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AHIP Study Discovers 'Runaway' Out-of-Network Doctor Charges

By Jane Norman, CQ HealthBeat Associate Editor

August 12, 2009 -- Some physicians are billing "runaway charges" for out-of-network care that exceed 1,000 percent of the allowable Medicare reimbursement for the same service, the health insurance industry said in a study issued Wednesday.

The report throws light on an issue that's been little discussed in the many hours of chatter over the health care overhaul moving through Congress—how much it sometimes costs insured consumers who for various reasons use services outside their health insurance networks. The study by Dyckman & Associates prepared for America's Health Insurance Plans (AHIP) found that in some cases, the fees are very high.

For example, researchers found an upper GI endoscopic visual diagnostic exam with a biopsy produced a $12,000 bill from a Texas doctor, while the Medicare reimbursement for the same procedure in the same geographic area is $337.99—which means the charge was a whopping 3,550 percent of what Medicare would pay.

In Virginia, the identical procedure was billed for $6,486 by a doctor, while the Medicare reimbursement there would be $312.60. In Florida, the upper GI procedure was billed for $5,542, in contrast to a Medicare payment of $319.

The May 2009 study included 10 insurance companies in the 30 most populous states and looked at data in a "conservative" approach that excluded high charge outliers that could have reflected coding or billing errors, Dyckman said in its survey methodology. Procedures looked at included benign breast lesion removal, total hip replacement, lower back spinal fusion, colonoscopy with biopsy and tendon repair in the hand.

Susan Pisano, director of communications for AHIP, said that there's been plenty of discussion about insurance companies' payments to providers but little said about provider charges. "We thought it was important if we were going to have a reasonable discussion about this that the question be asked," said Pisano.

In addition, there's a focus on insurance benefits, co-payments and out-of-pocket limits in the overhaul debate and "it occurred to us that policymakers might want to know what consumers are facing in terms of the charges," she said.

"So we asked the question and we got some fairly startling results," Pisano said.

The study also serves as a volley from an industry that's come in for increasingly tough criticism in recent weeks from Democrats who charge that insurers are standing in the way of the overhaul and ginning up outbursts of opposition at town hall meetings, which insurers deny.

On Tuesday, President Obama at a town hall meeting in Portsmouth, N.H., said that a recent report found that in the past three years, more than 12 million Americans couldn't obtain insurance because of a pre-existing condition.

"Either the insurance company refused to cover the person, or they dropped their coverage when they got sick and they needed it most, or they refused to cover a specific illness or condition, or they charged higher premiums and out-of-pocket costs," said Obama. "No one holds these companies accountable for these practices."

Insurers and doctors also have found themselves on opposite sides to a degree in the overhaul fight. The American Medical Association, the largest doctors' organization, in a surprising turn last month endorsed the House overhaul bill (HR 3200) — which includes a public option for health coverage strongly opposed by AHIP.

The AMA said in a statement Wednesday night that the survey does not represent the full picture of physician fees. "The AHIP report is nothing more than a fishing expedition that focuses on the most extreme outliers of the billions of health insurance claims filed annually. To call this representative of the entire physician community is grossly misleading," said J. James Rohack, president of the AMA.

Pisano said the endorsement by the physicians' group did not prompt the study. "I wouldn't look at it that way at all," she said. "We were hearing from our members about problems consumers are facing who go out of network."

AHIP says that doctors' out-of-network charges ought to be on the table for discussion because there's no cap or limit on bills that may be unreasonable. "As policymakers pursue health care reform, we encourage them to look at how much is being charged for services, particularly since higher charges don't mean high quality of care," said Karen Ignagni, president and CEO of AHIP, in a statement.

Pisano said the study also drives home the point that insurance companies are able to ensure affordable care for the insured by forming networks of physicians who agree to lower rates, thus controlling health spending.

However, insurers also have been accused of underpaying for out-of-network charges. New York Attorney General Andrew Cuomo in January reached a settlement with UnitedHealth after he said the company wasn't paying enough of the "usual and customary charges" it was supposed to pay for out-of-network care. Under the agreement, a new database of billing information for the entire country will be created and run by a nonprofit organization, with the help of $50 million paid by UnitedHealth, according to Cuomo's office.

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