Surprise medical bills burden 1 in 7 patients

About 1 in 7 patients received a surprise bill despite obtaining care at an in-network hospital, according to new data that fuels the momentum behind potential fixes to the fragmented billing process.

The share of in-network hospital admissions with at least one out-of-network claim ranged from 1.7% in Minnesota to 26.3% in Florida, according to the Health Care Cost Institute's analysis of nearly 620,000 in-network inpatient admissions and associated claims across 37 states and the District of Columbia in 2016.

Anesthesiology accounted for the largest share of out-of-network professional claims associated with an in-network admission at 16.5%. Independent labs were the most likely to bill out of network at 22.1%.

One in seven "certainly is a striking number," said Kevin Kennedy, co-author of the analysis and HCCI researcher. "A patient can choose a hospital that's in network and just get stuck with a surprise bill in the end."

Consumers have no control over out-of-network issues. Even after choosing an in-network hospital, they don't have access to whether a physician or independent lab is out-of-network. If the patient has a chance to ask whether an anesthesiologist is out-of-network, they often don't get a straight answer, making the patient pay for a fractured healthcare system.

Insurance designs are becoming more complicated with tiered or narrow networks, more restrictive coverage policies and new reimbursement models. Hospitals and insurers decry the tens of millions of dollars a year they spend adjudicating claims.

Some health systems and insurers are working more closely together to try to synthesize multiple bills into one statement, but those efforts are in their infancy.

HCCI researchers broke down the prevalence of surprise billing in two ways. First, they examined which medical specialties represented the largest share of out-of-network claims during an in-network hospital admission. Anesthesiology topped the list with 16.5% of out-of-network professional claims. Other notable specialties included primary care at 12.6%, emergency medicine at 11%, non-physicians at 9.5% and radiology at 7.5%. "Other" physicians accounted for 13.5% of claims. (See the data set for more information.)

Then, HCCI looked at which medical specialties most often billed out-of-network as part of an in-network hospital admission. Of the in-network admissions with an independent lab claim, 22.1% of those lab claims were out-of-network. Emergency medicine was the specialty with the next-highest, at 12%, although that is likely a conservative estimate because it doesn't capture observation status and other ED visits where the patient wasn't admitted to the hospital, researchers noted.

It also broke down surprise bills by state, revealing that 10 states had at least 15% of their in-network admissions associated with an out-of-network claim.

The data bear out the laments from the general public, Kennedy said.

"By showing state-by-state variation, maybe we can see what Minnesota is doing with the relationships between hospital and insurers and the legislation involved and how it compares to states like Florida or Kansas," he said.

Legislators have pitched different approaches to mitigate surprise bills, including capping out-of-network charges to a regional average or resolving out-of-network disputes between insurers and providers through arbitration. A timetable as to the bills' formal introductions is unclear.

Experts at Modern Healthcare's Leadership Symposium last week said that surprise billing legislation is likely one of the only bipartisan issues that can pass through Congress, along with drug pricing legislation.

"Something may give here because it is an issue that touches so many people," Chip Kahn, CEO of the Federation of American Hospitals, said during the event.

Surprise billing represents a perfect opportunity for industry stakeholders to sit down and resolve a widespread problem, Anthony Barrueta, senior vice president of government relations for Kaiser Foundation Health Plan, said during the symposium.

"We should all own that," he said. "We should all sit down together and solve it … no one is innocent in this and it is a big problem. You are right, Chip, I do think that is one where the intensity and concern will lead to some kind of action."