Out-of-Network Care at In-Network Facilities Creates Surprise Medical Bills

Privately-insured patients may receive surprisingly high medical bills after receiving care from an out-of-network specialist practicing at an in-network hospital.

A new study published by JAMA found that anesthesiologists, emergency physicians, pathologists, and radiologists charge more than 4 times as much for patients with private insurance compared with Medicare-insured patients.

These patients may experience shock when they receive their medical bill weeks later. Since patients do not choose the healthcare provider they see at the hospital, they typically do not have an idea how high their bills will be, especially if they are unaware of the provider’s network status.

The investigators found that anesthesiologists charge privately-insured patients 6 times what Medicare pays, and radiologists charge 4.5 times the Medicare price. Emergency department physicians, pathologists, and neurosurgeons all charge 4 times what Medicare pays. Diagnostic radiologists charge private insurance 3.8 times what Medicare pays.

Specialists with the lowest mark ups were found to be internists, psychiatrists, and family physicians, which patients are more likely to choose, and have the most interaction with, according to the study.

High medical costs not only affect patients who are uninsured or underinsured, it also affects patients who are well-insured and receive care from an out-of-network provider. Most individuals understand that they will pay more to see an out-of-network provider, but the surprise comes when they are charged for seeing an out-of-network provider at an in-network facility.

In emergency situations, receiving care from an out-of-network provider may be medically necessary.

These findings suggest that patients must be more vigilant in choosing providers who are in-network, and policymakers should implement a strategy to protect patients from incurring large, surprise medical bills, according to the study.

"The doctors with the highest markups are often the ones that patients don't actually choose," said study senior author Gerard F. Anderson, PhD. "Many people are shocked two weeks or two months later when they get a bill from a doctor they didn't really meet and no one told them what the exam would cost and later they discover the price is outrageous. But this is happening all the time."

In the study, the investigators analyzed more than 400,000 individual physicians who were included in the Medicare Provider Utilization and Payment Data. The researchers found that an average physician charged 2.5 times what Medicare pays for the exact same service, according to the study.

Medicare negotiates what they reimburse for certain services, but out-of-network patients pay the full price, which is up to 6 times as high as the Medicare price.

The researchers noted differences in regions. Physicians in Michigan charge twice the Medicare price, while physicians in Wisconsin charge 3.8 times.

Among the top 2.5% highest markups, 55% of the 10,730 physicians were anesthesiologists. Approximately 32% were from Manhattan, NY; Houston, TX; East Long Island, NY; Dallas, TX; Milwaukee, WI; Atlanta, GA; Camden, NJ; Los Angeles, CA; Newark, NJ; and Charlotte, NC, according to the study.

The study authors said that Congress should create legislation that requires providers to disclose their network status prior to delivering services to remove billing surprises and increase transparency. However, disclosure may not benefit patients who are too ill to make decisions.

In the state of New York, there is a law that limits the amount an out-of-network physician is allowed to charge for services. Since the law was created in 2015, 11 other states created similar laws that apply mostly to emergency care provided. These laws could become a model for reducing surprise medical bills, according to the study.

"Protecting patients from surprise medical bills from out-of-network physicians is an important issue in the ongoing national debate about the affordability of health care," Dr Bai concluded. "It is particularly frustrating for patients who deliberately select an in-network hospital and an in-network physician only to learn that one of their physicians was out of network long after the care was delivered."