Health insurance plans as a rule cover most of the costs of medical services such as doctor's visits, hospital stays and tests as long as a patient uses a health-care provider within the plan's network. In return for being in a plan's network — and getting access to potential customers — providers generally agree to accept a lower payment rate for services than they would charge for out-of-network patients.
But if a patient goes to a health provider who is not in their plan's network, insurance might not cover any of the bill — or might require the patient to pay a much bigger share of the bill out-of-pocket than they would have if they had gone to an in-network provider.
The NEJM article published Wednesday notes that while hospitals generally contract with physician groups to provide care to patients who visit emergency rooms, the ER doctors, "however, contract independently with insurance companies."
"And they and the hospitals where they work may not contract with the same insurers," the authors wrote.
"As a result, patients who choose an in-network ED [emergency department] may discover later that the physician who treated them wasn't in their insurer's network," according to the authors. "The result is a large physician bill that the insurer doesn't cover or only partially covers, leaving the patient to pay the balance."
To understand how common that phenomenon is, the authors looked at claims data from a large insurer that covers tens of millions of customers, and focused on emergency department visits of adults under the age of 65 in 2014 and 2015. In all, 2.2 million emergency visits in all 50 states were looked at.
The authors found that 22 percent of the visits that occurred at an in-network hospital involved out-of-network physicians.
But that figure "masks significant geographic variation in surprise-billing rates" the authors wrote.
"In McAllen, Texas, and St. Petersburg, Florida, surprise-billing rates were 89% and 62% respectively," according to their article. "In contrast, in Boulder, Colorado, and South Bend, Indiana, the surprise-billing rate was near zero, suggesting that surprise billing is a solvable problem."
The article notes that some states, including New York, have passed laws that bar out-of-network doctors from balance billing patients who receive care at an in-network facility.
But the authors point out that New York's law, while being "one of the most ambitious to date," does not apply to people who receive health coverage from firms that self-insure. "Furthermore, patients who receive surprise bills must be aware of state protections and submit a substantial amount of paperwork to get redress."
The authors also point out that so-called hold harmless laws against balance billing "typically require the insurer to pay the full billed amount" from the out-of-network doctor.
"Although they limit additional costs for consumers, such laws create perverse incentives for providers to avoid joining networks, because they insurer must still pay the billed rate," the article says. "Insurers will ultimately pass these higher costs on to consumers in the form of higher premiums."