From the Journals

Out-of-network billing in in-network hospitals adds $40 billion in spending



As the debate over how best to address surprise billing continues, new research shows that billing from out-of-network physicians at in-network facilities is adding $40 billion in costs.

Paper money spread out under a stethoscope utah778/Thinkstock

Researchers focused on four different types of physicians that account for out-of-network billing: anesthesiologists, pathologists, radiologists, and cases involving an assistant surgeon, which had out-of-network bills in about 10% of claims that were examined as part of the research.

“To give a rough estimate of the savings that could be achieved by eliminating the ability of these four types of specialists to readily bill out of network, we simulated what would happen if all of these specialists received the same average payments as orthopedic surgeons did (164% of Medicare rates),” Zack Cooper, PhD, associate professor of health policy at Yale University, New Haven, Conn., and colleagues wrote in a research report published in Health Affairs.

“We estimated that if these physicians were paid the same average rate as orthopedists for all of the services that they delivered in our sample, spending would be lowered on anesthesiologists by 53.5%, on pathologists by 47.4%, on radiologists by 16.3%, and on assistant surgeons by 46.2%,” the authors wrote.

Researchers said that physician spending for these four specialties would be lowered by 13.4% and would lower total spending for people with employer-sponsored insurance by about 3.4%, or $40 billion. If spending on these four specialties were lowered to 150% of Medicare rates, it would lower spending on physicians by 15.3%.

To help combat the issues of surprise billing in a way that lowers total commercial health care spending and helps to preserve a competitive price for physician services, Dr. Cooper and colleagues recommended an approach that would regulate the contracts of physicians who work in hospitals and are not chosen by patients. It would establish a bundled package for services that include the emergency department physicians and the four specialists examined as part of the research and would use the fee associated with the package of services to recruit specialists to work at the hospital.

The authors said this kind of policy would eliminate the possibility of patients seeing out-of-network providers at in-network hospitals and, unlike arbitration (a favored solution among physician groups if it is set up in an agreeable manner), patients are protected without being required to take any action. The policy also sets a competitive rate for these services.

“Under this bundled care approach, physicians would compete to offer their services on the basis of price and quality,” Dr. Cooper and colleagues stated. “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.”

This approach is not included in any current surprise billing legislation. There was hope that surprise billing would be addressed in a government spending bill that would be signed before year’s end. But a second bipartisan plan was introduced in the House Ways and Means Committee after a bipartisan compromise was reached by the House Energy and Commerce and the Senate Health, Education, Labor, and Pensions committees. This has postponed a decision on surprise billing legislation into the coming year.

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SOURCE: Cooper Z et al. Health Aff. 2019 Dec 16. doi: 10.1377/hlthaff.2019.00507.

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