Patients with private health insurance face a serious risk of being treated and billed by an out-of-network doctor when they receive care at in-network hospitals, according to a new study by Yale researchers. Addressing the issue could reduce health spending by 3.4% -- representing about $40 billion annually.
Published in the December edition of Health Affairs, the study analyzes 2015 data from a large commercial insurer covering tens of millions of patients throughout the U.S. to show that anesthesiologists, pathologists, radiologists and assistant surgeons at in-network hospitals billed out of network in about 10% of cases.
When physicians bill out of network -- especially when the physician is someone the patient didn't choose, and can't avoid -- it opens up the possibility of unexpected and expensive medical bills, undercutting the functioning of healthcare markets, the authors concluded.
And the ability to bill out of network means specialists can negotiate inflated in-network rates, which can in turn lead to higher insurance premiums for consumers.
WHAT'S THE IMPACT
The study, led by Zack Cooper, associate professor of public health at the Yale School of Public Health and in the Department of Economics, adds to a body of work by he and his colleagues analyzing the causes of surprise medical billing in the U.S.
A 2018 study in the New England Journal of Medicine found that more than one in five patients who went to in-network emergency departments were treated by out-of-network emergency physicians. A 2019 study analyzed the drivers of surprise medical billing and New York State's approach of protecting consumers by introducing binding arbitration between insurers and out-of-network physicians.
Their research triggered the recent push in Congress to pass federal protections against surprise medical billing. Several relevant bills are currently under consideration in Congress. Cooper's research has been cited by the White House, highlighted by congressional leaders and featured extensively in the media.
The latest paper focused on anesthesiologists, pathologists, radiologists and assistant surgeons -- hospital-based physicians who are not chosen by patients. After analyzing more than 3.9 million cases involving at least one of the four specialties, it found out-of-network billing at in-network hospitals occurred in 12.3% of pathology cases, 11.8% of anesthesiology care, 11.3% of cases involving an assistant surgeon, and 5.6% of claims for radiologists.
Out-of-network billing was more prevalent at for-profit hospitals and at hospitals located in concentrated hospital and insurance markets where there is little competition.
When a private insurance company declines to cover care delivered by an out-of-network provider, patients can get stuck with exorbitant bills. Mean out-of-network charges were $7,889 for assistant surgeons, $2,130 for anesthesiologists, $311 for pathologists and $194 for radiologists.
The study analyzes several potential policy measures to address the problem. The researchers' preferred approach would be to regulate the contracts of physicians who work in hospitals and are not chosen by patients. The policy would require hospitals to sell a bundled package of services that include fees for anesthesiologists, pathologists, radiologists, assistant surgeons, and emergency department physicians.
THE LARGER TREND
Just last week, the House and Ways Committee announced a proposal to end surprise billing by letting insurers and providers first work out their differences without interference; and if that process fails, a structured, negotiated process would settle payment differences by accounting for payments made to similar providers for similar services in similar areas. The plan rivaled a Senate and House bill, introduced days before, that also sought to end surprise billing.
In March, Physicians for Fair Coverage, a nonprofit, non-partisan physician alliance, partnered with both state and national consumer organizations on a legislative model to protect patients from surprise out-of-network medical bills they hoped would inspire federal lawmakers.
The proposal seeks to ban providers and insurers from balance billing patients for unanticipated out-of-network care. It creates a national protocol for alternative dispute resolution, or ADR, which is a model to prohibit surprise medical bills and establish reimbursement standards.
In August, America's Health Insurance Plans expressed its support for California's plan to stop surprise medical bills, and suggested it be rolled out on a national level.
Since the California law went into effect in 2017, the number of physicians in provider networks has increased by 16%, according to the study published in The American Journal of Managed Care and cited by AHIP.
Consumers may only be billed for their in-network cost-sharing for co-pays, coinsurance or deductibles when they use an in-network facility for non-emergency care, according to the law. They're protected from surprise medical bills when they get non-emergency services, go to an in-network health facility and receive care from an out-of-network provider without their consent.
Facilities include hospitals, ambulatory surgery centers or other outpatient settings, laboratories, and radiology and imaging centers. Consumers following their health insurer's requirements are protected from having their credit hurt, wages garnished or liens placed on their primary residence, AHIP said.
2019 was the year of the patient
Since February, when CMS Administrator Seema Verma said patients needed immediate access to their health records, the hits have just kept on coming.