Coos Bay Dermatologist Strikes Out on Her Own, Abandons Billing Codes

Dr. Kathleen Brown says she’s received pushback from the two insurers for not using CPT billing codes
The Lund Report

December 15, 2011 – In July, Dr. Kathleen Brown decided to leave the Coos Bay clinic where she’d been practicing since 1997 and open her own dermatology practice. It’s not uncommon for doctors to strike out on their own, but Brown’s decision had a twist: she decided to eschew the use of CPT codes, a set of medical billing codes required by the American Medical Association for reimbursement by insurers.

Processing patients according to the codes was eating up too much time, she said. Instead, she switched to a time-based model that bills patients in five-minute increments, using a tiered pricing structure that adjusts the costs based on what type of procedure is needed. Prices are listed on her website. Although patients pay out of pocket, the price is still lower than it might be if they billed insurers themselves.

Brown sees a mix of insured and uninsured patients, and she now sees herself as working for the patient -- not insurance companies and not the government. “I think something pretty much everyone agrees on is that the way we pay for healthcare is broken,” she said.

More controversial is Brown’s response to the problem – specifically her decision not to use the billing codes. Just determining the right codes ate into her evenings and weekends, she said, and placed unwelcome restrictions on her practice. “In a sense, insurance companies set the price,” Brown said. “They just set the price a little bit higher or a lot higher.”

When she left to start her practice, Brown told The Lund Report, her patients received phone calls from representatives at Regence BlueCross BlueShield and ODS telling them not to see her, and ODS counsel sent a letter to her office threatening to report her to the Oregon Medical Board, but the board stood by her decision to run her practice as she does. A spokesperson for the board couldn’t comment on whether such a complaint was made, since only actions taken by the board are public information.

Regence spokesperson Scott Burton declined to comment for this story. Earlier this year, using part of a $56 million payout to its holding company, Regence started a subsidiary company, Sprig Health, which functions as an online portal to connect patients with providers who will see them without insurance, lists prices and allows patients to pay with a credit card.

Jonathan Nicholas, ODS’ vice president of corporate branding and communication, said he was unaware of any ODS employees having contacted Brown’s patients, and added that ODS is unable to reimburse patients for services if their providers don’t submit billing codes.

CPT billing codes are mandatory, Nicholas said. “You can’t be half in and half out. If you want to bill insurance companies, you have to have a code.”

Thus far, Brown’s practice is doing well financially. “I haven’t done a formal profit and loss, but we are financially viable and able to take a check,” adding that she’s paid off her school debt, and that if that weren’t the case, her business would not be as viable.

Brown said many healthcare discussions center on the high costs incurred by uninsured patients, but she doesn’t think they’re the sole driver of spiraling costs.

She believes more physicians will find alternative ways of delivering healthcare without dealing with insurance companies. “I didn’t anticipate that insurance companies would still try to control the way I practice.”
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I love you guys, but did The Lund Report write this article or did OPB? The thing I like about you is that you make health care transparent. Shouldn't you reveal who reported this story first?

Hi Anonymous,

First, I want to note that your comment had to be edited before being approved, as you chose to include the full text of a story that ran on OPB's website on November 30. We do not have the right to reproduce OPB-copyrighted content here, but readers are welcome to read the story here. For this story, I chose to focus on Dr. Kathleen Brown's practice and some of the challenges she has faced running a clinic with a new type of billing model. The story is my own work. I appreciate your interest and welcome any questions you might have.

The CPT system has rules for time-based billing for the basic office visit. For an established patient, a low-level visit is 10 min (99212), an average visit is 15 minutes (99213), a more complex visit is 25 minutes (99214) and a very complex visit is 40 minutes (99215). For that matter, there are "prolonged service" codes that account for office visits that, for some reason, go longer than that. This doctor bills based on time. there are many ways the insurance could convert the doctor's service into a reimbursement check for the patient, that would approximate what they would otherwise have paid the doctor directly. It's not that the insurance company "can't" do it. The insurance company "won't" do it.

The CPT system has rules for time-based billing for the basic office visit. For an established patient, a low-level visit is 10 min (99212), an average visit is 15 minutes (99213), a more complex visit is 25 minutes (99214) and a very complex visit is 40 minutes (99215). For that matter, there are "prolonged service" codes that account for office visits that, for some reason, go longer than that. This doctor bills based on time. there are many ways the insurance could convert the doctor's service into a reimbursement check for the patient, that would approximate what they would otherwise have paid the doctor directly. It's not that the insurance company "can't" do it. The insurance company "won't" do it.

Good for you, Dr. Brown! The AMA's is oppressive to health care in the United States. We cannot "bend the cost curve" with their powerful lobbying influence and their role in setting compensation. The fee-for-service fiasco is about a procedure-dominated reimbursement system where the AMA financially benefits in their development of the CPT codes. We need to Replace the RUC! Kris Alman MD

Thank you, Kris. Whether it is a procedure or a "cognitive service" (visit), it has created a war within our profession, battling for "reimbursement" and pieces of the pie. It is entirely wrong. Competition, transparency, and innovation are what bend the cost curve downward, but that is not possible with CPT. Americans are entirely capable of being informed consumers. But, trust in the doctor's advice is based on the doctor working entirely for the good of the patient, and on not being controlled by the government or the insurance company. When there is this giant "game" with CPT, the doctor has a conflict of interest. Patients count on their physicians being virtuous and rising above the conflict of interest, but eventually such a system must collapse into mediocrity. Some people now believe that the physician needs to balance the needs of the patients with the needs of society. I would not knowingly send a family member to a physician that feels that way, and there are better ways of reining in health care costs. Kathleen

I am sure the patients love it" They know what they are going to pay and that the doctor is not going to argue with them when they ask for a "vitamin injection" or for anything else whether justified or not. They say, "this is the charge" and the patient pays it. No fussy insurance company which has to justify payment for procedures and medications based scientifically on effectiveness or for the proper diagnosis. Makes it much easier to provide, "powdered bee's knees" and "butterfly wings" and get paid for it and no one has any questions. duane bietz md

Accepting the premise of the bee's knees and butterfly wings and all that, If you went to a naturopath, where you might arguably expect those bee's knees, and paid cash (since they're rarely in insurances), that $300 an hour would be about what they make.........again making the assumption that they are seeing these patients in rapid succession, never any down time, and of course they have their own overhead. Of course, they're usually running a retail store with all the vitamins and butterfly wings, etc., as well. ............another Oregon physician.

Check out Regence Blue Cross' product, Sprig Health. They list a "preventative heart health" visit with a Naturopathic doctor for 45 minutes at "only $400.00". There goes that theory about health insurance companies preventing prescribing of "bees knees", and reining in the costs of care. This is how Blue Cross manages to take a cut from people without insurance paying for health care!

This is a great story and should be part of a larger wake-up of our insurers. I'm curious if Dr. Brown anticipates or will experience the challenges experienced by similar physician decisions in New York: eventual harassment by the New York insurance board for in effect "competing" with insurers without an insurance license. Absurd. Good for you Dr. Brown and best of luck!

Wow, I appreciate the creativity but what type of value is this providing to her community? The fee's posted on her website aren't much different than what she would be paid using the traditional CPT methodology. If she truly wants to do help her patients it seems to me that she should reduce the fees since she won't have to spend all that extra time "processing patients according to the codes." Based on her fee schedule she is looking to be paid $300 per hour or over $600,000 per year. I sure hope she has better outcomes than her peers at the practice she just left....

Seriously? Don't confuse gross income with net income. There is this little thing...well, acutally, not so little!...called overhead.

You've got a dermatologist on the Oregon coast, a rare breed to begin with......... A real-live dermatologist who will see the stubborn rashes and skin cancer. She hasn't limited herself to esthetics and Botox as all too many do these days. I have never met the individual, but revenue numbers as described here are hardly unreasonable for a dermatologist. .......and she's being attacked? Come to my county. - Another Oregon physician, and no dermatologists of any stripe in my county.

Thank you for your comment. I replied to you on December 15, but didn't use the "reply" feature. You can find it where I start with "Thank you, Christen". I'll also say that we are now a pure business model; no subsidy from government, no contracts with insurance companies. If our customers/patients do not find that it meets their needs for medical care and price, they will go elsewhere. It would do our patients no good in the long run if our business goes bankrupt or does not allow me a check that is adequate to pay my personal bills. It is completely possible to charge what I charge, (or less, or more), and go bankrupt, or not have anything left to pay myself after paying everyone else. We have planned well, and as I said, are financially viable. For a price check, see where else you can have an actinic keratosis, seborrheic keratosis, or wart frozen off for $20.00. If you contract with Medicare, you are NOT ALLOWED to bill non-Medicare clients less than Medicare pays, and so must bill approx $76.51 for freezing of an actinic keratosis, and $104.52 for freezing of a wart, to be perfectly "compliant". For another price check, Medicare pays about $103.00 for evaluation of a pathology specimen (we send that out), and private insurance pays about $180.00. We charge $42.00, because we collect the fee and the pathologist bills us at the end of the month. The pathologist uses CPT 88305 for that. I hope that this helps you understand what we are doing. My practice, instead of catering to those who only care about "out of pocket" expense, actually care about the true cost, AND care about their health. I appreciate the challenges of working under this model, and appreciate my patients and customers! Kathleen M. Brown MD

Thank you, Christen, for interviewing me. 1) Per ODS, "you can't be half in and half out". I am out, but patients have a contract with their insurer to get reimbursed for care from out-of-network doctors. Unless there is language in the insurance contract that lets the insurance company out of their obligation to reimburse when the doctor refuses to use CPT coding, they are in breach of contract. Neither Regence Blue Cross nor ODS has shown my patients that language, to my knowledge. It is inconvenient for them, but they need to honor their contract. I cannot set reasonable, transparent prices AND use CPT. CPT is too complicated, confusing, rigid, etc. to lend itself to transparent reasonable pricing. 2) The first anonymous commentator talked about fees. I can tell you that our fees are extremely reasonable, and although they may be perhaps comparable to Medicare rates some of the time, they are definitely lower than what commercial insurance pays. I know this for a fact. The hourly rate, if I were seeing and billing someone every single minute, would be $240.00, for regular visits, but I don't (and can't) see and bill someone for every minute. Higher level visits use more expensive materials and more staffing. There are also services we provide that we don't generally bill for, but which take my time (phone calls, research, prescription refills, review of lab results, stitch removal). Our gross daily income, since you asked, ranges from around $1000.00 to $1600.00 currently, and we'll probably be open about 240 days in a year, so the earnings estimate made by the commentator is quite extreme(!), and assumes no expenses. I have two excellent full-time staff, and of course they are paid and have benefits, and then there are the multitude of expenses of running a small business, including rent, a lot of very expensive equipment, insurance (several types), phone, banking/credit card fees, electricity, accountant, attorney, medical licenses and memberships, continuing medical education (involves travel), laundry, lots and lots of supplies (very expensive!), janitorial, answering service, security, and that is not all. And, my day does not end when I leave the office. This is a customized, personalized, quality service in a very well-equipped comfortable office; not a mass-produced good. We are very proud of achieving the good prices and posting them. We do not aim to be cheap; we aim to be excellent, and for a reasonable price. I feel happy to be practicing medicine, free of most of the endless obstacles from "third parties". I appreciate the interest in this article, and in our practice! Kathleen M. Brown, MD

Did they REALLY send you a letter threatening to report you to the Board for failure to use CPT coding? I'd like to see that. Post it somewhere if you're comfortable doing that. Not that I'm disputing you, that's hardly a new low for an insurance company. It's been a while since I practiced in the People's Republic of Massachusetts, but I doubt if they've changed this rule. As a condition of licensure, you can't charge more than the "Medicare limiting charge" for a Medicare recipient, and you sign an affidavit to that effect on your license application or renewal. So even if you're out, you're in. I cam imagine the insurers need to put certain numbers into a computer to generate a check to the patient. If you (the doctor) don't do it, the insurance company can, if they wanted to, use some sort of miscellaneous/by report code.....CPT 99999.....or whatever number covers such a thing, and generate a payment to the individual patient. $1600 a day, assuming eight-hour day like normal human beings, $200 an hour, not unreasonable gross income for a physician, assuming high end of reimbursement described by Dr. Brown, times 240 days in a year (how dare you not work 24/7/365). Medicare fee schedule is available on-line, an average mid-level established office visit is $66.81 in Coos Bay (public information from Noridian). so $200.43 an hour if you saw a very leisurely three Medicare patients an hour as a family doc. As we speak, I have a backed-up sewer line, the plumber's coming over, and the fee is $100 an hour. Of course the plumber does not see the $100, nor does Dr. Brown see that $200. Both places have overhead expenses. Is my math right? $384,000 annual gross income best estimate by numbers given. Not unreasonable to generally ballpark say overhead is half of gross in a medical practice. $192K best estimate. Less if income not maximum every day. Less if the doctor chooses to take more vacation. Considering weekends and national holidays, a 240-day year would come to about three weeks vacation. I'd say Dr. Brown's numbers are quite reasonable. .......another Oregon doc

Yes, ODS really did send me a threatening letter from counsel, advising me that I must use CPT, or they would be obligated to report me to the Oregon Medical Board. They have sent copies to some of my patients. I was shocked, because I don't contract with them, that they still feel that they can force me to bill a certain way. I am confident of my training and abilities, and work hard for my patients; I am not easily intimidated any more. Our entire billing model is geared around transparent pricing. We are seeing lots of uninsured and high-deductible insured patients, and I hear every day that it meets their needs. We have plenty of people who have a $20.00 bill; got them in quickly to see if a skin growth was cancer or not, and if it wasn't, looked at another thing or two, maybe froze off the spot, out the door! And no, you can't have enough of those types of visits in a day to even cover overhead, but it is good business, and good medical practice. I appreciate it that other doctors are interested in this issue.

Your practice deserves a writeup in Medical Economics or American Medical News......or both. .............Oregon doc again.

Thank you! I don't think that I will be talking to the AMA, though (AMNews). I maintain that the AMA has a tremendous conflict of interest, because their income is greatly derived from CPT. AMA's answer to health care is to "insure the uninsured", and they get a cut on all of it. True insurance is to prevent FINANCIAL catastrophe. What we have a lot of is pre-paid medical services, and it is a very poor value, and has caused the price escalation in health care services, as well as over-use of health care services. Also, Christen paraphrased me talking about how insurance companies effectively set prices, but it didn't quite represent what I was saying. Insurance companies set allowable amounts for CPT codes, and doctors' offices set "standard fees", but the doctors' office sets them a little or a lot higher than their best insurance payer, because they don't want to "leave money on the table", and need to make up for their poorer payers (Medicare, Medicaid, Tricare, etc.). That is the "game". The doctors' office knows what the insurance companies pay, because the insurance company pays them instead of the patient, so they see how it goes through on the patient's account. Then, the doctors' office, by contract with the insurance company, makes an adjustment to the patient's account ("provider write-off"). You can say that it isn't price-setting, but in effect, it really is. Kathleen M. Brown, MD

And this is why the McCarran-Ferguson act needs to be repealed. It is legal for a large insurance company to attempt to restrain the trade of an individual physician. It would not be in the reverse situation.

Duane Bietz, seriously? You are an MD and rely on an insurance company to help determine how appropriate and effective is the care? Well, there is the tail wagging the dog. It is the doctor's responsibility to keep up to date, to tell patients the truth, to avoid "snake oil" medicine, and to practice high quality medicine, informed by good science. Kathleen M Brown MD

Interesting that you are a Doctor and find CPT codes set forth by the American Medical Association too complex. I didn't realize that coding of medical procedures should be so fluid and flexible. If I was a patient in your practice and left the area with a copy of my medical records, how would my new doctor know what you did for me. My understanding is that CPT (Common Procedure Terminology) codes are to standardize the language between two medical providers. So if I move out of the area, my new Doctor will have to spend a lot of time figuring out what you have done for me or if I'm in an emergency situation they will have to take the time to deciper YOUR unique coding or read through every chart note to figure out my medical history. Sounds like you are just lazy and wanting 15 minutes of fame. Jumping on the 'Lets kill insurance companies' band wagon to have shameless self promotion.

Wow. What a condescending attitude toward a doctor. It would be reasonable if you showed some understanding of the coding system. "My understanding is that CPT (Common Procedure Terminology) codes are to standardize the language between two medical providers." You understood wrong. 100% wrong. The CPT code exists for the purpose of medical billing. It exists for the purpose of statistical analysis (how many open gallbladder surgeries did Dr. Smith do last year, how many of the gallbladder surgeries were laparoscopic), etc. I am a doctor. If I sent a patient to Doctor Brown, and she sent me a report with nothing but a CPT code on it, I wouldn't send her any more referrals. I could care less about her CPT coding, I want the narrative report of what she found, what she did, what she prescribed. If I had a new patient who had moved from Coos Bay, I want Dr. Brown's chart notes, NOT her CPT codes. What am I going to do with a paper reading 99213, 99214, 99213? All that tells me is three office visits, doesn't tell me what the visits were for, what was found, what was done, what was prescribed.

Yep, lazy. I now am working less than 70 hours a week; yay! A lot of a doctor's time is not spent on direct patient care; some say 40% on average is on documentation and coding, outside of direct patient care. I would say that is accurate. About half my practice previously was Medicare, and because I spent adequate/generous time with patients and did a good job, a lot of that work was done essentially for free in recent years (nothing left over for me after overhead), because of the amount of overhead (high staffing needs for dealing with government and insurance companies) combined with Medicare price fixing and rules. When you do a lot of work for free or almost free, you don't have a lot of time left, or you don't have much of a paycheck. Others have responded on the CPT issue. No doctor looks at CPT billing to see what was done; that is just silly. Kathleen M. Brown MD

A worthy discussion. However, what if every medical provider designed their own billing system? How would insurers and self- insured entities know what they are paying for? How would medical researchers and state agencies study medical trends and costs?

Definitely an interesting discussion. The current fee based system has it's flaws but it does have inertia going for it. Going time based does have its merits, such as not requiring as much coding staff or as many complicated codes, but also some new problems. For instance, what if a doctor is taking 60 minutes to do what others are doing in 45?

Your point is? What if it takes twice as long for one patient as another for the "same" procedure" because one patient is very elderly and has super-fragile skin, or should not be taken off an anti-coagulant ("blood thinner") without excess risk of stroke, and the procedure takes longer because of dealing with more bleeding? Sometimes, (often!) the more precise and complicated the CPT codes become, the less accurate they are. One doctor might take longer because they don't use as many assistants, but the fee schedule might reflect that. One doctor might take longer because of doing a better job! Another doctor might take more time because the patient has many more questions. CPT codes have ABSOLUTELY NOTHING to do with how good a job one does! If you are doing the best for your patient, there are many times that it has actually COST you to do right for the patient, when using CPT codes. I don't mean you haven't gotten paid for your time; I mean it actually COST you. So I ask you what kind of incentive that is for a doctor? Choose between doing right for the patient and doing right for yourself? Well, good doctors choose what is best for the patient, but it is a bad system. You cannot build a good system relying on people to frequently act against their own best interests. If that is what people think that doctors should do, then they will have bad health care. Thank you for your interest and your comments! Kathleen M. Brown, MD

Dr Brown's practice should be emulated around the country. She and her patients have many advantages: 1: Much lower overhead secondary not needing a ramped up business office 2: Not having daily hassles with insurers that interact with the provider asking to have the patient switched from one medicine or rx to another (in which the insurance company benefits. She doesn't have to read and respond to the never ending escalating increased paperwork, produced by in insurance companies. 3: She has much more productive time when in her office and can choose to utilize the non productive time as she wishes. 4: She feels more in control and less wasted time is spent when she doesn't have to ask "mother may I" in treatment, referrals, and accepting referrals. I agree the one of the responders that stated her overhead would be 30% lower and add that her wasted time will also be lower by 20-30%.

Unfortunately, we still have to deal with insurance companies on the prescriptions and prior authorizations, and choosing different medications when they won't cover and the medications are too expensive. We also deal with them when they send claims back to us instead of to the insured. But, yes, it is so much better. Kathleen M. Brown, MD

CPT billing codes are mandatory, Nicholas said. “You can’t be half in and half out. If you want to bill insurance companies, you have to have a code.” So if the insurers demand that their customers - Dr. Brown's patients - be able to generate the necessary codes, they need to start a really big, expensive, mandatory training program for their customers. Dr. Brown, however, is not a customer, not a contractor and, in fact, not in any way obligated to follow the rules the insurance companies set. Instead, she is obligated to care for her patients, without the interference of the insurance company. Good for her.


Sigh.....OK You had five visits to Dr. Brown. Here's the report: 99213 99213 99213 99213 99213 What does that tell you? Hint, it's a midlevel office visit. Could have been for acne, psoriasis, skin cancer, poison ivy. We don't know. Once again, the CPT codes are used for billing, analysis of practice patterns, but does almost NOTHING to facilitate CLINICAL communication between doctors.

I am a physician, and never use CPT codes to learn a new patient's past medical history. I look at the previous physicians notes - they simply list the past diagnoses. Why convert a diagnosis to a number and then have to look up the number to see what the diagnosis or procedure was? CPT codes and ICD codes only benefit the insurance company - not the physician or the patient - and spare me the argument about insurance companies needing to know what they are paying for or monitoring physicians to make sure the patient is getting quality care. If the insurance company wants to know what work was performed and the diagnosis, they should hire their own staff to code everything instead of cost shifting that to physicians. Second CPT codes are too generic - they don't convey everything important about a patient's medical history. I personally curse the AMA and the insurance companies. They are both middlemen as they both work together to form a barrier between patients and physicians. Finally, we already have a common language to communicate effectively with - we learned it in medical school and the CPT codes are irrelevant. It's not like physicians quote CPT codes when discussing a patient. I can't tell you what the ICD-9 code is for diabetes with retinopathy that is not stated to be uncontrolled. It is very curious your perspective about physicians using CPT codes to communicate with. Where do you work?

Dr. Brown Thankyou for standing up and doing something about our broken system. Emergency Nurse

I am very greatful as a patient not to have to deal with the buearuacy of insurance companies dictating to me what medical treatment I can have. I also appreciated the fact that I could actually afford my medical visit to Dr. Brown's office and not have to worry about, if or when, either one of my insurance companies would pay. I think more doctors need to do the same as Dr. Brown. Just maybe, our over zealous government, will see that the insurance companies and the power they have been given, is why our current medical system broken and will remain so, until they go back to doing what the individual insured are paying them to their medical expenses!