Surprise Medical Bills Are Increasingly Common, Study Finds

Ellie Kincaid

August 13, 2019

Patients who seek care at a hospital in their insurance company's network are receiving out-of-network bills from physicians and medical transport services at an increasing rate, according to a new analysis published online August 12 in JAMA Internal Medicine.

The rates are higher than previous estimates.

Researchers at Stanford University School of Medicine analyzed millions of claims from a major US health insurer to generate more data on how common surprise medical bills may be for patients as federal lawmakers consider potential approaches to curb them. The researchers were "surprised" by both how common the bills were and the amount, said study author Michelle Mello, JD, PhD, a professor of law and health policy researcher at Stanford University.

"These are pretty significant bills for the average American," Mello said in an interview with Medscape Medical News.

Researchers examined the rates at which patients who sought care at in-network hospitals received bills from out-of-network physicians for emergency department (ED) visits and inpatient admissions. They found that the percentage of ED visits for which patients received out-of-network bills increased from 32.3% in 2010 to 42.8% in 2016, and the incidence of out-of-network bills for inpatient admissions increased from 26.3% to 42.0%.

Out-of-network billing was most common for medical transportation services. Overall, 85.6% of ED visits that included an ambulance ride resulted in an out-of-network bill. Mello experienced this herself when she received a bill of nearly $25,000 for an ambulance ride of three blocks after she was in an accident. She challenged the bill and it was reduced by 90%. "People shouldn't have to go through that," she said.

For physician services, out-of-network billing was most common for the emergency medicine specialty, amounting to 32.6% of ED visits in which an emergency medicine physician submitted a claim. Radiologists, cardiologists, anesthesiologists, and internal medicine and family practice physicians each sent out-of-network bills for approximately 20% of ED visits in which their respective specialties submitted a claim.

The specialty out-of-network billing rates were similar for inpatient admissions, with the addition of pathologists sending out-of-network bills in about one fifth of encounters. Less than 1% of Ob/Gyn encounters resulted in an out-of-network bill for an inpatient admission.

Wide Variation Between Hospitals

The rate of out-of-network billing varied widely by hospital. At about half of hospitals, patients received out-of-network bills for less than 10% of inpatient admissions. But for inpatient admissions in about 15% of hospitals, more than 90% resulted in out-of-network bills.

Many of the hospitals where the majority of providers are in-network may be academic medical centers, Mello said, which employ physicians directly. The hospitals generating many out-of-network bills may be community hospitals, which contract with physician groups for staffing and may not get reimbursement rates as high as academic medical centers. "Unfortunately, those may be located in communities where there's not a lot of choice among hospitals for patients, so it can be particularly problematic," Mello said.

Dollar Amounts Climb Too

Researchers also calculated the amounts patients could be liable to pay as the difference between the out-of-network charge and the insurer's in-network rate. The mean amount for an ED visit increased from $220 in 2010 to $628 in 2016, adjusted to the 2018 dollar value. For inpatient visits, the mean potential financial responsibility rose from $804 in 2010 to $2040 in 2016.

The newly reported rates of out-of-network billing at in-network hospitals are higher than previous findings from different databases, including claims from multiple insurers, but the new analysis "shows really well that this is a serious problem," said Chris Garmon, PhD, an assistant professor of health administration at the Henry W. Bloch School of Management, University of Missouri, Kansas City.

"This is a genuine disagreement between the insurance company and provider on what is a fair reimbursement, but they should figure that out without putting the patient in the middle of that disagreement," Garmon told Medscape Medical News.

Garmon, who was not involved in the current study, published a similar analysis in Health Affairs in 2017, which found the percentage of potentially surprising medical bills decreased in three categories from 2007 to 2014. In that period, the percentage of visits likely to generate a surprise medical bill fell from 28% to 20% of inpatient admissions from the ED, 18% to 14% of outpatient ED visits, and 14% to 9% of elective inpatient admissions.

The methods of analysis were similar to the new study, Garmon said, so the most likely reason for the different findings are the different datasets. Garmon's analysis used the Truven Health MarketScan Commercial Claims and Encounters Database, which includes claims for patients with employer-sponsored health insurance from multiple companies. The analysis by Eric C. Sun, MD, PhD, and colleagues draws on Optum's Clinformatics Data Mart database of claims from one insurer. The Stanford researchers did not identify which insurer their data came from, but state in the article that the Clinformatics Data Mart database from Optum includes approximately 13 million covered patients, representing nearly one fifth of Americans with commercial health insurance. Optum is a business unit of UnitedHealth Group, as is the insurer UnitedHealthcare.

It's possible that one reason the new analysis found a higher prevalence of potentially surprising medical bills could be a difference in the insurer's network design, Sun said in an interview.

The analysis did not examine potential causes for the trend of increasing surprise medical bills, Sun noted, but consolidation in the healthcare industry could play a role. Over time, both insurance companies and physician groups have combined with others to form fewer, bigger entities with more bargaining power to negotiate payment rates.

"It could be the case that consolidation in the insurance industry means doctors are more likely to be out-of-network," Sun said, as neither side of the bargaining table is satisfied with what the other offered as an in-network rate of payment and they decide to remain out-of-network.

Funding for the study was provided by the National Institute on Drug Abuse and Agency for Healthcare Research and Quality. Sun has reported receiving personal fees from the Mission Lisa Foundation and Egalet. Study author Baker has reported receiving a grant and personal fees from the National Institute for Health Care Management and personal fees from Blue Cross and Blue Shield of California and Florida, and Dignity Health.

JAMA Intern Med. Published online August 12, 2019. Full text

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