Out-of-Network Billing by Hospital-based Specialists Boosts Spending by $40 Billion
Source: Modern Healthcare, by Shelby Livingston
Patients who seek care at in-network hospitals have a significant risk of being treated by and receiving a surprise bill from out-of-network anesthesiologists, pathologists, radiologists or assistant surgeons, a new study by Yale University researchers found.
The ability of these four specialties to send patients out-of-network bills allowed them to negotiate high in-network payments from insurers, which leads to higher insurance premiums for individuals, according to the study published Monday in Health Affairs.
Were the specialists unable to bill out of network, employer-sponsored healthcare spending would be 3.4%, or about $40 billion, lower per year, researchers concluded.
Because hospitals and physicians separately negotiate payments and network participation with health insurers, it’s possible for a patient to see an out-of-network physician at an in-network hospital. Those physicians may send patients a “surprise” medical bill for services that the insurer would not cover.
Surprise billing has come under scrutiny from state and federal lawmakers who have been working to come up with a solution that would protect patients, though there are disagreements over how to solve the issue. One of the most recent fixes pitched in Congress would have banned balance billing and given providers the option to pursue arbitration over out-of-network charges, but it failed to gain enough support.
Yale researchers analyzed 2015 employer-sponsored insurance claims from a large commercial insurer for care delivered at in-network hospitals by anesthesiologists, pathologists, radiologists and assistant surgeons. Researchers focused on those specialties because they are not chosen by patients.
They found that at in-network hospitals, 12.3% of cases involving a pathologist, 11.8% involving an anesthesiologist, 11.3% involving an assistant surgeon and 5.6% of cases involving radiologists were billed out-of-network.
In contrast, orthopedists performing knee replacements—a service for which a patient could choose an in-network physician ahead of time—billed out-of-network less than 1% of the time, according to the study.
Researchers found that assistant surgeons billed the highest out-of-network rates at 2,652% of Medicare, while anesthesiologists’ out-of-network charges averaged 802% of Medicare. Pathologists and radiologists’ out of network charges were 562% and 452% of Medicare, respectively.
Physicians in the four specialties were able to command higher payments from health insurers because of their ability to send patients out-of-network bills. The researchers said in-network rates for anesthesiologists were 367% of the Medicare rate for anesthesiologists, on average. In-network rates were 343% of Medicare for pathologists, 195% for radiologists and 176% for assistant surgeons.
Orthopedists, meanwhile, were paid about 164% of Medicare for knee replacements. Researchers estimated that if the four specialties’ in-network payment rates were put on par with orthopedists’ rates at 164% of Medicare, physician spending would be reduced by 13.4%. That in turn would lower total spending for people with employer-sponsored insurance by 3.4%, or about $40 billion, annually, according to the study.