Out-of-Network Billing

Out-of-network billing has been in the headlines for over a year, usually under the heading of “surprise billing”.  If it weren’t so pathetically predictable, it is hilarious to watch how Congress can’t get out of its way in trying to deal with the problem.  Think all those campaign contributions from providers have anything to do with it?  A study in Health Affairs describes the source of most of these surprise out-of-network bills.   (HA Article)   The fundamental problem is that while many hospitals have in-network status for a health plan, that does not mean that all physicians working at those facilities are also in-network.  So the patient is admitted to the hospital and while there may be referred to and seen by doctors who are out-of-network and submit a full bill to the patients, who are naturally shocked, both that they got a bill and at the size of the charges.  Most people don’t have a clue how high most medical charges are, because they rarely see an actual bill.  Using data on commercial health plans from a very large health insurer, the authors sought to ascertain what percent of certain specialists bill out-out-of-network and other aspects of the practice.  Across this insurer, 11.8% of hospitalizations had an out-of-network bill from an anesthesiologist, 12.3% from a pathologist; 5.6% from a radiologist and 11.3% from an assistant surgeon.  Billings by out-of-network doctors tended to be concentrated in a minority of hospitals.  64% of hospitals in the study had a rate of out-of-network billing under 2% of admissions.  As you might expect, hospitals in very highly-concentrated markets have higher rates of out-of-network billing.  Interestingly it also increased as a function of health plan market concentration.  In addition, for-profit hospitals were more likely than non-profit ones to have physicians who engaged in out-of-network billing.  The authors estimated that if the apparent excess charges associated with out-of-network billing were eliminated,  spending would be reduced by about $40 billion.  That is a huge amount of savings for consumers.

Another interesting phenomenon is that the doctors doing out-of-network billing also have very high in-network billing rates, with the anesthesiologists charging on average 367% of Medicare reimbursement, the pathologists 343%, the radiologists 195% and the assistant surgeons 176%.  That is high, but get the out-of-network rates–802% of Medicare rates on average for anesthesiologists, 562% for pathologists, 452% for radiologists and 2652% for assistant surgeons.  Note that the physicians who tend to do out-of-network billing are already among the very highest paid specialists.  They don’t need the extra money.  And also note that it is highly likely that hospitals actually don’t mind the practice–it probably helps build a stronger relationship with the physicians and it may bring other benefits to a hospital, like referrals to their other services.   Some states have begun addressing the issue, but don’t hold your breath waiting for Congress to do so.