New Report Examines Out-of-Network Charges by Some Physicians

For Immediate Release
August 12, 2009

Contact:
Susan Pisano
(202) 778-3245

Washington, D. C. – A new report by Dyckman & Associates prepared for America’s Health Insurance Plans shows that some physicians who choose not to participate in health insurance networks are charging patients fees that are several hundred – and in some cases,  a thousand percent - higher than Medicare reimbursement for the same service in the same geographic area.  Looking at the 30 largest states, the report found that some physicians who don’t take insurance are charging patients startling fees for a wide variety of medical treatments and services.

Recently, in public policy discussions about out-of-network services, the focus has been only on how much insurers pay for  these services, and the critical issue of what out-of-network physicians are charging patients has been ignored.  Hearing from its members about exorbitant out-of-network charges, AHIP engaged Dyckman & Associates to gather information across the country.

What we found should cause policymakers to closely investigate this issue, including looking carefully at how these charges compare to in-network fees, as well as fees charged for similar services in other countries.  For example, in one state, a physician billed a patient $6,791 for “cataract surgery with insertion of artificial lens” – over 1100% of the Medicare fee of $581.  Similar examples were found in all 30 states, and there are many examples of even higher variation in charges, even though the researchers used a conservative approach to the data that excluded outliers.

While the issue of how much is appropriate for out-of-network physicians to charge has not been part of health reform discussion to date, this report demonstrates that it needs to be.  No mechanism exists to protect patients who seek care out-of-network from receiving bills that are unreasonable and unaffordable.

“As policymakers pursue health care reform, we encourage them to look at how much is being charged for services, particularly since higher charges don’t mean high quality of care,” said AHIP President and CEO Karen Ignagni.  “With the nation facing the crushing burden of rising medical costs, all stakeholders should be focusing on constructive ways to bring costs under control.”

Health plans create physician networks to ensure that patients have affordable access to a wide choice of high-quality health care providers.  Consumers receive savings when they visit contracted providers who have agreed to lower rates, and are generally prohibited from charging patients anything above that rate.  Consumers who receive services from in-network providers also typically have lower cost sharing, which, over the decades, has saved billions of dollars in out-of-pocket costs and premiums.

View the full report. 

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