This issue came up at the MDU meeting on “Setting Up a Private Practice” recently. A delegate enquired as to the difference between the two and what the difference can lead to in terms of shortfalls:
The delegate was an Orthopaedic Surgeon who was suffering from an increased number of deductions and wished to understand why.
Benefits – the values insurance companies pay to the Orthopaedic Surgeon on behalf of their insured patient in line with the terms of the patient’s policy.
Fees – the professional fee charged by the surgeon to his patients for his services
There is a big difference between the two.
For example if the orthopod charges the insurance company patient a fee of £250 but the insurance company benefit is paid out £190 there will be a shortfall of £60 due from the patient. Have 10 shortfalls a month and he is immediately out of pocket by £600.
Not understanding the difference between benefits and fees shortfalls therefore soon adds up to a potential significant loss.
But it’s not quite as simple as that.
Some Health Insurance Companies request the consultant to become “fee assured”. In this case the Orthopaedic Surgeon – just like any other healthcare professional – can only charge a fee which the insurance company agrees. Normally the FEE equates to the BENEFITS payable by the insurance company and hence there are no shortfalls. Sounds great! Save of course benefit fee may be less than the Consultant fee!
As an aside consider some consultants still charge LESS than the PMI are prepared to pay and / or continue to loose money due to shortfalls.
The issue gets really complicated because even if the consultant has charged a fee in line with the PMI level, shortfalls still arise. Normally this happens when the total costs exceed the total benefit payable under his or her policy.
For example: take a patient with £5,000 worth of benefit. Consider the patient who has incurred consultation fees, test fees, surgeon fees, anaesthetist fees, and hospital fees and out patient fees. They may total, for example, £5,250. Thus the shortfall is £250, which will be owed to the one of the medical professionals involved in the treatment.
Obviously if the patient’s policy has £10,000 worth of benefit there won’t be a shortfall but the point I’m making is that generally speaking the emergence of shortfalls is driven by the benefit available and not only the value of fees being charged.
So, if the total benefits are £5,000 but the total fees are £5,250 there is a shortfall due of £250 from the patient. The Orthopaedic Surgeon concerned was unaware of such shortfalls and/or did nothing about them, thus they rapidly built up and would easily have totalled many thousands if left unattended.
But now he understood the difference between benefits and fees, how they had lead to shortfalls.
AND he was now in a position to do something about them.