People treated in emergency rooms may end up going home with a surprisingly large bill.
According to a New England Journal of Medicine article by Yale economics professors Zack Cooper and Fiona Scott Morton ’89, although over 99 percent of emergency room patients in the United States attend hospitals covered by their insurance plan, 22 percent are treated by doctors outside their insurance network. The data, which was published on Nov. 17, is based on 2.2 million claims made to a large unidentified commercial insurance company between January 2014 and September 2015.
“What emergency doctors can do is drive an enormously high price and the patient visiting an emergency room seeking care thinks they are covered,” Scott Morton said.
According to the article, insurers independently negotiate contracts with hospitals and with the physicians who work at those hospitals. As a result, it is not uncommon for patients to be treated at an in-network facility by an out-of-network physician. This issue is particularly prominent in emergency departments because patients receiving emergency care do not have a say in the physician who treats them.
The paper stated that, in general, physicians compete with one another to gain contracts with insurance companies, and this competition leads to lower prices for care. However, according to the paper, because ER physicians have access to patients regardless of whether or not they are included under the patient’s insurance network, they have no incentive to compete in order to join a network. The paper also claims that ER physicians benefit from staying out-of-network and keeping their prices high.
While Medicare pays physicians only the cost of care provision, private insurance companies pay an additional amount to provide doctors with a profit. Although insurers pay 297 percent of the Medicare rate to in-network physicians, out-of-network physicians charge 798 percent of the Medicare rate.
On Nov. 16, the American College of Emergency Physicians released a statement in response to the Nov. 17 paper, which criticized the research’s small sample size, as well as the origin of its data. Specifically, the statement claimed that data supplied by insurance companies is often inaccurate.
“It was a very biased and inflammatory article without the data to back it,” said Rebecca Parker, the president of ACEP.
Howard Forman, a professor of radiology and public health at Yale, said that there are substantial limitations to the format and scholarship presented in a “perspective piece;” compared with an original research paper in the New England Journal of Medicine. These submissions are intended to be more “accessible” to all readers; but this, in turn, makes it more difficult to scrutinize the methods and data analysis, he said.
Arjun Venkatesh MED ’14, an emergency room physician at Yale New Haven Hospital, said that the Nov. 17 paper lacks detail, adding that it is unclear from the data whether the bills reported were for multiple doctors, or just for emergency physicians. Venkatesh also noted that out-of-network emergency physicians do not receive the amount they charge — rather, the amount charged it is a starting point for negotiations with insurers. In the end, on average, out-of-network doctors end up receiving the same compensation as in-network doctors, Venkatesh said.
Both Venkatesh and Parker highlighted the influence of The Emergency Medical Treatment and Labor Act on emergency health care prices. According to the ACEP website, the law requires emergency room physicians to treat everyone, regardless of their ability to pay. Therefore, in the same way that ER patients cannot choose their doctors, ER doctors cannot choose their patients.
According to Parker, half of ER patients are either uninsured or underinsured and those patients are very rarely directly billed by physicians.
Parker and Venkatesh both stated that, contrary to the publication, emergency physicians prefer to be in-network because that way they are guaranteed payment and do not have to go through the administrative hassle of negotiating for payment.
“It’s just easier,” Venkatesh said.
The main reasons for physicians not contracting with insurers are insurers not paying physicians high enough rates, Parker said. Venkatesh added that insurers are increasingly narrowing their networks to fewer and fewer providers as a means of increasing their profits.
Cooper and Scott Morton said they are currently working on a paper identifying possible solutions to the problem of out-of-network physicians in in-network hospitals, adding that they expect it to be published within the next year.
Correction, Nov. 29: A previous version of the article ‘Yale economists highlight frequency of surprise ER bills’ misspelled the name of Arjun Venkatesh.