Consider the following: A local hospital has three general surgeons covering trauma. Two are in network with most plans, and one is out. The out-of-network (OoN) surgeon charges whatever he wants. In most instances, insurance companies pay the entire bill, and patients are rarely balance billed for amounts not covered by the payer. Practices such as this raise costs for everyone covered by insurance.
This was not the intent when insurance companies began offering OoN benefits—initially, OoN benefits were designed to increase patient choice. Today, OoN costs have skyrocketed to the point that insurers are lobbying for changes, and patients are getting balance billed for tens of thousands of dollars by physicians they did not even realize were OoN. The Kaiser Family Foundation recently found that nearly 18 percent of hospital stays for members of large employer health plans resulted in OoN balance bills for patients; that number increased to 27 percent for patients who passed through the emergency department (ED).
The result is a financial crisis for many patients, which, in turn, fuels animosity toward physicians and hospital billing departments. It is why many states are introducing bills to put the brakes on OoN billing. On Aug. 30, 2018, a New Jersey law took effect that protects consumers from having to pay balance bills, specifically from “hidden” providers who provide OoN services at in-network facilities. In January 2018, a bipartisan group of U.S. senators introduced a bill that would ban the practice of balance billing and force insurers to pay additional charges for patients who receive emergency services from OoN providers.
Many physicians are considering OoN strategies to mitigate current stresses of practice. Potential options include dropping Medicare, Medicaid, and/or commercial insurance contracts. It is important that orthopaedic surgeons evaluate the impact upon revenue and reputation when considering this potential change.
Take your time and do the math
“A lot of people’s knee-jerk reaction to the frustrations of insurance contracts is to torch the bridge,” said Michael J. Sacopulos, JD, founder and president of the Medical Risk Institute. “But that’s not smart. You have to analyze the situation. Don’t be reactionary. Think it through.”
Physicians need to take a realistic look at the economic environment in which they practice. In Manhattan, N.Y., for example, a lot of patients can afford OoN fees; thus, many physicians are OoN. However, in much of the country, patients do not have money to pay for OoN physicians, given that the median U.S. family income is $59,055.
“I don’t think there are many people who will give up their benefits to pay $10,000–$12,000 out of pocket,” Mr. Sacopulos said. “There are certainly some and probably enough to support a few physicians. But for a big group, I don’t see going OoN as an option. It just doesn’t scale.”
Physicians also need to think about how to address the issue of ED call. According to Mr. Sacopulos, physicians who are OoN and deliver services in an ED are probably creating significant angst for patients. Plus, if most of their competitors are in network, physicians run the risk of alienating patients, as well as losing cases to colleagues.
“All of this can be done, and it’s legal,” Mr. Sacopulos said. “However, very few physicians can pull it off. You need to consider your reputation, run the numbers on how many cases you can anticipate losing, and make sure it is financially and operationally viable.”
To be successful, appropriate staffing is a must. A financial counselor should explain to patients that the physician is OoN, as well as calculate and provide a cost estimate for each patient’s portion of the bill. Mr. Sacopulos also suggests updating the informed consent form to include information that the physician is OoN.
If you are an OoN physician, be sure you have a team that can communicate that status to patients clearly and consistently. Create a script and train the front desk about what to say at the time of the patient’s first phone call. Before an appointment is scheduled, establish expectations by providing an estimated range of costs for each of the common conditions treated. No patient wants to feel like going to the doctor is a bait and switch.
Mr. Sacopulos recalls a surgeon whose staff did not communicate the details when she dropped insurance plans. Her otherwise positive online patient reviews got squashed by online rants about lack of price transparency and aggressive collection tactics. “A cancer survivor who’d had reconstructive surgery posted a particularly scathing review, which left very little sympathy for the physician,” he said.
The financial impact of your online reputation is huge and could very well put a nail in your OoN coffin. After an OoN obstetrician/gynecologist group sent a lot of patients to collection, people started talking about it online, and the group experienced a large decrease in patient volume.
Premium price = premium brand
Because of the out-of-pocket cost difference, physicians who are OoN are essentially considered a premium brand. If there is anything we have learned from concierge medicine, it is that when patients are charged a premium price, they expect premium service.
“You can’t charge a Four Seasons rate and deliver Hampton Inn service,” Mr. Sacopulos warned.
Your patients’ experience must be top-notch. For example, you could follow the lead of concierge physicians and offer 24/7 access by email or text. If you are in Manhattan, N.Y., think about offering valet parking. Consider creating a “spa-like” experience by improving the check-in and waiting room experience or serving refreshments in the reception area. One practice Mr. Sacopulos visited provided workstations with iPads and computers for patient use.
Just make sure that if you offer such services to OoN patients, you offer them to all patients. Most contracts specify that you cannot discriminate based on insurance type.
“OoN can work well for someone who has a great reputation, has built a large following, and is in the latter part of his or her career—someone who doesn’t want to fool with insurance and doesn’t mind doing fewer cases because the quality of life is more enjoyable,” Mr. Sacopulos said. “However, it is not really appropriate for the 34-year-old surgeon building a practice.”
Mr. Sacopulos added that physicians who decide to go OoN need a limited amount of attorney time to draw up informed consent forms and policies. “There is no sense spending money until you have a game plan,” he said.
Michael R. Marks, MD, MBA, is an orthopaedic surgeon; editor of the Medical Liability Committee column for AAOS Now; senior consultant with KarenZupko & Associates, Inc.; and senior medical director at Relievant MedSystems. He is also a member of the AAOS Patient Safety Committee.
- Kaiser Family Foundation: Analysis: For Patients with Large Employer Coverage, About 1 in 6 Hospital Stays Includes an Out-of-Network Bill. Available at: kff.org/health-costs/press-release/analysis-for-patients-with-large-employer-coverage-about-1-in-6-hospital-stays-includes-an-out-of-network-bill. Accessed December 10, 2018.
- Abraham T: Senators Take Aim at Surprise Billing. Available at: healthcaredive.com/news/senators-take-aim-at-surprise-billing/532729. Accessed December 10, 2018.
- Seeking Alpha: January 2018 Median Household Income. Available at: https://seekingalpha.com/article/4152222-january-2018-median-household-income. Accessed December 10, 2018.
Questions orthopaedic surgeons should consider before going out of network
- What are the economic conditions where you practice? Can patients afford out-of-network (OoN) rates?
- How many patients will you lose to in-network surgeons? What is your estimated reduction in cases versus the increase in revenue from OoN reimbursement?
- How would going OoN affect your reputation in the community?
- What will referring physicians think? Will they still send you cases?
- Do you currently deliver a patient experience and brand for which people would pay a premium price?
- How could you differentiate yourself from in-network surgeons? What is the added value to patients if they see you at a higher cost?
- Will you need to hire or train staff to provide improved services and cost estimates?
- Do you offer multiple payment options, such as automated recurring payments or patient financing?