by Center for Policy and Research
September 29, 2015
Our study identified a pattern of average billed charges submitted by out-of-network (OON) providers that far exceeded Medicare reimbursement for the same service performed in the same geographic area. These findings reinforce conclusions from our previous reports that used the three highest billed commercial charges in a geographic region.
There was wide variation in out-of-network charges from different providers for the same procedure. For example, billed charges for “muscle-skin graft trunk” differed from $3,565 for the 25th percentile to $14,998 for the 75th percentile, and for “low back disk surgery”—from $3,013 for the 25th percentile to $10,216 for the 75th percentile.
Among the 97 procedures studied, average out-of-network billed charges, as a percentage of corresponding Medicare fees, ranged from a low of 118 percent of Medicare (“eye exam new patient”) to a high of 1382 percent of Medicare (“electrocardiogram (ECG)/monitoring and analysis”).
For many procedures, we found regional patterns in the ratio
of out-of-network charges to average Medicare fee at the state level. For example, states that had high out-of-network charge-to-Medicare fee ratio for gall bladder surgery also had high ratios for other gastrointestinal (GI) procedures.
To ensure consumers have affordable health care coverage options, health plans develop provider networks that give consumers access to a range of health care providers who deliver high-quality care. However, when providers either choose not to participate or do not meet the requirements for inclusion in health plans’ networks, these providers may charge patients whatever fee they choose, including amounts far in excess of the benchmark Medicare rate for the same service. In addition, most out-of-network (OON) providers bill the patient for any amounts not paid by the health plan under a practice known as “balance billing.”