Out-Of-Network Billing And Negotiated Payments For Hospital-Based Physicians

Area of Science:

• Health Economics
• Healthcare Policy
• Patient Financial Risk

Background:

• Physicians not chosen by patients can bill out-of-network for in-network hospital care, creating financial risks.
• This practice undermines the functioning of healthcare markets and patient cost predictability.
• Specialists may leverage out-of-network billing to negotiate higher in-network rates.

Purpose of the Study:

• To quantify the prevalence of out-of-network billing by specific specialists within in-network hospitals.
• To identify factors associated with higher rates of out-of-network billing.
• To estimate the financial impact of eliminating out-of-network billing on physician payments and healthcare spending.

Main Methods:

• Analysis of 2015 claims data from a large commercial insurer.
• Examination of out-of-network billing rates for anesthesiology, pathology, radiology, and assistant surgery.
• Regression analysis to identify correlates of out-of-network billing and estimate financial impacts.

Main Results:

• 11.8% of anesthesiology, 12.3% of pathology, 5.6% of radiology, and 11.3% of assistant surgeon services were billed out-of-network at in-network hospitals.
• Out-of-network billing was more common in concentrated hospital/insurance markets and at for-profit hospitals.
• Eliminating out-of-network billing could reduce physician payments by 13.4% and overall healthcare spending by 3.4% ($40 billion annually).

Conclusions:

• Out-of-network billing by certain specialists is prevalent within in-network facilities, posing financial risks to patients.
• Market concentration and hospital ownership influence the extent of this practice.
• Policy interventions to curb out-of-network billing could yield substantial savings in healthcare expenditures.