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The much higher costs of 'out-of-network' health care

Healthcare costs
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If you go "out of network" to get health care, your bank book might go into the red.

A new analysis finds that people who get common treatments from doctors and facilities that aren't covered by their insurance plans routinely receive bills that are anywhere from 118 percent to a whopping 1,382 percent higher than what the federal Medicare system is billed for the same services.

The findings come on the heels of a spate of reports detailing cases of patients being surprised by high bills from out-of-network doctors who became involved in treating them when patients thought their care was being provided by doctors and hospitals covered by their health plans.

The study was based on 18 billion health claims for 97 types of the most common services in 50 states, and released Thursday by America's Health Insurance Plans, the industry trade group.

Nationally, the study found that the average out-of-network charge for neck/spin disk surgery was $10,459, or nearly 640 percent higher than the $1,414 paid by Medicare. And a 40-minute office outpatient visit would cost a patient an average of $260 from an out-of-network doctor, whereas that same doctor would receive $147 if Medicare was paying for the visit.

The majority of procedures, 57 out of the 97 analyzed, had average out-of-network billed charges of 300 percent or higher compared with Medicare reimbursement rates for the same services, AHIP said.

The study found examples of procedures, such as in New Jersey, where patients who sought treatment outside of the provider network covered by their plans were charged an average of 1,200 percent more than Medicare for an ultrasonic guide for a biopsy, and in New York where patients getting low-back disc surgery from an out-of-network provider would be charged 1,100 percent more than Medicare.

Knee surgeries, which are among the most common operations performed in the United States, on average cost more than 500 percent above the Medicare reimbursement rate in Rhode Island if obtained out of network.

Private insurance plans offer customers health benefits provided by a network of doctors, hospitals and other facilities, who in turn agree to receive negotiated reimbursement rates from the plans in exchange for being covered by the plan. Customers who seek care outside of the plan's network of providers typically have to personally pay more for the care, because the plan either does not cover the services at all, or it covers a much smaller share of the cost.

Clare Krusing, a spokeswoman for AHIP, said that a report released two years ago found that about 12 percent of health claims were made for services obtained from out-of-network providers.

AHIP's analysis compared the out-of-network charges with Medicare reimbursements, as opposed to what the charges would be from an in-network provider, because there is not comparable data on what the in-network charges for the same services would be, Krusing said.

That's due to the fact that most of the plans aren't paying the in-network providers for individual services, but instead are making "bundled payments" in which the provider is paid for all services related to an episode of care for the patient.

AHIP President and CEO Marilyn Tavenner, who until earlier this year headed the federal Medicare and Medicaid system, said the report "demonstrates the serious cost pressures facing consumers who want affordable access to care, and the added financial burden caused by soaring out-of-network medical bills."