Out-of-Network Billing

Comparing Commercial and Medicare Rates for Select Anesthesia, Emergency Room, and Radiology Services by State

Committees in both the House and Senate have advanced legislation that includes measures to address "surprise bills." A surprise bill results when a person unknowingly receives medical care from a provider that is not part of their insurer's network. Both pieces of legislation set a benchmark for out-of-network payments. Those benchmarks are determined based on the median in-network amount paid by an insurer for similar services. To understand how such a rate might vary across types of services and geographies, we calculated 2017 state level median and mean in-network rates paid for select services used by people with health insurance provided through their employer (ESI – employer sponsored insurance).

We examined the ESI in-network allowed amounts (the total payment negotiated between providers and insurers, including the amount paid by patients) for the most common anesthesia, emergency room, and radiology procedures. The amounts presented here only include the physician costs and do not include any facility fees or ancillary services. For each of these service categories we restricted to providers with the specialty that most commonly bills for these services. For anesthesia procedures we only included claims where an anesthesiologist provided the service; for ER procedures we looked at claims from emergency medicine specialists; and for radiology procedures we included only claims from radiologists.

We calculated the median and mean ESI allowed amounts for each service and procedure by state and where possible by urban and rural areas within states. We also include the average Medicare fee-for-service allowed amounts published by the Centers for Medicare and Medicaid Services (CMS). The mean commercial and Medicare rates can be compared to better understand the variation in the costs of these procedures across states and payers.

Key Findings:

ESI had large variation in median in-network allowed amounts for the same procedure performed in different states (Figure 1).

  • The median amount in 2017 for CPT 01967 – Anesthesia for labor during planned vaginal delivery ranged from $672 in Pennsylvania to $1,825 in Florida.
  • The median amount in 2017 for CPT 99285 – Emergency department visit, problem with significant threat to life or function ranged from $222 in Arkansas to $935 in Alaska.
  • The median amount in 2017 for CPT 74177 – CT scan of abdomen and pelvis with contrast ranged from $99 in Maine to $315 in Wisconsin.

Overall, ESI's median in-network allowed amounts do not appear to differ when comparing rural and urban areas, but when looking at specific states and services patterns emerge. For example:

  • In Texas the median in-network amounts for radiology procedures were always higher in rural areas.
  • In New York the median in-network amounts emergency room procedures were always higher in urban areas.

Median and mean allowed amounts for ESI were higher than Medicare allowed amounts in all states for all services included in the analysis (Figure 2). We show this using the ratio of mean allowed amounts paid by ESI and Medicare fee-for-service in 2017 by state and procedure.

  • Anesthesia procedures had the highest ESI to Medicare ratios, with ESI allowed amounts costing 2.4 to 7.9 times the Medicare fees-for-service allowed amounts.
  • Radiology procedures had the lowest ESI to Medicare ratios, with ESI allowed amounts costing 1.1 to 4.1 times the Medicare allowed amounts.
  • Methods Note

    Estimates for the employer sponsor insured (ESI) population are based on 2017 claims data from the Health Care Cost Institute. All costs represent only in-network professional fees - amounts paid to providers participating in payer's network; they do not include facility fees or out-of-network professional fees. ESI data were restricted to claims where service category and provider specialty were aligned - anesthesia provided by anesthesiologists, radiology provided by radiologist, ER services provided by emergency medicine specialists. ESI data were further restricted by place of service and only include professional services performed in inpatient hospitals, outpatient hospital departments (on or off campus) and emergency departments. Data were suppressed according to HCCI masking rules based on the number of procedures performed at a given level of reporting. Medicare fee-for-service estimates were obtained from the Physician and Other Supplier Data CY 2017 public use file from CMS.

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