My experience of evolving from a small family practice into a medium-sized multispecialty medical group triggered thoughts on the dilemma that forced this transition. Having lived through the revolution from patient responsibility to employer responsibility for payment of medical care, I offer these thoughts. I present this through the limited view of outpatient practicing physicians.

Please recall your algebra from high school. Try to solve for the value of X (representing a basic 99112 office visit).

Insurance Plan A contracts for X at 50 percent, or .5X.

Insurance Plan B contracts for X at 45 percent, or .55X.

Insurance Plan C contracts for X at 48 percent, or .52X.

Cash-paying patients would pay X, but with a cash discount, the charge is .7X.

Now bill 10 visits at .5X, three visits at .55X, five visits at .52X and one visit at .7X. After calculating the variations of X, can you solve the value of X?

Hmm! How do we determine the value in dollars of X? Let us take our costs of doing business. Employee salaries, rent, supplies, postage and billing fees will total Y. Maybe we could divide that by the number of visits X to determine a value? X/Y = Z. But we have variations of X. Of course, we have varying charges for office visits and supplies. So how the h--- do we calculate the value of X? If we don't know the value of X, how do we determine if we can discount X?

I realize that there are some sophisticated programs that can assist in the analysis of the average practice. However, I also suspect that there are many practices in which this analysis rarely occurs. In fact, guessing at X occurs in many practices. When Y (expenses) exceeds total X (income), other letters creep in--BK (bankruptcy). Ask the principals in the former MedPartners and KPC corporations.

In many small practices, only when X exceeds Y does that equal income to the physician. And we wonder why young physicians prefer the security of large groups? Most of them forgot their algebra years ago. Leave these "details" to office managers with high school (and some college) educations. Let them work on elevating X greater than Y. That epitomizes the maxim about the "C" students managing the "A" students.

But who signs the contract for .5X or decides on .7X for cash patients? You guessed it--we physicians do. In large groups, someone somewhere somehow calculates X and comes to the conclusion to accept .5X or .6X. The big insurance plans figured that out years ago. Their algebra experts determined that docs would take any .X they offered. And we did.

The California Medical Association recommends some solutions. First, truly work to calculate Y. Don't sign for a low X. If you don't have a contract and provide services to a patient on an emergency basis, bill the patient, not the plan.

The CMA and the California Academy of Emergency Physicians claimed a recent victory in the courts against Prospect Medical Group. Prospect claimed that emergency services provided by noncontracted providers should be paid at Prospect's usual and customary rates, if Prospect agreed that it was a true emergency.

From my understanding, the court looked at the contractual arrangements. During an emergency, the patient enters into a patient-physician relationship with the medical provider. If the provider had no contract with the patient's insurer, the provider could bill the patient and expect the PROVIDER's usual and customary charges. All attorneys know this contracting issue by heart: it's the first class on the first day at any reputable law school.

This victory could signal a swing back to the requester of services being accountable to pay for those services. The whistleblowing on silent PPOs, the movement to health savings accounts, the withdrawal of employers from providing first-line insurance coverage, and the RICO lawsuit victory are all efforts made by the CMA to change the dynamic of physician reimbursement.

Unfortunately, patients still have an attitude that they "have insurance" and someone else should pay for their services. As the populace gains awareness of their need to pay more, will they sit back? Because someone else always paid most of their healthcare costs, will they look for Big Brother's help again? Will the push for balance billing fuel the fires for national health insurance?

I, for one, would resist Big Brother telling me what my X should be.

Lytton W. Smith, MD, editor for the OCMA, is a physician practicing family medicine with the St. Joseph Heritage Medical Group in Yorba Linda. Dr. Smith welcomes feedback on his articles and can be reached at ocmaeditor@ocdoc.com.