Surprise medical bills from out-of-network providers are making headlines and angering patients. They also cause some pretty big problems for patient access.
“We have had issues with patients getting ‘surprise’ medical bills,” says Maria Lopes-Tyburczy, CHFP, director of patient access at HackensackUMC Palisades in North Bergen, NJ. Typically, multiple bills arrive because the ED physician group bills separately from the hospital. “Patients dispute the bills, stating that they should have been told upfront that the physician is out of network,” Lopes-Tyburczy explains.
The primary source of surprise billing is when patients go to hospitals that are in network, but are seen by physicians who are out of network. “Some hospitals take a hands-off attitude toward this problem, thinking that it’s really an issue for the physicians but not for the institution,” says Mark Hall, JD, who authored a recent white paper on the topic.1 However, patients see things a little bit differently. “They are not aware of the fine points of distinction among employed physicians, contracted physicians, and independent medical staff members,” says Hall, director of the Health Law and Policy Program at Wake Forest University School of Law. Hall is author of Making Medical Spending Decisions: The Law, Ethics, and Economics of Rationing Mechanisms (Oxford University Press).
In Lopes-Tyburczy’s experience, “patients feel that it is the hospital’s responsibility to let them know that physicians are not in network.” Most often, it happens in the ED setting. However, surprise bills also come from outpatient ancillary services because physicians bill separately for their professional fees.
Despite patients’ outrage, surprise bills remain common. About one in five (22%) ED patients receive such bills, according to the authors of a recent study.2 In that investigation, the patients were seen at in-network hospitals, but were treated by out-of-network physicians.
“Hospitals should be aware of the potential for surprise billing situations to arise, especially when a facility is in network but particular physicians are not,” Hall warns. Hospitals could include network participation as one of the conditions for medical staff membership, or make it a condition of contracts with physician groups. “Hospitals have significant influence on whether their physicians join the same insurance networks as the hospital,” Hall adds.
It’s not only that patients are billed for out-of-network care without notification. It’s also that that the amounts charged are inflated, according to a recent analysis.3
“Surprise bills have reached headlines all over the country, and have caused real hardship to both insured and uninsured consumers of healthcare,” says Barak Richman, JD, PhD, the paper’s lead author and Bartlett Professor of Law and Business Administration at Duke University in Durham, NC.
Researchers found that chargemaster rates impose significant financial burdens on uninsured and out-of-network patients while inflating healthcare costs. “When hospitals negotiate with insurers and decide whether to be in network or out of network, they tend to threaten insurers that they will charge chargemaster prices for all out-of-network care,” Richman explains.
This makes it costlier to keep hospitals out of network, making insurers more likely to accede to pay hospitals’ demands to bring them in network. “This is best described as an extortive negotiation tactic that raises the cost of health insurance and the cost of healthcare,” Richman notes. “It is a deeply unfair way to charge for healthcare.”
The obvious question is: If hospitals change these practices, how will they make up for lost revenue? “The short answer is, they have to set prices the way everyone sets prices: transparently, in advance,” Richman offers.
This is contrary to how the healthcare industry operates. “But hidden prices are not real prices. And ‘discounts’ from prices to which no one agrees are not discounts,” Richman adds.
Negotiation With Carriers
Patients have a right to know where medical charges come from and how much they will be responsible for, says Peter Kraus, CHAM, CPAR, FHAM. “Ultimately, it’s a matter of transparency.”
Unfortunately, ED registrars don’t know what services a given patient will receive, let alone which services are out of network for the patient’s insurance plan. “EMTALA regulations don’t make things any easier,” says Kraus, business analyst for revenue cycle operations at Emory Healthcare in Atlanta. He suggests these two approaches:
- Hospitals should negotiate contracts with carriers so that all procedures deemed emergencies and ordered in an ED setting are covered at the negotiated rate, regardless of where they are performed. “Insurance companies can tout this as a benefit to the insured,” Kraus says.
- ED registrars should advise patients, at the time when insurance information is collected, that not all services are performed and billed by the hospital; and that some services may end up out of network. “This includes services that were already performed as part of the emergency treatment the patient received,” Kraus notes.
- Hall M, Ginsburg PB, Lieberman SM, et al. Solving surprise medical bills. Schaeffer Initiative for Innovation in Health Policy White Paper, Brookings, Oct. 13, 2016. Available at: . Accessed March 27, 2018.
- Cooper Z, Morton FS, Shekita N. Surprise! Out-of-network billing for emergency care in the United States. Institution for Social and Policy Studies Working Paper, Yale University, July 2017. Available at: . Accessed March 27, 2018.
- Richman BD, Kitzman N, Milstein A, Schulman KA. Battling the chargemaster: A simple remedy to balance billing for unavoidable out-of-network care. Am J Manag Care 2017;23(4):e100-e105.
- Mark Hall, JD, Director, Health Law and Policy Program, Wake Forest University School of Law, Winston-Salem, NC. Phone: (336) 758-4476. Email: email@example.com.
- Peter Kraus, CHAM, CPAR, FHAM, Business Analyst, Revenue Cycle Operations, Emory Hospitals, Atlanta. Phone: (404) 712-4399. Fax: (404) 712-1316. Email: firstname.lastname@example.org.
- Maria Lopes-Tyburczy, CHFP, Director, Patient Access, HackensackUMC Palisades, North Bergen, NJ. Phone: (201) 295-4028. Email: email@example.com.
- Barak Richman, JD, PhD, Bartlett Professor of Law and Business Administration, Duke University, Durham, NC. (919) 613-7244. Email: firstname.lastname@example.org.