By Erin Duffy, Erin Trish, Loren Adler, USC-Brookings Schaeffer Initiative for Health Policy

  • “Too often after a hospital procedure or visit to an emergency room patients get hit with unexpected bills from out-of-network doctors they had no role in choosing. These include assistant surgeons, emergency room doctors and anesthesiologists.”
  • “Most research and media coverage focuses on how burdensome these bills are for the patients who receive them. As health economists and policy analysts, we think there is a broader impact of surprise billing that deserves to share the spotlight.”
  • “Evidence from our recent study suggests that everyone with commercial health insurance is paying higher premiums today because lawmakers allow the practice of surprise billing to persist. Fixing surprise billing won’t just help the patients being billed; it offers the potential to lower health insurance premiums for everyone.”
  • “About one in five commercially insured patients treated at an in-network emergency room is seen by an out-of-network physician. In about one in 10 elective procedures at an in-network hospital with an in-network surgeon, the anesthesiologist, assistant surgeon or similar physician is out-of-network. This is not the way a market typically works. In a functioning market, consumers can choose service providers based on quality and price.”
  • “At its core, market failure arises because this system allows the subset of hospital-based physicians whom patients don’t choose to negotiate with insurance companies independent of the hospital at which they practice. Therefore, ambulance companies, emergency facilities and hospital-based physicians can still receive a substantial volume of patients whether they are in- or out-of-network. They are assured a steady stream of patients, in part, by the nature of their work. They don’t need to join networks to get patients. And, as out-of-network providers, they can set their own prices.”
  • “With this out-of-network option to submit surprise bills, these unique providers have a valuable alternative to joining networks. This gives them bargaining leverage when they negotiate with insurers, allowing them to negotiate higher prices than they otherwise could have. As a result, these providers are out-of-network more often, set higher charges and have higher in-network prices than other types of providers who rely on being in-network to generate patient volume.”
  • “This might not be so important if these unique providers accounted for only a very small share of health care spending. But we found that is not the case. In our recent study, we found that about 12% of insurers’ spending on medical care goes to providers who commonly issue surprise bills: anesthesiologists, radiologists, pathologists, emergency medicine physicians, emergency facilities and emergency ground ambulance services. Eliminating the ability to submit surprise bills for these unique providers would reduce their ability to collect large out-of-network payments. This would bring their leverage in price negotiations with insurers in line with those of other specialties in which patients are able to choose their providers. In turn, less insurer spending would result in lower premiums.”
  • “Our research suggests that a federal policy eliminating surprise medical bills would reduce premiums for everyone with commercial insurance, in addition to sparing individual patients from these burdensome bills…[For example, under one proposed surprise billing solution], instead of charging what they wish, out-of-network providers would receive the average amount that insurers currently pay to similar in-network providers in the local area. This approach could reduce average payments for services where surprise billing is common by about 15%, according to the Congressional Budget Office.”

To view the full op-ed, click here.