Surprise! Out-of-Network Billing for Emergency Care in the United States

Zack Cooper, Fiona Scott Morton and Nathan Shekita

No 23623, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Hospitals and physicians independently negotiate contracts with insurers. As a result, a privately insured individual can attend an in-network hospital emergency department, but receive care and potentially a large, unexpected bill from an out-of-network emergency physician working at that hospital. Because patients do not choose their emergency physician, emergency physicians can remain out-of-network and charge high prices without losing patient volume. As we illustrate, this strong outside option improves emergency physicians’ bargaining power with insurers. We then analyze a New York State law that introduced binding arbitration between emergency physicians and insurers and therefore weakened physicians’ outside option in negotiations. We observe that the New York law reduced out-of-network billing by 34 percent and lowered in-network emergency physician payments by 9 percent.

JEL-codes: I11 I13 I18 L14 (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-hea and nep-ias
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Published as Zack Cooper & Fiona Scott Morton & Nathan Shekita, 2020. "Surprise! Out-of-Network Billing for Emergency Care in the United States," Journal of Political Economy, vol 128(9), pages 3626-3677.

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Working Paper: Surprise! Out-of-network billing for emergency care in the United States (2017)
Working Paper: Surprise! Out-of-network billing for emergency care in the United States (2017)
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