In a new study that sheds light on “surprise billing,” researchers found that insurers paid out-of-network reimbursements in emergency medicine that were about double the median in-network rates. Self-funded insurers coughed up more money than fully insured insurers, suggesting that they were more willing to reduce fees paid by insured patients.

Overall, “insurers were allowing out-of-network payments that were much higher than in-network payments,” said study lead author Erin Lindsey Duffy, PhD, MPH, a research scientist at the University of Southern California’s Schaeffer Center for Health Policy and Economics, in an interview.

The study was published September 16 in JAMA Health Forum.

The researchers conducted the study in light of the implementation of the No Surprises Act on January 1, 2022. The law attempts to address the problem of “surprise billing,” which can leave patients with exorbitant and unexpected medical bills when out-of-network medical professionals provide care.

As Duffy noted, one component of the law has spawned litigation ― the “qualifying payment amount” (QPA), a benchmark for reimbursement when there’s a dispute over a bill. “We wanted to better understand how insurers’ allowed amounts prior to the No Surprises Act measured up to qualifying payment amounts.”

Emergency medicine bills are of special interest, since previous research “has shown that approximately 1 in 5 emergency episodes of care involve an out-of-network healthcare provider and likely result in a surprise medical bill,” Duffy said. “Emergency medicine services are inherently more likely to involve out-of-network care because patients are generally seeking the closest available care with urgency, often transported by an ambulance. Patients don’t choose their emergency medicine providers based on network status or price, which is a sharp contrast to how patients choose a provider for more planned or elective services.”

For the study, Duffy and colleagues analyzed 2019 emergency medicine claims data from Aetna, Humana, and some Blue Health Intelligence plans. They focused on the median QPA, “which was calculated as the median allowed amount of all observed claims within strata defined by geographic region, CPT code, and funding market.”

Duffy explained, “We didn’t evaluate charges ― the bill the providers send. We evaluated allowed amounts ― the amount the insurer agrees should be paid.”

Of 7.6 million claims, the mean claim was for $313, and the mean QPA was $133. “Among the 650 geographic and market strata in the sample, the mean in-network allowed amounts were 14% higher than the estimated QPA,” the researchers report. “For the subset of strata with a sufficient sample of out-of-network claims (n = 227), the mean out-of-network payments were 112% higher than the QPA.”

Self-insured plans were more likely to pay higher out-of-network payments than fully insured plans (2.2 times the QPA estimates, vs 1.43 times). “High out-of-network allowed amounts protect patients from surprise medical bills, since the magnitude of a surprise bill is the balance between the charge and allowed amount,” Duffy said. “Large self-insured employers have had an interest in protecting their employees from surprise bills, and they were willing to make high out-of-network payments to do so. Fully insured plans may have lacked the same motivation or willingness.”

Going forward under new policies mandated by the No Surprises Act, “insurers may be unwilling to continue their practice of allowing out-of-network emergency medicine payments that far exceed in-network allowed amounts,” Duffy said. “This could lower the revenue of emergency medicine provider groups that had been using surprise billing as leverage in price negotiations or relied on high out-of-network payments.”

In an interview, Alan Sager, PhD, professor of health law, policy, and management at Boston University School of Public Health, said he’s surprised by the finding that self-funded plans paid higher excessive sums.

“Perhaps they were likelier to cover out-of-network care,” he said. “Or perhaps they are more generous in the share of fees they covered. I would have used the term ‘self-insured,’ meaning the employer bears the risk of higher claims, not the insurer. I don’t think this is a great practical distinction for patients, caregivers, or US health costs. But it is one that allows the larger private employers — the ones big enough to self-insure — to dodge state-mandated coverage and other regulations.”

In the big picture, he said, “the data and analyses presented for this research testify to the convoluted methods of payment and absence of a fundamental peace treaty between payers and doctors. We need to pay doctors well enough and simply enough, so they stop thinking about their fees and incomes so often, so emotionally, and in such detail. This will liberate them to focus on spending money carefully to do as much clinical good as possible.”

He said the No Surprises Act is a mess. “The new rules for arbitrating out-of-network prices are a lawyer’s delight ― complicated, unclear, and with lots of room to litigate. They are a recipe for more administrative waste and mistrust in US healthcare. They are not the simple dispute resolution mechanism that supporters apparently had in mind.”

Arnold Ventures funded the study. Sager and Duffy report no relevant financial disclosures. Other authors’ relevant financial relationships are listed in the original article.

JAMA Health Forum. Published online September 16, 2022. Full text

Randy Dotinga is a freelance writer and board member of the Association of Health Care Journalists.

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