|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CVER | CEP | SERC | STICERD||Cookies?|
Paper No' CEPDP1524: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: health care, emergency care, US, hospital, politics
JEL Classification: I11; I13; I18; L14
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: CEP Discussion Papers
Share this page: Google Bookmarks | Facebook | Twitter
Abstract:Using insurance claims data capturing 8.9 million emergency episodes, we show that in 22% of cases, patients attended in-network hospitals, but were treated by out-of-network physicians. We find that out-of-network billing is concentrated in a small group of primarily for-profit hospitals. Within 50% of hospitals in our sample, fewer than 5% of patients saw out-of-network physicians. In contrast, at 15% of hospitals, more than 80% of patients saw out-of-network physicians. Out-of-network billing allows physicians to substantially increase their payment rates relative to what they would be paid for treating in-network patients and significantly improve their outside option when bargaining over in-network payments. 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 hospitals’ costs of allowing out-of-network billing to occur within their facilities. 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.
Copyright © RLAB & LSE 2003 - 2018 | LSE, Houghton Street, London WC2A 2AE | Contact: RLAB | Site updated 24 April 2018