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

Listed author(s):
  • Zack Cooper
  • Fiona Scott Morton
  • Nathan Shekita

Using insurance claims data, we show that in 22% of emergency episodes, patients attended in-network hospitals, but were treated by out-of-network physicians. Out-of-network billing allows physicians to significantly increase their payment rates relative to what they would be paid for treating in-network patients. Because patients cannot avoid out-of-network physicians during an emergency, physicians have an incentive to remain out-of-network and receive higher payment rates. Hospitals incur costs when out-of-network billing occurs within their facilities. We illustrate in a model and confirm empirically via analysis of two leading physician-outsourcing firms that physicians offer transfers to hospitals to offset the costs of out-of-network billing and allow the practice to continue. We find that a New York State law that introduced binding arbitration between physicians and insurers to settle surprise bills reduced out-of-network billing rates.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23623.

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Date of creation: Jul 2017
Handle: RePEc:nbr:nberwo:23623
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  1. Zack Cooper & Stuart Craig & Martin Gaynor & John Van Reenen, 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
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