Should You Charge For It?

November 15, 2004

With paperwork piles getting ever higher, more physicians have been trying to buck the trend by charging their patients administrative fees.


How many minutes did you talk the last time you called your lawyer? How long did it take your auto mechanic to install that new part? How many hours did your plumber spend fixing your pipes? Chances are, you can find out exact answers to these questions by looking at your bill, where every minute is accounted for.

Why are other professionals able to charge for their time while physicians are forced to spend dozens of hours per month "off the books," doing administrative paperwork, with nothing to show for it? That question has driven physicians crazy for years.

But recently, with paperwork piles getting ever higher, more physicians have been trying to buck the trend by charging their patients administrative fees. Internist Tim Smith of Seattle, for example, charges patients between $15 and $50 for copies of medical records, for letters describing patient status, and for disability paperwork and other forms.

"If it's part of the visit, that's one thing," he says. "But when someone sends me [a form] I have to fill out and sign and make it a legal document, I will bill for it."

Other physicians charge for patient behaviors and requests that generate more work, like failing to show up for appointments, prescription refills outside of a clinic appointment, and phone consultations requested by the patient.

Debbie Hack, a solo family medicine physician in Muncie, Ind., charges $8 for prescription refills and $25 for phone consultations. The charges, Hack believes, are an effective way to get patients in for their regular appointments. "I don't want them to become ill before they can be seen," she says. By not coming in, "they're not fulfilling their responsibility to me or to their own health. This makes them do it - they learn."

Peter Dehnel, medical director at Children's Physician Network in Minneapolis, Minn., has noticed several practices in his network experimenting with fees like these.

"It takes a certain amount of staff time and physician time" to perform these tasks on patients' behalf, he says. "Most people would say it should be paid for just like if you were an auto mechanic or plumber."

The types of administrative fees some physicians have begun charging for include:

  • forms for schools, sports, or camp (when requested outside of an office visit);

  • forms for life insurance and legal uses such as Family and Medical Leave Act eligibility and disability;

  • e-mail/phone consultations requested by the patient;

  • prescription refills;

  • no-shows;

  • copies of medical records.

Growing popularity

Fees typically range from $5 to $50, depending on the nature of the service performed, the amount of time it takes to complete, and what the physician's time is worth on an hourly basis. But most doctors say their administrative fee policies are less about generating revenues than they are about recovering costs and encouraging patients to think about what they're asking for.

"The people that I know ... are not looking to make this real profitable," says Dehnel. "They're just trying to cover some of the losses. Most of these things take a fair amount of time. It's either family or community time or time spent volunteering on hospital committees. They only have so much time in a day. There's no way to cover all of it, but this helps a little bit."

According to Smith, the fees add only a couple of thousand dollars a year to his practice's coffers, but they have been valuable in the statement they make to patients. "The bottom line is, you're losing ground" even with the fees, he says. "But it's important that people understand it's a business. Most people have one thing in mind: their specifics (what they need). Not yours, and not your other patients and their needs for your time. If you don't set some limits and parameters, people are bound to take advantage of that."

The practice of charging for nonclinical paperwork has become more common as the volume of such paperwork has exploded. The amount of time physicians spend filling out forms has been spiraling upward, research shows. For example, Merritt, Hawkins & Associates recently surveyed older doctors on the subject. The vast majority said that when they started their practices, they spent no more than four hours per week on nonclinical paperwork chores. Today, a third report spending seven to 10 hours per week on paperwork, and another 12 percent say they spend 11 to 14 hours per week.

Put a different way: almost half of doctors are spending nearly a full workday per week filling out nonclinical paperwork, and some are spending almost two days. That doesn't even include the time spent on clinical documentation. Is it any wonder that physicians feel overworked and stressed out, and that patients feel they're not getting enough one-on-one time with their doctor?

Patient backlash

Under these circumstances, many physicians feel justified charging for the time they spend on paperwork; some feel that as an economic reality, they have no choice. Patients, however, haven't necessarily felt their pain. Elizabeth Woodcock, MBA, FACMPE, CPC, an Atlanta-based practice management expert, takes no issue with fees for services that are purely administrative, like making copies of medical records, but cautions against fees for refills or others directly attributable to the patient encounter or made necessary by the doctor's instructions.

Although she sympathizes with physicians who want to charge fees, Woodcock says they typically don't amount to enough money to make them worth the accompanying headaches and expense of collecting them. Worse, she says, they sometimes drive patients away.

Indeed, backlashes against the extra fees have led patients to leave practices or even call the media. After an angry patient at an Ohio OB/GYN practice was repeatedly billed for an administrative fee, she called the local newspaper. Several articles later, the patient's insurer, which the practice claims had verbally supported the idea before the fees were launched, threatened to drop the practice from its network.

Nevertheless, physicians are continuing to express interest in administrative fees. If you do decide to charge the fees, Woodcock and others advise you do it the right way by taking some precautions.

Start by investigating which patients you can safely charge, and which you can't. For example, some of your commercial payers may expressly forbid them; make sure you've scrutinized your contracts carefully. Also, you are prohibited from charging Medicaid patients extra fees, and experts caution strongly against trying it with Medicare. 

And consider a few other preparatory steps before you start charging:

  • Call your lawyer. In addition to helping you review contracts with insurers, Woodcock says, your attorney can help you interpret how other relevant laws may apply to you. For example, the federal Truth in Lending Law requires that, in many situations, consumers must be notified before fees are charged. State collection laws may have edicts that apply to you, too.

  • Contact your insurers. Let insurers know about your plans in advance, and document your discussions in follow-up letters.

  • Notify patients well ahead of time. Inform them about the new fees before you start charging them, and then remind them - more than once. Send letters to all affected patients and display brochures in your waiting room and exam rooms explaining the fees and the reasons behind them. Have patients sign a form during registration acknowledging their responsibility for the fees. Make sure your bills clearly itemize the fees and what they're for. Staff members should be briefed on exactly how to respond when patients question the reasons for new fees or ask whether the fee can be waived.

  • Beef up your practice's payment options. Successful practices collect administrative fees up-front, and they make it easy for patients to pay. That means accepting cash, credit cards, and checks.

  • Make sure your office procedures aren't partly responsible for the patient behaviors that you'd like to discourage through fees. Many practices are charging patients when they don't show up for their appointments. That seems reasonable, but not if you're giving patients appointments six months from when they call.

  • Decide what you'll do if patients don't pay. Woodcock advises against adopting an aggressive collection policy with regard to administrative fees. For one thing, the fees themselves are generally too small to justify a big collection expense. And for another, you could generate bad PR for your practice if word gets around about your hard-line stance toward fees for camp physicals and notes to employers.

Is it worth it?

So you've had your new fees in place for six months and you've racked up a decent chunk of change. Sure, some patients have refused to pay, but overall you believe the new policy is working and your time is better compensated.

Just in case, says Woodcock, review the paper trail to see if the data match your perceptions. Compare your collections to the costs of collecting the fees. Keep track of who isn't paying, and find out why. One practice Woodcock worked with compared its list of patients who weren't paying no-show fees with its list of those requesting their records be transferred to a competing practice. They discovered that many of the names on the list were the same - and that the patients were busy professionals with good insurance.

The lesson? Some of the practice's best patients were so miffed about the fees that they were leaving. While Woodcock doesn't excuse patients who don't show up for their appointments, she says, "You need to understand the overall implications of, Who am I charging and what's their behavior? The bottom line: for a $20 no-show rate, they were driving their best customers to their competitors."

Linda Zespy, BS, a freelance healthcare writer based in St. Paul, Minn., is a graduate of the University of Minnesota. She has 12 years of writing and journalism experience and has spent six years specializing in healthcare topics. Before beginning her freelance career, she was a spokesperson for Children's Hospitals and Clinics of Minnesota and an associate producer for PBS's Emmy award-winning science program, Newton's Apple. She can be reached at editor@physicianspractice.com.

This article originally appeared in the November/December 2004 issue of Physicians Practice.