ED Patients Shocked by Out-of-Network Physician Charges

Diana Mahoney

November 28, 2016

Of the patients who visit an emergency department (ED) in their insurer's coverage network, 22% later learn that the physician who cared for them was out of network, leaving them with a "surprise" bill for the balance of the charges not covered by their insurer, a study has shown.

This finding, reported in an article published in the November 17 issue of the New England Journal of Medicine, is based on an analysis of insurance claims data for more than 2.2 million ED visits for people younger than 65 years between January 2014 and September 2015 at hospitals registered with the American Hospital Association.

However, the American College of Emergency Physicians (ACEP) questions the findings and the journal's decision to publish them, given that the insurance claims data on which they are based are neither identified nor available for examination. The unidentified claims data "from a large insurance company" demonstrate a lack of transparency by the insurance industry, Rebecca Parker, MD, ACEP president, said in an ACEP news release.

For the analysis, Zack Cooper, PhD, from the Department of Public Health and the Department of Economics, and Fiona Scott Morton, PhD, from the School of Management, Yale University, New Haven, Connecticut, included ED visits occurring in hospital referral regions with at least 500 ED visits during the target period, covering all 50 states. Of the visits analyzed, 99.35% occurred at in-network facilities, but 22% involved out-of-network physicians, the authors report.

Some of the highest rates of surprise billing were seen in McAllen, Texas, and St. Petersburg, Florida, at 89% and 62%, respectively. "In contrast, in Boulder Colorado, and South Bend, Indiana, the surprise-billing rate was near zero, suggesting that surprise billing is a solvable problem," the authors write.

Using third-party insurance-enrollment data, the researchers estimated the extra costs associated with ED treatment by an out-of-network physician. "Our data show that out-of-network emergency physicians charged an average of 798% of Medicare rates," they report.

"On average," they state, "in-network emergency-physician claims were paid at 297% of Medicare rates."

To determine potential additional costs for patients, the researchers calculated the difference between the out-of-network emergency physician charge and 297% of the Medicare rate for the same services in the patient's location. Unless patients' insurers paid the difference, "patients could be billed for an average balance of $622.55," they report.

The potential balance bills for individual patients can be "extremely high," the authors write. "[T]he maximum potential balance bill faced by a patient included in our dataset was $19,603.30."

"The data do not make sense, and in some cases, border on preposterous," Dr Parker said in the ACEP news release. For example, she explained, the $19,603.30 bill is likely a facility charge or some other specialist charge, and the average physician charge of 798% of Medicare rates "is absurd, in part because physician charges are consistently the smallest part of emergency care bills."

The study authors believe that the dearth of federal and state protection against surprise physician bills has allowed the practice to continue, and that the solution lies in bundling ED care and setting a competitive price for physician services.

One way to establish a set price "would be for states to require hospitals to sell a bundled ED care package that includes both facility and professional fees," the authors suggest. "In practice, that would mean that the hospital would negotiate prices for physician services with insurers and then apply these negotiated rates for certain designated specialties. The hospital would then be the buyer of physician services and the seller of combined physician and facility services."

Such a scenario, the authors write, would preserve price competition by encouraging ED physicians to compete on price and quality, and insurers would compete on premiums and quality. "Most crucially, patients would always be protected," the authors conclude.

The editors of the New England Journal of Medicine and the study authors declined to comment on the ACEP statement.

Dr. Parker suggested that billing surprises may be a consequence of misleading insurance practices, whereby insurance companies sell patients "affordable" policies with coverage that does not begin until large deductibles are met, and "then blaming physicians for charges."

As long as insurance companies pay fairly, "[m]ost emergency physicians prefer to be 'in-network,' " Dr Parker stated. Toward this end, she said, ACEP is calling for increased transparency from the insurance industry and is advocating that the industry adopt an independent database, such as Fair Health, to calculate payments. "State and federal policymakers need to ensure that health insurance plans provide fair payment for emergency services and provide adequate rosters of physicians," she said.

Karen Pollitz, MPP, senior fellow at the Kaiser Family Foundation who works on organization's Program for the Study of Health Reform and Private Insurance, says that although she cannot comment on the underlying data specifically, or ACEP's challenges to it, the results are consistent with the Kaiser Family Foundation's medical debt survey reported in January 2016, which showed that surprise medical bills are a leading cause of medical debt among individuals with insurance.

Regarding ACEP's call for increased insurance transparency, Pollitz agrees that this is a widely sought goal, but does not believe it will sufficiently address the problem of surprise medical bills. "While transparency could provide consumers with more information on the relative incidence of surprise medical bills across health plans, the problem does not lend itself to a 'buyer beware' solution. Patients first learn about surprise bills, by definition, after the fact," she said in an interview. "And as our survey also found, though people with unaffordable medical bills are more likely than others to try to shop around, negotiate, and engage in other cost conscious behaviors, most are unsuccessful."

Dr Cooper and Dr Morton report receiving grant support from the National Institute for Health Care Management and the University of Toulouse.

N Engl J Med. 2016;375:1915-1918. Extract

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