One of my friends is a doctor practicing in New York City, and he’s not enthusiastic about insurance companies. Bills vs. reimbursement is just one of the many frustrations.

I asked him about his fees, as well as bills vs. reimbursement, and he explained that for an average office visit, he bills $200 – but he doesn’t know what he will receive from the insurance company. (He’s a specialist, though to protect him I’m not naming what specialty; he is affiliated with a teaching hospital and helps train med students as part of his practice.) The reimbursement rate can range well below $100, for Medicare patients, to a more general $90 to $175, depending on the insurance company.

When your bill from the doctor (or hospital) has a charge of $11,000, while the reimbursement is, say, $1,000, it invites skepticism about the process, and makes that process seem impenetrable and fraught with half-truths or untruths.

But as my friend – Call him Doctor X – says, there’s no incentive for him to make the bill correspond to the reimbursement, because if he does, his reimbursement rate will go down.  Doctors typically negotiate rates individually with insurance companies – or their group negotiates for them. Some, like my friend, may contemplate using  the services of a hospital physicians’ association to help him with his rate negotiations with the insurance companies.

But basically, he goes into the negotiation feeling at a loss for information, because he’s not allowed to talk to his partner about his rates, or to ask other doctors, because there have been antitrust suits against doctors alleging collusion and price-fixing. The insurance company, on the other hand, knows what his peers charge. Information asymmetry, in other words.

He went on to say that it makes him sad that the culture thinks of doctors as “fatcats,” which I assured him isn’t really true.

He said that he averages out his reimbursements over the course of a year, in order to manage his practice, and feels that his $200 office visits typically return an average of about 60 percent of that over the course of the year.

Beyond that, Doctor X says,  his expenses for dealing with managed care and insurance-company issues have risen dramatically.

This is borne out by a study in the excellent “Health Affairs” journal:  “Primary care practices spent $64,859 annually per physician—nearly one-third of the income plus benefits of the average primary care physician” interacting with health plans, according to the study. This included an average for doctors themselves of 43 minutes  per day (3 hours a week); for nurses, 3.8 hours per doctor per day interacting with health plans (19.1 hours a week); and for clerical staff,  7.2 hours per doctor per day (35.9 hours a week).

The authors, Lawrence P. Casalino, Sean Nicholson, David N. Gans, Terry Hammons, Dante Morra, Theodore Karrison and Wendy Levinson , concluded that “When time is converted to dollars, we estimate that the national time cost to practices of interactions with plans is at least $23 billion to $31 billion each year.”

Maybe that’s one of the reasons that it costs so much. Doctors spend that much time interacting with health plans, and the health plans have to pay someone to interact with them. Then there’s me, on the other end of the phone, trying to interact with my health plan (usually in a tone of irritation and indignation). They have to pay someone to interact with me, too. That probably adds up.

Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...