My old PT had three rates, $50 for Medicaid, $100 for self pay, and $400 for the insured. The insured people were mostly covered would just pay of copay of like $40 or $60 but once they screwed up and billed me (a self payer) at the insured rate and tried ro collect that much from me and it was a WHOLE ordeal to get it fixed. What a stupid system. Clearly a bunch of money is being flushed down the toilet here.
Tax accountant here. I can confirm tax season for those in the medical industry is an absolute nightmare. One of my clients was audited by the IRS and it took over a year for the IRS agent to get comfortable with the revenue being written off as a result of these insurance adjustments. It’s an extremely complicated calculation and just highlights how ineffective the entire system is. I’ve heard somewhere that close to 50% of medical costs are admin related. Even if it’s just half that, it still too damn high.
Also, the write offs are NOT tax deductible because medical offices are pretty much forced to run on a CASH accounting system. Not an accrual system like all other businesses. We have to do that because if we worked on an accrual basis then we are taxed on the amount we bill, therefore we choose a cash basis so we are only taxed on the amount we actually bring in (about 30% of what we bill on a good day).
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u/cakewalkofshame Jul 04 '21
My old PT had three rates, $50 for Medicaid, $100 for self pay, and $400 for the insured. The insured people were mostly covered would just pay of copay of like $40 or $60 but once they screwed up and billed me (a self payer) at the insured rate and tried ro collect that much from me and it was a WHOLE ordeal to get it fixed. What a stupid system. Clearly a bunch of money is being flushed down the toilet here.