Want to Lower Premiums for Millions of Americans? Ending Surprise Medical Billing Will Do Just That

Sep 23, 2020 | Blog Post, Market Approach

When out-of-network providers and private equity firms take advantage of patients, we all pay the price. Now, new research from the USC-Brookings Schaeffer Initiative for Health Policy shows clearly how this exploitative practice ends up costing the country billions in unnecessary spending.

The latest analysis points to the excessive charges from emergency and ancillary providers as a root cause for the majority of surprise bills. In total, these out-of-network bills account for roughly 10 percent of health plan spending. If Congress were to take action with reforms that would put an end to these excessive charges, premium costs could be reduced by roughly 5 percent, leading to $38 billion in premium savings for commercially-insured patients.

Highlights from the report are included below:

  • “Most surprise bills are generated by emergency and ancillary providers, such as radiologists, anesthesiologists, pathologists, emergency physicians, emergency ground ambulances, and emergency outpatient facilities.”
  • “Unlike most medical services, for which patients have an opportunity to seek in-network providers, patients generally are not able to choose these emergency and ancillary providers. As a result, these providers can often remain out of network without significantly reducing their patient volume.”
  • “Not only can this lead to patients receiving surprise bills, but evidence suggests that the ability to surprise-bill creates leverage that enables these providers to obtain higher in-network payments.”
  • “The expense of these high in-network payments is passed on to consumers and taxpayers through the cost of health insurance premiums. Therefore, although the surprise bills themselves are burdensome to individual patients, the higher in-network payments resulting from this leverage have a broader impact on total health care spending for consumers.”
  • “More than 10% of commercial health care spending is attributable to services for which surprise billing is common: those provided by radiologists, anesthesiologists, pathologists, emergency physicians, emergency ground ambulances, and emergency outpatient facilities.”
  • “Policies addressing surprise billing can meaningfully influence commercial insurance premiums. A well-designed policy to address this market failure could therefore reduce consumer health care spending.”

To view the full analysis, click here.