No matter how a patient's health plan responds to an out-of-network bill, the result is higher costs for consumers. (Photo: Shutterstock)
Patients would save billions of dollars a year if medical specialists were not allowed to bill out-of-network rates.
An analysis of 2015 data obtained from a "large commercial insurer" showed that a significant percentage of medical services were billed out-of-network, including 11.8 percent of anesthesiology care, 12.3 percent for care involving a pathologist, 5.6 percent of claims for radiologists, and 11.3 percent of cases involving an assistant surgeon.
According to the research, reported earlier this week in Health Affairs, if out-of-network billing were eliminated, overall payments to doctors would decrease by 13.4 percent and patient spending on health care would drop 3.4 percent, or by roughly $40 billion annually.
Related: Surprise out-of-network medical bills outlawed in New Jersey
Out-of-network billing is more common in markets where there are fewer hospital and insurance options. It was also significantly more frequent at for-profit hospitals. "For-profit hospitals have an incentive to take a share of the profits earned from physicians' surprise billing," wrote the study authors.
Out-of-network billing was least likely to occur at teaching hospitals.
No matter how a patient's health plan responds to an out-of-network bill, the result is higher costs for consumers, the study notes. While outrage has focused on cases where the insurer declines to cover the bill and leaves the patient with a huge out-of-pocket expense, the higher cost of out-of-network billing is passed onto consumers through higher premiums even when insurers opt to cover the claim.
Moreover, physicians can leverage their ability to bill out-of-network in order to negotiate higher in-network payments.
The study proposes regulations to protect patients from surprise bill. While a number of states have put in place laws that holds patients harmless in the event that they receive unavoidable treatment at an out-of-network hospital, there are not yet robust regulations dealing with out-of-network specialists at in-network providers.
One option that has been floated is to set a standard rate for out-of-network billing. The potential problem with this approach, however, is that if the rate is set too low, insurers would perhaps forgo setting up networks since they could rely on the out-of-network rate. In an "extreme" instance, low reimbursement rates might prompt doctor shortages.
Other options include requiring arbitration between physicians and insurers and requiring doctors to participate in the same networks as the hospitals they work in.
The option the study authors favor, however, is for hospitals to "sell a bundled package of services" that includes the prices for various physician consultations. The hospital would set the prices and then hire doctors to perform the services.
"Under this bundled care approach," wrote the study authors, "physicians would compete to offer their services on the basis of price and quality. Hospitals would compete with one another on the price and quality of their care, including the services provided by the physicians they recruited. Hospitals would also need to compete to retain physicians."
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