Insurers Find Out-Of-Network Bills As Much As 1,400 Percent Higher

It’s common knowledge that consumers have to pay more money if they choose doctors or hospitals outside of their insurance plan’s network. But a new analysis prepared by the insurance industry seeks to show just how much more in each of the 50 states.

Out-of-network providers charged patients on average 300 percent more than the Medicare rate for certain treatments or procedures, according to the analysis of 2013 and 2014 claims data released Thursday by the America’s Health Insurance Plans. The industry group, which supports limiting out-of-network charges, found that some treatments were even more exorbitant — with out-of-network providers charging nearly 1,400 percent more than what is reimbursed by Medicare.

Charges for an MRI of the brain, for example, cost on average $2,929 with an out-of-network provider, compared to the Medicare rate of $405, according to the report. And patients who needed a one-hour chemotherapy infusion paid on average $437 while Medicare reimbursed $136, the group found.

The study found significant differences among providers for the same treatments and wide geographic differences. California had some of the largest gaps between out-of-network charges and Medicare rates. For example, out-of-network providers billed an average of 626 percent higher than Medicare for a brain MRI.

Other states also saw out-of-network charges that far exceeded the Medicare rates, the study found. In New York, providers charged on average 1,100 percent more than the Medicare fee for low back disc surgery. And emergency care in Florida cost about 700 percent higher for out-of-network care.

“This is the blueprint to show that there is more work to be done and that we have to fix this problem for patients,” said Clare Krusing, spokeswoman for America’s Health Insurance Plans. “There needs to be much more disclosure from hospitals and doctors and specialists.”

Krusing said limits should be set on charges that out-of-network providers can bill. The report is based on 18 billion claims covering about 100 medical procedures performed in 2013 and 2014 in all of the states.

In a prepared statement, Dr. Steven J. Stack, president of the American Medical Association, called the insurance industry report “grossly misleading.”

He said the report features a handful of extreme examples and compares them to Medicare payments that have lagged behind inflation for years. The report also provides no information on how much patients actually paid for care, he said. And the study does not address the role of the insurance industry in pushing costs upward, he said.

“If there is a growing problem with out-of-network billing, it’s because the insurance industry has created it with ever more restrictive provider networks,“ Stack said.

Betsy Imholz, director of special projects for Consumers Union, agreed with the report’s finding that providers are charging too much — but she said it is hardly surprising.

“Some providers will take whatever they can get,” she said. “If there is no limitation … they will ask for the most they can.”

The bigger problem, Imholz said, is when patients get stuck with surprise bills. That happens when they go to an in-network hospital but are unknowingly treated by anesthesiologists or other specialists not in the plan’s network.

“The rude awakening is that when they get home … there are these huge other bills that come filing in,” she said. “The Affordable Care Act was aimed at making care affordable, and we want it to remain that way.”

A few states, including New York, have passed laws to protect patients from higher surprise bills. Proposed legislation that would have done so in California recently died in the legislature.

Imholz said consumer advocates would try again. “We are not giving up on this,” she said.

Blue Shield of California Foundation helps fund KHN coverage in California.

KHN’s coverage of aging and long term care issues is supported in part by a grant from The SCAN Foundation.