Out-of-network physicians: how prevalent are involuntary use and cost transparency?

Most privately insured individuals are enrolled in private health insurance plans that offer some reimbursement for services provided by out-of-network physicians (Kaiser Family Foundation/Health Research and Educational Trust 2011). These plans allow patients greater physician choice but with higher cost sharing. However, these additional costs may be unexpected if (1) a patient involuntary uses an out-of-network physician or (2) the costs of using an out-of-network physician are not transparent. Both the voluntary choice and involuntary use of an out-of-network physician are influenced by three domains of factors: patient, encounter, and system (Figure 1). Note that the framework reflects each discrete factor as directly influencing use; however, some factors may interrelate and/or work through mediating factors. Importantly, in contrast with involuntary use, we see voluntary out-of-network use as an active choice by patients. Thus, we expect different factors to affect the decision to voluntarily go out-of-network (factors on left side of the conceptual framework) than those related to involuntary use (factors on right side). Figure 1 Conceptual Framework: Patient, Encounter, and System Factors Influencing Voluntary and Involuntary Out-of-Network Use Related to patient factors influencing voluntary use, we expect individuals with higher income will be more likely to use out-of-network providers, and that individual preferences for a recommended physician and physician continuity will affect this choice. Perceived quality of specific out-of-network providers, which may or may not be associated with actual quality, may also lead to voluntary out-of-network health care use. Varying participation by physician type (e.g., primary care, mental health) in insurer networks may influence access to and therefore voluntary use of an out-of-network physician. Considering system characteristics influencing voluntary use, provider shortages and health system concentration may affect network adequacy, which may affect decisions related to out-of-network health care use. For patient factors influencing involuntary use, we expect those with more contact with the health care system (perhaps due to fair/poor health status) to be more likely to experience involuntary out-of-network care. Of particular interest to policy makers are encounter and system factors that may result in involuntary use: With respect to encounter characteristics, in a medical emergency a patient may be treated at the nearest emergency room regardless of whether it is in-network. Whether a physician is out-of-network may not be disclosed to the patient at the point of care, leaving some patients unaware they have had contact with an out-of-network physician until receiving an unexpectedly high health care bill. Anecdotal evidence suggests that this may be especially problematic for hospital-based services such as anesthesiology or intensive care where the hospital may be in-network, but the assigned physician has chosen not to contract with the insurer (Mathews 2008; Andrews 2011b). Lack of cost transparency in out-of-network care may relate to a lack of easily accessible information about the amount the physician charges for a specific service (i.e., list price), the level of insurer reimbursement, or patient responsibility with respect to out-of-pocket payments, making the marginal out-of-pocket cost of using an out-of-network physician unknown to the patient when making the decision to go out-of-network. Patients may be aware that out-of-network services are subject to higher coinsurance or higher and separate deductibles but may not be aware that these services are often subject to “balance billing” in which the patient is required to pay the difference between insurer reimbursement and the physician's billed charge. Involuntary care and lack of cost transparency in out-of-network services have the potential to impact a large number of the privately insured. Although there are no recent national estimates of the prevalence of out-of-network service use, one 2004 study of health care claims suggests that out-of-network care represents 10–13 percent of total charges in point of service or preferred provider organization plans (McDevitt et al. 2007). These issues have also gained priority among policy makers as reflected in provisions in the 2010 Patient Protection and Affordable Care Act and numerous state-level legislative actions. To date, the evidence base for policy efforts has been limited to anecdotal, stakeholder commissioned, or geographically limited data (Mathews 2008; America's Health Insurance Plans 2009; Hoadley, Lucia, and Schwartz 2009; Kolata 2009; Raeburn 2009). We conducted the first nationally representative survey of patient experiences to describe the scope and nature of these issues.