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Surprise! Out-of-Network Billing for Emergency Care in the United States

Author

Listed:
  • Zack Cooper
  • Fiona Scott Morton
  • Nathan Shekita

Abstract

Hospitals and physicians independently negotiate contracts with insurers. As a result, a privately insured individual can attend an in-network hospital, but receive care from an out-of-network physician. Because patients do not choose their emergency physician, emergency physicians can remain out-of-network and charge high prices without losing volume. This strong outside option improves their bargaining power with insurers. We show that emergency physician outsourcing firms take advantage of this strong outside option by either remaining out-of-network or by using it to negotiate higher in-network rates. We propose a policy that would restore competition to the ED physician market and protect consumers.

Suggested Citation

  • Zack Cooper & Fiona Scott Morton & Nathan Shekita, 2017. "Surprise! Out-of-Network Billing for Emergency Care in the United States," NBER Working Papers 23623, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23623
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    References listed on IDEAS

    as
    1. Cooper, Zack & Craig, Stuart & Gaynor, Martin & Van Reenen, John, 2015. "The price ain’t right? hospital prices and healthspending on the privately insured," LSE Research Online Documents on Economics 66059, London School of Economics and Political Science, LSE Library.
    2. repec:hrv:faseco:33471113 is not listed on IDEAS
    3. Jeffrey Clemens & Joshua D. Gottlieb & Tímea Laura Molnár, 2015. "The Anatomy of Physician Payments: Contracting Subject to Complexity," NBER Working Papers 21642, National Bureau of Economic Research, Inc.
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    1. repec:aea:jecper:v:31:y:2017:i:4:p:51-72 is not listed on IDEAS

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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