Friday, February 1, 2013

Fwd: qotd: AHIP's report on physician out-of-network charges

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-------- Original Message --------
Subject: qotd: AHIP's report on physician out-of-network charges
Date: Fri, 1 Feb 2013 14:14:27 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

AHIP (America's Health Insurance Plans)
February 1, 2013
New Report Examines Physician Out-of-Network Charges

A new report from America's Health Insurance Plans (AHIP) highlighting
data collected by Dyckman & Associates shows that some physicians who
choose not to participate in health insurance networks are charging
patients fees that are 10 times – and in some cases, nearly 100 times –
Medicare reimbursement for the same service in the same geographic area.
Looking at the 30 largest states, the report found that some physicians
who do not take insurance are charging patients startling fees for a
wide variety of medical treatments and services.

This report demonstrates the importance of public policy leaders
focusing on how much patients who seek out-of-network care are being
charged by some physicians. In discussions to date, the focus only has
been on how much insurers pay for these services, and the critical issue
of what out-of-network physicians charge patients has been ignored.

The findings of the report should cause policymakers to closely
investigate this issue, especially considering how these charges compare
to in-network fees, as well as fees charged for similar services in
other countries. For example, in New York, a physician billed a patient
$115,625 for lumbar spinal fusion – 62 times the Medicare fee of $1,867.

While the issue of how much is appropriate for out-of-network physicians
to charge has not been part of the affordability discussion to date,
this report demonstrates that it needs to be. No mechanism exists to
protect patients who seek care out-of-network from receiving bills that
are unreasonable and unaffordable.

"As we shine a spotlight on the affordability issue, we encourage
policymakers to look at how much is being charged for services,
particularly since there is often no relationship between higher charges
and higher quality of care," said AHIP President and CEO Karen Ignagni.
"With the nation facing the crushing burden of rising medical costs, all
stakeholders should be focusing on constructive ways to bring costs
under control."

AHIP infographic on highest out-of-network charges:

Comment: The insurance lobby organization, AHIP, is correct when they
point out that patients are not protected from exorbitant fees charged
by physicians outside of their own insurance networks. Although this
report appropriately condemns outrageous fee gouging, the report itself
is deceptive, reflecting on AHIP's own credibility.

AHIP asked its insurers to provide the three highest billed charges from
non-participating providers for each of 24 CPT procedure codes. They
then took the very highest charge for 10 procedures and created a graph
demonstrating how outrageous these charges were compared to Medicare
rates. They distributed the graph with their press release.

Although the bar graph is quite impressive (link above), it represents
only ten specific instances of fee gouging. Yet the infographic -
labeled "Out-of-Network Charges" - is presented as if it were
representative of charges made by out-of-network providers (though it
does state that these are the highest reported out-of-network provider

Nowhere in the 26 page report is there any mention of what fees were
actually paid. Although the insurer pays no more than its allowed
out-of-network charges, if any, does the patient pay the rest? No. Often
the patients are able to negotiate payments that are closer to typical
commercial insurance rates. Sometimes the patient simply doesn't pay at
all, though the claim may be turned over to a collection agency.
Regardless, the AHIP report is deceptive since it represents only a few
outrageous billing charges but does not represent actual typical
out-of-network payments.

In this press release, AHIP implies that there needs to be a mechanism
"to protect patients who seek care out-of-network from receiving bills
that are unreasonable and unaffordable." In essence, they are saying
that the government should require out-of-network providers to accept
rates similar to those agreed to through contracts with the in-network

Think about that. The only mechanism that insurers have introduced to
slow the increase in heath care spending has been provider contracting.
Okay. Let's accept their implicit recommendation. Let's do what other
industrialized nations do and use some form of government administered
pricing. Then there would be no reason for the insurers to establish
exclusive provider networks.

Since the insurers then would have nothing substantial to offer other
than claims processing, we can do away with much of their administrative
and marketing waste. In fact, we can do away with them completely by
establishing our own universal health insurance administrator - a single
payer national health program.

As AHIP CEO Karen Ignagni says, "With the nation facing the crushing
burden of rising medical costs, all stakeholders should be focusing on
constructive ways to bring costs under control." She's right. The first
step should be to get rid of the private insurers.

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