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

Author(s): 

Zack Cooper, Fiona Scott Morton, and Nathan Shekita

ISPS ID: 
ISPS17-22
Full citation: 
Cooper, Zack, Fiona Scott Morton, and Nathan Shekita (2020). Surprise! Out-of-Network Billing for Emergency Care in the United States, Journal of Political Economy, 128(9): 3626-3677. DOI: 10.1086/708819.
Abstract: 
In the United States, hospitals and physicians independently negotiate contracts with insurers. Therefore, a privately insured individual can be treated at an in-network hospital’s emergency department but receive a large unexpected bill from an out-of-network emergency physician working at that facility. Because patients do not choose their emergency physician, emergency physicians can remain out of network and charge high prices without losing patient volume. We illustrate that this strong outside option improves physicians’ bargaining power with insurers. We conclude by analyzing New York’s efforts to address out-of-network billing through binding arbitration between physicians and insurers over out-of-network payments. This intervention reduced out-of-network billing by 12.8 percentage points (88%).
Supplemental information: 

Link to article here.

An earlier version of this paper is also available as an ISPS working paper (link here) and a NBER working paper (link here).

Location: 
External ID: 
NBER Working Paper No. 23623
Publication date: 
2020
Publication type: 
Publication name: 
Discipline: 
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