, but it is the result of simply the supply and demand (right now there is an oversupply of people qualified and willing to read dermpath slides, so finding people to accept these poorly paid positions is not hard).

The only difference between this and client billing is that client billing is easier, but the exploitation is the same. Of course, there is a new initiative to prohibit these types of labs, but until this arrangement is prohibited (and whether or not that is a good thing is a very complicated issue) then it makes little sense to prohibit client billing. They are effectively the same thing.

3. The whole issue that client billing is somehow wrong because "someone is billing for work they didn't do" is not compelling to me. It is just rhetoric. In pretty much every industry, sub-contracting is a standard practice. For example, imagine you're building a house and you pay someone a fee to build it. If they then go out an hire an electrician to do the wiring, a plumber to do the plumbing, etc. are they being unethical because they are billing for work they didn't actually do?

In a way, the whole insurance system is just a giant case of people billing for work they don't actually do. With my health insurance plan, I pay an insurance company to take care of my health care needs. They then contract a network of physicians to provide those services. They're not providing the health care, but they are billing me premiums for it.

Sure, medicine is different from building houses. In medicine, one often hears the argument that in medicine it is unethical because it causes the dermatologist to do more (unnecessary) biopsies because of the financial incentive. However, that is a completely distinct issue from someone billing for work they didn't do.

Moreover, in our current health care system this problem of someone "billing for work they didn't do" arises repeatedly in large hospital systems. A large hospital hires a bunch of physicians to see patients, the physicians assign the collections to the hospital and then the hospital pays the physician an agreed upon (normally low, because they can) salary. There are some artificial differences between this extremely standard practice and client billing, but in then end the exploitation is the same.

The arguments to the exploited physicians are eerily similar, and I've heard them first hand:

"Look XXX hospital spends a lot of time marketing and acquiring patients for Dr. Y to be able to see, so it only make sense that Dr. Y should be willing to accept a little less salary to be part of this beneficial situation" is exactly the same argument as "Dermatologist X spends a lot of time marketing his practice, generating referrals and getting the patients whose specimens Pathologist Z is able to read, so it only seems fair that Pathologist Z should be willing to accept a little less income to be a part of this beneficial situation."

If anything, it's the exploitation that is the problem, not who is billing for what.

There are a few more thoughts about the issue that I have, but this is longer than I thought, so I'll stop here.

 

[icpshootyz]

There's certainly comparisons to be made to large academic centers or hospitals where the center is paid the full reimbursement for the path diagnosis and only gives an employed pathologist a portion of that pay. However, usually that's because the center/hospital owns and pays for all of the overhead involved. Kind of hard to justify allowing a dermatologist (or any clinician) to bill for pathology services if they don't even own the lab or physical space. Like I said, I can't say much if a clinician opens a histology lab and hires a pathologist to work for them, that's not very different than a LabCorp or University X situation. But this client billing seems like a pretty shady set-up whereby the clinician does ZERO pathology yet expects to get paid for it. And it definitely sounds like a situation ripe for over-treatment and over biopsy as a means of increasing revenue. And the studies have shown just that (in urology for sure). Glad to hear my state doesn't allow client billing. Now I just have to figure out what they do allow that's keeping potential clients from even considering us!

But yes, the underlying issue is that pathology consistently over trains people leading to too much supply for the actual demand. Dermpath fellowships have expanded too rapidly, and dermpath is not the highly desired field it once was. Meanwhile dermatology artificially limits trainees, almost to the point of harming patients with very long waits for appts. But, I'd rather be in high demand than high supply. Too bad our professional organizations keep pretending there's some massive future need for pathologists. Ah well. The good thing is maybe less derms will want to do dermpath since it won't be as profitable.

 

[reno911]

Like I said, I can't say much if a clinician opens a histology lab and hires a pathologist to work for them, that's not very different than a LabCorp or University X situation.

It's also not very different from client billing. In both cases, the clinician is not doing any of the pathology work. In both cases, the pathologist is getting paid less and the clinician is making money off of them. The only difference is client billing is easier to set up. The fact that client billing is easier doesn't really make it ethically different in my mind.

You seem to think there is a big difference because the clinician built and runs the lab. But in the case of the direct billing, it is as if he is just sub-contracting out those lab services. The former is certainly harder, but the effect on the guy at the scope (and the guy sending the specimens is identical). The motivations are identical.

The differences between the two arrangements are superficial and immaterial. Ethically speaking, there is virtually no difference.

 

[Substance]

It's also not very different from client billing. In both cases, the clinician is not doing any of the pathology work. In both cases, the pathologist is getting paid less and the clinician is making money off of them. The only difference is client billing is easier to set up. The fact that client billing is easier doesn't really make it ethically different in my mind.

You seem to think there is a big difference because the clinician built and runs the lab. But in the case of the direct billing, it is as if he is just sub-contracting out those lab services. The former is certainly harder, but the effect on the guy at the scope (and the guy sending the specimens is identical). The motivations are identical.

The differences between the two arrangements are superficial and immaterial. Ethically speaking, there is virtually no difference.

I don't have a dog in the fight either way, but personally, I feel that if I were to have my patient care work skimmed off the top by former classmates and colleagues, without them sharing any of the liability risk of the work, I'd be checking to leave that field ASAP. There's something about that arrangement that makes pathology less of a professional field than derm, uro, IM etc. It's more like technical staff.

There's a reason why pathology can't attract anyone and has to fill its ranks with dangerous and frankly unqualified IMGs. It's because of stuff like this. Which medical student in his right mind would settle for a future where his pay gets skimmed by his old gunner classmate? In the long run, this is a dangerous game. When pathology screws up, it screws up bad. Up here in Canada there are innumerable accounts of some dolt pathologists making huge messes.

I can't blame anyone for taking advantage of this arrangement. Who I can blame are the pathology training programs recruiting substandard professionals and flooding the market rather than going 50% unfilled (assuming 0% IMG recruitment), and the pathologists who accept to work for such arrangements.

 

[icpshootyz]

It's also not very different from client billing. In both cases, the clinician is not doing any of the pathology work. In both cases, the pathologist is getting paid less and the clinician is making money off of them. The only difference is client billing is easier to set up. The fact that client billing is easier doesn't really make it ethically different in my mind.

You seem to think there is a big difference because the clinician built and runs the lab. But in the case of the direct billing, it is as if he is just sub-contracting out those lab services. The former is certainly harder, but the effect on the guy at the scope (and the guy sending the specimens is identical). The motivations are identical.

The differences between the two arrangements are superficial and immaterial. Ethically speaking, there is virtually no difference.

Don't get me wrong, I find both to be terribly corrupt. But at least the clinician has the financial responsibility of owning the lab in the latter case. Expecting money from path services while having zero dog in the fight is akin to extortion. Obviously as a pathologist I'd be very fond of making both practices illegal. It does seem as though many states do find a difference between client billing and TC/PC arrangements involving clinician-owned labs, though.

 

[MOHS_01]

There's certainly comparisons to be made to large academic centers or hospitals where the center is paid the full reimbursement for the path diagnosis and only gives an employed pathologist a portion of that pay. However, usually that's because the center/hospital owns and pays for all of the overhead involved. Kind of hard to justify allowing a dermatologist (or any clinician) to bill for pathology services if they don't even own the lab or physical space. Like I said, I can't say much if a clinician opens a histology lab and hires a pathologist to work for them, that's not very different than a LabCorp or University X situation. But this client billing seems like a pretty shady set-up whereby the clinician does ZERO pathology yet expects to get paid for it. And it definitely sounds like a situation ripe for over-treatment and over biopsy as a means of increasing revenue. And the studies have shown just that (in urology for sure). Glad to hear my state doesn't allow client billing. Now I just have to figure out what they do allow that's keeping potential clients from even considering us!

But yes, the underlying issue is that pathology consistently over trains people leading to too much supply for the actual demand. Dermpath fellowships have expanded too rapidly, and dermpath is not the highly desired field it once was. Meanwhile dermatology artificially limits trainees, almost to the point of harming patients with very long waits for appts. But, I'd rather be in high demand than high supply. Too bad our professional organizations keep pretending there's some massive future need for pathologists. Ah well. The good thing is maybe less derms will want to do dermpath since it won't be as profitable.

AAAAGGGGGHHHHHHHHHHHHHHHHHH!!!!!

The fallacy that just won't die!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[doc MD]

Don't get me wrong, I find both to be terribly corrupt. But at least the clinician has the financial responsibility of owning the lab in the latter case. Expecting money from path services while having zero dog in the fight is akin to extortion. Obviously as a pathologist I'd be very fond of making both practices illegal. It does seem as though many states do find a difference between client billing and TC/PC arrangements involving clinician-owned labs, though.

I can see your point about client billing being considered unethical. However, another viewpoint is that derm residents are trained in dermpath as well and are capable of doing their own path (at least I'm getting that experience from my program). That is not to say I wouldn't sent something complicated out to an expert if needed. My point is, I'm being trained to do my own path for a majority of diseases, but so busy clinically that I will hire someone to do it at a good rate. Why would it be unethical to give you a specimen to examine, something that I am capable of doing as well, when without derm you couldn't even get the specimen in the first place? How would this be different if I hired a dermatopathologist? do I give them the entire rate as well, or will that be unethical to not pay them in full of all the slides they see because I decided to salary them instead.

 

[itsthepleats]

I can see your point about client billing being considered unethical. However, another viewpoint is that derm residents are trained in dermpath as well and are capable of doing their own path (at least I'm getting that experience from my program). That is not to say I wouldn't sent something complicated out to an expert if needed. My point is, I'm being trained to do my own path for a majority of diseases, but so busy clinically that I will hire someone to do it at a good rate. Why would it be unethical to give you a specimen to examine, something that I am capable of doing as well, when without derm you couldn't even get the specimen in the first place? How would this be different if I hired a dermatopathologist? do I give them the entire rate as well, or will that be unethical to not pay them in full of all the slides they see because I decided to salary them instead.

The difference is that if you're sending your specimens out under client billing, you're not reading the slide (professional component) or creating the slide to be read (technical component). Even if you read all your slides and billed for the PC, do you expect that a lab would make you the slide (TC) for free? When you send a biopsy to a pathologist/lab, that lab is spending a lot of money in order to be able to make those slides in the first place (capital input for all the supplies, machines, processors, staff to gross and process the slides, embed them, cut them, stain them, etc. The lab/pathologist group probably also pays for all those nice little formalin jars you submit your biopsies in as well as pays a courier to come and pick up your biopsies. So you're not just paying a pathologist to read a slide you could read yourself. If you hired a dermpath, you'd still have to "buy" the technical component from somewhere if you want your tissue to be turned into a slide.

As a complete aside, I'd like to know how strongly dermatologists would support client billing if the tables were turned. If every PCP or referring doc expected that a derm would turn over 40% or 60% or 80% of the reimbursement generated from their derm exam (including any reimbursement generated for the office visit, procedure codes, etc) for every single patient that got referred to them from another doc every single time they saw that patient, would they be just fine with it because "without the referring doc the derm wouldn't get that patient anyway?" Of course, for many reason this isn't the way things work, but I think it would be interesting to consider.

Finally, I just want to make the point that client billing is not about derms vs pathologists. Many groups of clinicians--derms, GIs, uros, OBs, engage in client billing practices, and in many states, these billing practices are legal so these docs are not breaking the law. Derms are not solely responsible for the forces that have allowed client billing to come in existence or that allow it to continue. But most derms who engage in client billing should call it for what it is, which is free money earned off another physician's work.

 

[icpshootyz]

The difference is that if you're sending your specimens out under client billing, you're not reading the slide (professional component) or creating the slide to be read (technical component). Even if you read all your slides and billed for the PC, do you expect that a lab would make you the slide (TC) for free? When you send a biopsy to a pathologist/lab, that lab is spending a lot of money in order to be able to make those slides in the first place (capital input for all the supplies, machines, processors, staff to gross and process the slides, embed them, cut them, stain them, etc. The lab/pathologist group probably also pays for all those nice little formalin jars you submit your biopsies in as well as pays a courier to come and pick up your biopsies. So you're not just paying a pathologist to read a slide you could read yourself. If you hired a dermpath, you'd still have to "buy" the technical component from somewhere if you want your tissue to be turned into a slide.

As a complete aside, I'd like to know how strongly dermatologists would support client billing if the tables were turned. If every PCP or referring doc expected that a derm would turn over 40% or 60% or 80% of the reimbursement generated from their derm exam (including any reimbursement generated for the office visit, procedure codes, etc) for every single patient that got referred to them from another doc every single time they saw that patient, would they be just fine with it because "without the referring doc the derm wouldn't get that patient anyway?" Of course, for many reason this isn't the way things work, but I think it would be interesting to consider.

Finally, I just want to make the point that client billing is not about derms vs pathologists. Many groups of clinicians--derms, GIs, uros, OBs, engage in client billing practices, and in many states, these billing practices are legal so these docs are not breaking the law. Derms are not solely responsible for the forces that have allowed client billing to come in existence or that allow it to continue. But most derms who engage in client billing should call it for what it is, which is free money earned off another physician's work.

Couldn't have said it better myself!

 

[icpshootyz]

Looks like my state is also opposed to EHR donations:

http://pathologyblawg.com/pathology...ation-runs-afoul-massachusetts-law/#more-9705

Not that this means it isn't going on, especially with labs like Miraca, Strata, Quest, and Aurora in the area.

 

[doc MD]

The difference is that if you're sending your specimens out under client billing, you're not reading the slide (professional component) or creating the slide to be read (technical component). Even if you read all your slides and billed for the PC, do you expect that a lab would make you the slide (TC) for free? When you send a biopsy to a pathologist/lab, that lab is spending a lot of money in order to be able to make those slides in the first place (capital input for all the supplies, machines, processors, staff to gross and process the slides, embed them, cut them, stain them, etc. The lab/pathologist group probably also pays for all those nice little formalin jars you submit your biopsies in as well as pays a courier to come and pick up your biopsies. So you're not just paying a pathologist to read a slide you could read yourself. If you hired a dermpath, you'd still have to "buy" the technical component from somewhere if you want your tissue to be turned into a slide.

As a complete aside, I'd like to know how strongly dermatologists would support client billing if the tables were turned. If every PCP or referring doc expected that a derm would turn over 40% or 60% or 80% of the reimbursement generated from their derm exam (including any reimbursement generated for the office visit, procedure codes, etc) for every single patient that got referred to them from another doc every single time they saw that patient, would they be just fine with it because "without the referring doc the derm wouldn't get that patient anyway?" Of course, for many reason this isn't the way things work, but I think it would be interesting to consider.

Finally, I just want to make the point that client billing is not about derms vs pathologists. Many groups of clinicians--derms, GIs, uros, OBs, engage in client billing practices, and in many states, these billing practices are legal so these docs are not breaking the law. Derms are not solely responsible for the forces that have allowed client billing to come in existence or that allow it to continue. But most derms who engage in client billing should call it for what it is, which is free money earned off another physician's work.

I may have only mentioned the PC and left out the TC. However, the details of the process are irrelevant. In a way, one specialty does have leverage over the other. I'm not saying that it is ethically correct but that's the situation of the market place. The established big labs that accept client billing are streamlined to be very efficient and cost-effective to take a hit with client billing that smaller mom&pop labs can't compete.

 

[MOHS_01]

The difference is that if you're sending your specimens out under client billing, you're not reading the slide (professional component) or creating the slide to be read (technical component). Even if you read all your slides and billed for the PC, do you expect that a lab would make you the slide (TC) for free? When you send a biopsy to a pathologist/lab, that lab is spending a lot of money in order to be able to make those slides in the first place (capital input for all the supplies, machines, processors, staff to gross and process the slides, embed them, cut them, stain them, etc. The lab/pathologist group probably also pays for all those nice little formalin jars you submit your biopsies in as well as pays a courier to come and pick up your biopsies. So you're not just paying a pathologist to read a slide you could read yourself. If you hired a dermpath, you'd still have to "buy" the technical component from somewhere if you want your tissue to be turned into a slide.

As a complete aside, I'd like to know how strongly dermatologists would support client billing if the tables were turned. If every PCP or referring doc expected that a derm would turn over 40% or 60% or 80% of the reimbursement generated from their derm exam (including any reimbursement generated for the office visit, procedure codes, etc) for every single patient that got referred to them from another doc every single time they saw that patient, would they be just fine with it because "without the referring doc the derm wouldn't get that patient anyway?" Of course, for many reason this isn't the way things work, but I think it would be interesting to consider.

Finally, I just want to make the point that client billing is not about derms vs pathologists. Many groups of clinicians--derms, GIs, uros, OBs, engage in client billing practices, and in many states, these billing practices are legal so these docs are not breaking the law. Derms are not solely responsible for the forces that have allowed client billing to come in existence or that allow it to continue. But most derms who engage in client billing should call it for what it is, which is free money earned off another physician's work.

Well... Mohs and path derms do that to a lesser degree every single day (when they are not solo providers) as does every dermatologist in a multispecialty or employed setting. Many are not too happy about it, though; they just rationalize it as the cost of doing business in their chosen field.