New Report Examines Physician Out-of-Network Charges

For Immediate Release
February 1, 2013

Susan Pisano

 Exorbitant Fees Represent a Hidden Threat to Affordability 

Washington, D.C. – A new report from America’s Health Insurance Plans (AHIP) highlighting data collected by Dyckman & Associates shows that some physicians who choose not to participate in health insurance networks are charging patients fees that are 10 times – and in some cases, nearly 100 times – Medicare reimbursement for the same service in the same geographic area. Looking at the 30 largest states, the report found that some physicians who do not take insurance are charging patients startling fees for a wide variety of medical treatments and services.  Click here to view a new infographic highlighting the findings of this report.   

This report demonstrates the importance of public policy leaders focusing on how much patients who seek out-of-network care are being charged by some physicians. In discussions to date, the focus only has been on how much insurers pay for these services, and the critical issue of what out-of-network physicians charge patients has been ignored. The report is an update to a previous analysis by Dyckman & Associates released in 2009. Because the billing practices of some physicians continue to be an impediment to affordability for consumers, AHIP asked them to update their analysis last year.  

The findings of the report should cause policymakers to closely investigate this issue, especially considering how these charges compare to in-network fees, as well as fees charged for similar services in other countries. For example, in New York, a physician billed a patient $115,625 for lumbar spinal fusion – 62 times the Medicare fee of $1,867. Similar examples were found in all 30 states included in the survey, and there are many examples of even higher variations in charges, despite the fact that the researchers used a conservative approach in reporting the data. 

While the issue of how much is appropriate for out-of-network physicians to charge has not been part of the affordability 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 we shine a spotlight on the affordability issue, we encourage policymakers to look at how much is being charged for services, particularly since there is often no relationship between higher charges and higher 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.  

 Out of Network Infographic 

(click thumbnail to view larger image)

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