In Through the Out Door: A Comprehensive Look at Surprise Medical Bills
Imagine receiving medical care at an emergency department (ED) you know is in your insurance network only to find out later, after receiving a large medical bill, that the treating emergency physician was not an in-network provider in your health plan. Or diligently shopping for the best in-network hospital and in-network surgeon to perform an elective surgery, after which you find out that an out-of-network physician assisted in the procedure and expects payment for the portion of her bill not covered by your insurance. Imagine needing an ambulance, only to find out there are no ambulances available in your area that are covered by your insurance.
Stories of surprise and unavoidable out-of-network medical care and the large bills that often accompany such care abound in the popular press. The New York Times is currently collecting stories from their readers who have experienced these unwelcome bills. Senator Bill Nelson (D-FL) penned a letter to the Federal Trade Commission expressing his concern about “substantial consumer confusion and large, unforeseen bills.” The outgoing administration of President Obama made an effort to prioritize policies meant to curb surprise out-of-network billing. California, Florida, and New York recently implemented laws protecting patients from surprise medical bills and other states are currently considering similar protections. Yet little research beyond small-sample surveys has explored the frequency of surprise medical bills and the characteristics of the situations in which they occur.
Our findings, recently published in Health Affairs, quantify the frequency of surprise bills and characterize the situations in which they are likely to occur. We use a large multi-year sample of insurance records (known as medical claims data) from patients with employer-sponsored health insurance. All studies analyzing surprise bills that rely on administrative data are limited because they cannot observe the patient’s expectations. However, we use a conservative method to classify out-of-network care that is likely to lead to a surprise bill or out-of-network care over which the patient has little control. Our study is unique because our nationwide data contains records from multiple insurance companies and quantifies surprise medical bills in situations not previously studied (e.g., ambulance cases and elective procedures).
We found that in 2014, the most recent year of available data, 20 percent of hospital inpatient admissions that originated in the ED likely led to a surprise medical bill. Our study also reveals significant variation in the frequency of surprise bills across states. Some of the states with the highest rates of potential surprise bills for ED inpatient admissions are populous states such as Florida (37 percent), New York (35 percent), and Texas (34 percent). These results validate findings from recent studies that employ less comprehensive data. However, our study reveals a number of new findings about surprise medical bills.
For instance, even for elective procedures, in which a patient theoretically can research which providers are in-network, we found that 9 percent of inpatient admissions likely led to a surprise bill.
Ambulance medical transportation is also a source of surprise medical bills. When an ambulance is necessary, it is unlikely that you will have the time to consider your insurance network. In more than half of cases involving ambulance transportation, the ambulance services were out-of-network. For air and water ambulances, more than 60 percent were out-of-network.
Not all individuals face equal likelihoods of a surprise out-of-network bill. The probability of receiving a surprise medical bill increases with the patient’s age and the complexity of his or her diagnosis. Furthermore, inpatient ED cases are more likely to produce a surprise medical bill than outpatient ED cases, which implies that the chance of receiving an unexpected bill increases with the severity of the patient’s injury. This is troubling because one objective of insurance is to provide more protection in situations that are extreme and costly.
Despite the widespread belief that this problem has increased in recent years, we found that the rate of surprise medical bills has fallen over time. For instance, the ED inpatient rate has fallen from 28 percent in 2007 to 20 percent in 2014. This may be due to the increasing proportion of physicians who are employees of hospital systems or large group practices. We suspect that if a doctor is employed by a hospital as opposed to an independent practice, it is less likely that the doctor will be out-of-network when the hospital is in the patient’s insurance network. However, more research is needed to confirm that hospital employment of physicians is one cause of the decline in surprise medical bills.
Finally, we found that surprise medical bills are not just the province of hospital-based physicians, such as ED physicians and anesthesiologists. In fact, most potential surprise medical bills are associated with non-hospital-based out-of-network physicians and non-physician services (e.g., lab tests).
Despite this comprehensive study, our understanding of surprise medical bills is limited and more work is needed to better understand the factors that contribute to the problem and the best solutions to alleviate it.