More than $28,000 to remove an appendix, almost $94,000 for spinal surgery, over $500,000 for lifesaving dialysis treatment—these figures represent just a few of the unexpected medical bills patients have received, according to Kaiser Health News’ “Bill of the Month” column.
Concerns about surprise bills continue to mount as more people share their stories and as researchers dig into the extent of the problem.
“Surprise medical bills can be financially devastating,” said Karen Joynt Maddox, MD, MPH, an assistant professor at Washington University School of Medicine in St. Louis. “As a patient, you trust that if you have insurance you will be covered, but that is not how these scenarios are playing out.”
A surprise or balance bill can occur when a patient with health insurance unintentionally receives care from an out-of-network provider. When an insurance company and hospital or clinician don’t have a contract in place that sets payment rates, the clinician is considered “out-of-network” and the insurance company isn’t obligated to pay, Dr. Joynt Maddox explained. That often leaves patients responsible for the bill.
But how common are these types of charges?
An analysis published last year found that among almost 20 million privately insured patients, out-of-network bills accompanied more than 40% of emergency department visits and inpatient admissions in 2016 (JAMA Intern Med 2019;179[11]:1543-1550). A 2019 survey from the Kaiser Family Foundation estimated that 18% of emergency visits and 16% of inpatient admissions at in-network hospitals led to an out-of-network bill. Of inpatient admissions, surgical visits led to a higher rate of out-of-network charges, at 21%.
In an emergency or time-sensitive scenario, a patient will likely not have the ability to pick an in-network doctor or hospital. But what happens when patients do have time to shop for an in-network provider and facility?
Karan R. Chhabra, MD MSc, who studies the affordability of surgical care at the University of Michigan, in Ann Arbor, wanted to find out.
Dr. Chhabra and his colleagues analyzed bills from almost 350,000 patients who had gone to in-network surgeons and facilities for elective operations (JAMA 2020;323[6]:538-547). What he found surprised him: 20% of patients received an out-of-network bill. The average bill came to $2,011.
In other words, “out-of-network bills occurred just as often for elective surgeries as they do for emergency visits,” Dr. Chhabra said.
Dr. Chhabra’s team could only estimate the potential surprise bill stemming from these out-of-network charges because the data did not specify what portion of the out-of-network bill insurers ultimately paid. Some insurers, for instance, may cover part of an out-of-network bill whereas others may leave patients on the hook for the full amount.
The most worrying finding, Dr. Chhabra said, was that these patients had chosen in-network providers and facilities. Dr. Chhabra’s team found that the largest proportions of cases of potential surprise medical bills cases involved out-of-network surgical assistants and anesthesiologists, but other providers, such as radiologists and pathologists, also had a part.
Dr. Chhabra’s work aligns with other recent research that tracks out-of-network bills at in-network facilities. A 2019 study in Health Affairs also found that even when privately insured individuals received care at in-network hospitals, they often still faced unexpected out-of-network bills from specialists they didn’t choose.
“So, in the elective surgery setting, patients are getting charged thousands of additional dollars from a clinician they didn’t have an opportunity to pick,” said Dr. Joynt Maddox, who is also the co-director of her university’s Center for Health Economics and Policy. “Although the issue of surprise medical bills is not new, our recognition of how common it is has grown recently.”
Solutions for Surgeons
For Dr. Chhabra, “my biggest takeaway for surgeons is to try, when possible, to work with a surgical assistant who is in the patient’s network.”
Eileen Natuzzi, MD, an acute care surgeon in California, has another solution: complete price transparency.
Dr. Natuzzi ran her own surgical practice as an out-of-network provider for many years. In her practice, a clear price tag accompanied each procedure.
“I set my rates based on a back calculation of my business costs and gave those rates to patients before their surgery,” Dr. Natuzzi said. She also told her patients the extent to which their insurance would cover her charges based on their plan, so patients knew how much their out-of-pocket expenses would be prior to surgery. “There’s no reason consumers shouldn’t be able to get this number,” she said.
| Table 1. Rates of Out-of-Network Bills Across 7 Procedures | ||||||
| Procedure | Overall | CABG | Colectomy | Lap Chole | Total Knee Replacement | Hysterectomy |
|---|---|---|---|---|---|---|
| Average bill, $ | 2,011 | 3,236 | 3,449 | 1,255 | 2,786 | 2,174 |
| Frequency, %a | 20 | 33 | 24 | 24 | 25 | 26 |
| Table 2. Drivers of Out-of-Network Billing in Elective Surgery, by Provider Specialty | ||||
| Provider | Surgical Assistant | Anesthesiologist | Radiologist | Pathologist |
|---|---|---|---|---|
| Average bill, $ | 3,633 | 1,219 | 321 | 284 |
| Frequency, %a | 37 | 37 | 7 | 22 |
a Figures don’t add up to 100%; some patients received out-of-network bills from multiple providers. CABG, coronary artery bypass graft surgery Source: Dr. Chhabra’s analysis. https://ihpi.umich.edu/news/ihpi-briefs/surprisebilling. | ||||
Dr. Natuzzi, however, didn’t become an out-of-network physician by choice. She says she was driven out because insurers stopped negotiating fair contracts with independent and small practices.
“When I did the math, I found I needed to be paid 150% to 200% of Medicare to survive, and insurers in California were only offering contracted rates of 85% of Medicare,” said Dr. Natuzzi, who is now working with a group of surgeons to study and address health care costs.
No Simple Fix
Patients, doctors, policymakers, even insurers and hospitals agree that consumers need to be protected from these surprise out-of-network bills.
The challenge, however, has been finding a solution at a national level that all parties can agree on. Surprise billing legislation currently being considered in Congress would ensure patients being treated at in-network hospitals pay in-network rates for bills under $750, even if an out-of-network provider was involved in their care. For bills of $750 and over, clinicians or insurers could opt to go through an arbitration process where an independent party would decide how much the insurer should pay the provider.
“We’re facing a classic scenario in which we need legislation, but the legislation proposed so far has gotten pushback from all sides,” Dr. Joynt Maddox said. “Physician and hospital lobbies don’t think the fixes give them adequate compensation, while insurance companies and patients may not think the proposals go far enough.”
With no national-level legislation, some states have adopted their own surprise billing laws with varying degrees of protections for consumers. California, for example, passed a law in 2017 that protects patients using in-network facilities from receiving a surprise medical bill if a provider happens to be an out-of-network one. Patients are only responsible for their regular in-network copay or deductible, and out-of-network doctors receive 125% of what Medicare pays or the average contracted rate for similar services in the area.
But Dr. Joynt Maddox does not see state laws as a solution to surprise medical bills. “Surprise medical bills are a symptom of a completely broken health care market,” she said. “We can patch the system and limit the bleeding, but it’s not solving the problem of what got us here—that the market isn’t working to limit costs of care due to hospital and insurer consolidation and a lack of transparency. That said, I hope the patches we come up with can save patients from medical bills that threaten their financial security.”
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What physicians need to understand is that out-of-network billing is the thing that helps to maintain market pressure on insurance companies to keep appropriate compensation levels in their in-network contracts. The "threat" of leaving the network is the only negotiating tactic physicians have to try and maintain reasonable reimbursement. The reason why insurance is contracting with physicians in California at 85% of medicare is they have passed out-of-network legislation there. In Colorado, we recently passed out-of-network legislation and a major health insurance company just dropped one of the three major anesthesia groups from their contract because the insurance company didn't want to resign the contract at the rates from the prior contract. This in no way benefits patients, it narrows the network and these anesthesiologists are now forced to bill out of network. Why would the insurance company do this? Because the out-of-network legislation puts a cap on reimbursement based on median in-network rates. This allows for insurance companies to drop physicians with good contracts from their networks to ratchet down the median rates. This has the effect of driving reimbursement to the floor because carriers aren't held accountable for narrowing their network and it will get blamed on greedy physicians.
Doctors need to wake up. While getting "surprise" bills is an emotional issue for patients we need to protect our ability to continue to have control over rates we charge or the idea of being a private practice physician with control over your livelihood is going to be lost.
I completely agree with Dr. Lynn. He and I actually had several meetings with legislators in Colorado prior to the bills approval. We argued against the out of network legislation, as it was wriiten, for the exact reasons Dr. Lynn outlined above.
The irony is that in Colorado, patients were already protected from “suprise billing” for emergency procedures. This law, and otherslike it, only help the insurance companies.
We continue to allow politicians, hospital administrators, and insurance companies to devalue our contribution to society.
I think a good start, to solving this problem, would be to abolish networks! They can’t be manipulated, if they don’t exist. We must start standing up for ourselves and most importantly our patients. They are being sold a lie.
These laws will eventually catch up with all of us, regardless of our network status. We have to take back the narrative and educate patients in regards to this topic. I fear that if this continues, there will be very few competent surgeons willing to take care of those patients that need us the most.
R. Dewayne Edwards
The answer is actually simple. Eliminate all networks. Make us all the same. Pay a fair rate. No deductibles. SOLVED! Networks are nonsense. When you get sick you go to the nearest ER. It is not the ER's job to have only in-network doctors on call. So you don't know who you are going to get. If you are in a lot of pain all you care about is getting rid of the pain. Not networks. ELIMINATE NETWORKS and you've just eliminated balance billing.
Since this publication is for surgeons, let's talk about surgery. First, there is no excuse for surprise out-of-network anesthesia or pathology services. The patient has carefully chosen her surgeon and hospital as "in network." There must be full transparency of out-of-network parasites that jump aboard to the unsuspecting and unnotified patient. Second, the out-of-network surgical first assistant business model must be eliminated completely. These parasites don't even show up until the patient is anesthetized on the table and oftentimes bill and collect more than the surgeon. As a surgeon, you have the duty to reduce the anesthesia and pathology parasites, but it is unconscionable that you would allow a surgical first assistant to conduct "business as usual" and screw your patient without any notice whatsoever.
And shame on certain surgeons who go into business with these first assistant groups: the surgeon is in network but takes a percentage of the fee for the out of network first assistant. Talk about a conflict of interest AND a breach of contract with the insurance companies.
If you want to change the crappy rates paid "in network," do so without surprising your patients with these parasitic billers. The insurance companies are not suffering -- they pay the parasites "in network" at most. The patients suffer. And you should care about that more than anything.
How can you avoid this if you do not contract with any insurers, but as a condition of hospital privileges you are compelled to take ER call? In the ER the patient has no time or option to choose someone else, especially if you are the only one available.