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Devon Herrick, PhD, is a health economist and former hospital accountant. He has researched and written about health economics for many years.
Across the country more states are taking steps to limit patients’ exposure to surprise out-of-network bills.
Hospital executives view their emergency departments as the hospital’s “front door” through which their most lucrative guests arrive. The proportion of hospital admissions admitted through the emergency room (ER) has risen from about one-third 25 years ago, to about half today. Hospitals are increasingly outsourcing their emergency departments to emergency medicine staffing agencies, who manage the ER on their behalf. This should come as no surprise. Hospitals often turn to temp agencies because staffing needs vary with admissions, time of the year, day of the week and even hours within the day. However, emergency medical staffing is different than a temp agency supplying a few extra nurses, physical therapists or speech pathologists when the need arises.
The primary way ER staffing differs from other allied health staffing is that ER physicians generate revenue for the hospital and also bill for the services they provide in the ER. A new study by Yale professors published by the National Bureau of Economic Research illustrates why this is not without controversy. A national study of data from a large insurer finds that hospital admissions, up-coding and average charges per patients sometimes rise after outside agencies take over ER staffing. While this benefits hospitals, patients complain of inflated bills, outrageous fees and (surprise) out-of-network balance billing when the physicians who staff the ER are not affiliated with area insurance networks.
Across the country patients increasingly complain after getting billed for out-of-network physician charges they did not expect. These often occur even though consumers made sure the hospital was in their network. However, they have no way to ensure physicians who provide services at the hospital are in-network. Why would hospitals not require physicians staffing their ERs to affiliate with area insurers? It’s probably because hospitals are reluctant to rock the boat when the agency is boosting ER revenue. Why would physicians in the business of staffing hospital emergency rooms not affiliation with area insurers? There are two opposing views to this question.
Doctors complain they don’t join networks because insurers low-ball them; offering paltry reimbursements in return for their services. On the other hand, insurers claim emergency medical specialties take advantage of the fact their patients are in no position to go elsewhere even though the prices are high. When treating patients whose insurer has no fee contract, ER physicians are free to charge whatever they want. Joining a network would likely yield lower fees than refusing network affiliation and playing “gotcha” when desperately-ill patients are wheeled in through the ER doors. Patients often bear the inflated balance after insurance has paid its share. One Yale researcher described this to The New York Times as a “kind of ambushing of patients.” According to the Yale analysis, EmCare and TeamHealth were both emergency medical staffing agencies they observed that increased out-of-network balance billing once they took over hospital emergency departments.
Out-of-network balance billing is more common among physician specialties whose members rarely meet with patients prior to providing care. For instance, when patients go to an emergency room they are in no position to compare fees or question the tests their doctors order. Neither are they in a position to compare fees of radiologists, anesthesiologists and pathologists, who rarely meet with them prior to providing services. Thus, it may be no coincidence that the parent company that owns EmCare is also acquiring anesthesia and radiology practices, along with some other medical businesses. Anesthesia and radiology all share similar opportunities to reject networks and balance bill for services.
Across the country more states are taking steps to limit patients’ exposure to surprise out-of-network bills. One solution is to require a “meeting of the minds” between doctor(s) and patients or hospitals and patients before a debt is collectable. This is already the standard under contract law.
Devon Herrick, PhD, is a health economist and former hospital accountant.