Close to a quarter of patients treated in emergency rooms face out-of-pocket costs, often extremely high, because they unknowingly are treated by out-of-network doctors, a new study reveals.
The study's authors largely point to a company that runs the biggest physician management company in the United States for leaving so many insured patients with the shock of receiving bills after an emergency room visit.
The company, EmCare, a division of stock market-listed Envision Physician Services, provides physicians and management of emergency rooms across the country.
Zach Cooper, assistant professor at Yale University and one the authors, said the study found that when EmCare entered a market, costs, in general, went up through the use of higher billing codes for treatment. The number of patients facing out-of-network, out-of-pocket costs increased, sometimes dramatically, he said.
"We had published some research before that showed that 22 percent of patients who attended an emergency room in-network received an out-of-network bill. We were surprised but did not know the reasons," Cooper told Patient Daily.
"It seemed to be happening in a small group of hospitals, as most had low out-of-network rates," Cooper said, adding that the high out-of-network rates stemmed from for-profit facilities whose emergency rooms and physicians were managed by EmCare.
"Every hospital with high out-of-network rates were for-profit and managed by one company," Cooper said.
In a small sample, the study found that the out-of-network rates of customers of one large insurer rose by nearly 100 percent after EmCare took over. The average out-of-network rate in a larger sample was 62 percent. Most emergency rooms have a close to zero.
Physician outsourcing starting rising in the 2000s and was linked to increased admissions to emergency rooms. The pressure on hospitals led to them handing over management to outside companies. EmCare, founded in the 1970s, was the leading player.
Apart from its almost exclusive use of out-of-network doctors, the study also found that when EmCare takes over an emergency department, the rate of tests ordered increased, as did the use of the highest billing code for treatments. That further increases out-of-pocket costs for patients.
Patients are also more likely to get admitted to hospital from the emergency room if EmCare is in charge, the study said. This is where the hospitals can benefit financially.
"What is fairly clear, it is incredibly lucrative for doctors to avoid participation in-network," Cooper said.
But not all physician management companies engage in the same practices. Team Health, the second largest in the industry, does not engage in similar activities, Cooper said.
Some states have introduced legislation to curb the practices, including New York, which the authors studied. Patients cannot be charged out-of-network costs for attending the emergency.
"It is up to the hospital and the insurers to argue over who pays the difference," Cooper said.
EmCare's parent company, Envision said in a statement to the New York Times the study was "fundamentally flawed and dated."
But it added that it "appropriately identifies out-of-network reimbursement as a source of dissatisfaction for all payors, providers and patients in our current healthcare system."
“We agree with the implied recommendation – which is to advance a shared goal to reengineer the current system in a positive way," Kim Warth, communications director for EmCare’s parent company, told the newspaper in an email.
Seth Chandler, a visiting fellow at George Mason University's Mercatus Center and an expert in health care, is blunt in his summation of some of the practices that lead to patients facing these extra costs.
"Yes, the situation is shocking and appalling," Chandler told Patient Daily. "The practice is not new but is growing as a profit making strategy."
And, echoing the study authors, he said hospitals do benefit from opportunities created by the use of out of network doctors.
"It is pretty horrifying because there are questions over the extent a contract exists with an unconscious patient, or even a conscious patient," Chandler said.
While he did not single out EmCare, Chandler said that being out of network means it is "whatever the physician dreams up to charge."
"States could enact legislation where out-of-network physicians cannot charge whatever they think up," Chandler said. "It is not a situation where the patient has any way of negotiating. It is fully appropriate for state intervention."
Caitlin Donovan, director of outreach with the National Patient Advocate Foundation, said the use of out-of-network physicians and patients receiving an unexpected bill, is increasing. She identified the narrowing of networks as an issue.
"And those out-of-pockets can be catastrophic," Donovan told Patient Daily.
But the whole system is clouded in confusion and lack of transparency.
"There is the wall between the payer and provider, and a hospital may not even know whether a doctor treating a particular person is in-network," said Donovan, who expressed some surprise at the Yale study that found 22 percent of in-network emergency room admissions are treated by out-of-network doctors.
It is also an issue outside of emergency rooms, as she cited the example of her own pregnancy. With nine months to prepare, she still could not find out which doctors who would be attending to her were in-network.
But there are signs that states are waking up to the issue. Along with New York, California and Florida enacted legislation to protect patients, she said.
"Physicians do not like the law," Donovan added.