“Surprise” Out-Of-Network Billing in Orthopaedic Surgery: Charges from Surprising Sources

Introduction

This year, lawmakers in both the Senate and House of Representatives proposed multiple bills to end surprise medical billing. A surprise medical bill is a charge from an out-of-network clinician that is not anticipated by the patient at the time of service. Several prior studies on surprise billing focus on emergency department and medical care, but less is known about the drivers of out-of-network surprise billing in elective surgical settings. Since surgical services require a multidisciplinary team of providers (e.g. anesthesiologists, pathologists, etc.), many of whom are not chosen by the patient and may be out-of-network, patients receiving surgery may be particularly susceptible to surprise medical bills. We sought to determine the providers responsible for the highest rates and costs of out-of-network billing in orthopaedic surgical episodes across the United States. We chose to study orthopaedic procedures as they are among the most common and costly operations among commercially insured patients.¹

Methods

We analyzed data from the Clinformatics® DataMart (Eden Prairie, MN) on commercially insured patients undergoing one of four common elective orthopaedic procedures from 2012–2017: arthroscopic meniscal repair, lumbar discectomy, total knee replacement, and total hip replacement. We constructed surgical care episodes beginning on the day of surgery and ending 30 days after surgery. The primary surgeon was defined as the surgeon whose CPT code and date of service matched the principal procedure. When multiple surgeons submitted the same CPT as the primary procedure, the primary surgeon was defined as the one with the highest insurance plan payment. We defined potential surprise bills as out-of-network charges in episodes in which the facility and primary surgeon were in-network, based on previously published studies.² We calculated the percent of potential surprise bills by dividing the number of episodes with a potential surprise bill from a provider type by the number of episodes with any potential surprise bill. We calculated the magnitude of potential surprise bills by provider type by summing all out-of-network charges from a provider type within each episode and subtracting the typical in-network insurance plan payment for each service.

Results

Among 216,263 surgical episodes, out-of-network claims were present in 17.8% (range 12–25% across the four procedures) of episodes when the primary surgeon and facility were in-network (Table 1). The rate of potential surprise bills by procedure was highest for total knee replacement (24.8%), followed by lumbar discectomy (24.5%), total hip replacement (23.5%), and arthroscopic meniscal repair (12.5%).

Table 1: Rate and Size of Potential Surprise Bills in 4 Orthopaedic Procedures.

Rank-ordered list of provider types responsible for the highest rates of surprise billing for each procedure. Potential surprise bill scenarios were defined as those in which the facility and primary surgeon were in-network but other providers were out-of-network (either “non-participating” or “contracted, pay as non-participating”). The “%” column lists rates of potential surprise bills by each provider type, conditional on the episode involving a potential surprise bill. They do not add up to 100% because only the top five providers are listed, and multiple provider types may have issued a potential surprise bill in the same episode. Rates were calculated by dividing the number of episodes with a potential surprise bill from that provider type by the number of episodes with any potential surprise bill.

	All Procedures			Arthroscopic Meniscal Repair			Lumbar Discectomy			Hip Replacement			Knee Replacement
% of Episodes with Potential Surprise Bill	17.8			12.5			24.5			23.5			24.8
Share of Potential Surprise Bills, by Provider Type	Provider	%	$	Provider	%	$	Provider	%	$	Provider	%	$	Provider	%	$
Rank
1	Anesthesiologist	39	1,238	Anesthesiologist	57	808	Neurologist	28	18,639	Anesthesiologist	28	1,559	Anesthesiologist	28	1,822
2	DME	15	1,621	DME	23	1,378	Anesthesiologist	26	923	Physician’s Assistant	18	4,062	Physician’s Assistant	16	4,750
3	Physician’s Assistant	12	5,187	Physical Therapist	16	1,348	Physician’s Assistant	12	8,015	Pathologist	18	158	Pathologist	16	181
4	Pathologist	11	163	Physician’s Assistant	6	5,683	Pathologist	10	110	Orthopaedic Surgeon	11	4,221	DME	13	2,275
5	Physical Therapist	10	1,209	Emergency Medicine	5	653	Surgical Assistant (Non-Physician)	8	32,270	Internist/General Internist	9	532	Orthopaedic Surgeon	12	4,122

The “$” column lists average potential surprise bills corresponding to the listed provider types. Potential surprise bills by provider type were calculated by summing all out-of-network charges from each provider type within each episode and subtracting the typical in-network insurance plan payment for each service.

The “all” column lists the most common out-of-network providers when all procedures were pooled together. When orthopaedic surgeons are listed as out-of-network providers, they were not participating as primary surgeons – they billed for care as co-surgeons, surgical assistants, or for postoperative management.

The origin of potential surprise bills was most often anesthesiologists (39% of all episodes with potential surprise bills across all procedures) and DME (15%; Table 1). After these, physician assistants (12%), pathologists (11%), and physical therapists (10%) were most frequently involved. Per episode, the largest potential surprise bills came from non-physician surgical assistants ($32,270 for lumbar discectomy), neurologists ($18,639 for lumbar discectomy), and physician’s assistants ($4,062 to $8,015 per episode depending upon the procedure).

Discussion

Our analysis shows that approximately 1 in 6 patients undergoing elective orthopaedic surgery is at risk for a potential surprise bill—comparable to the rate in emergency department care, even though patients in our cohort found in-network surgeons and facilities. We confirm anecdotal reports that anesthesiologists are responsible for the largest share of out-of-network billing in surgical episodes. However, we found that the second-most common source of out-of-network bills in elective orthopaedic surgery is durable medical equipment providers, whose role has not previously been documented. We further identified a large burden of out-of-network billing from unexpected sources, including neurologists, surgical assistants (both fellow surgeons and allied health professionals), and physical therapy. We found that these size of these out-of-network charges exceeds the typical insurance plan payment by thousands of dollars.

Out of network billing has been described in news reports as an intentional tactic used by medical providers to extract excessive charges from patients.³ We find these practices are not confined to physicians. For instance, though hospitals often provide durable medical equipment to patients as part of their care, DME providers often bill patients independently for their services. Our analysis shows that in 13–22% of knee operations with a potential surprise bill, an out-of-network DME provider is involved. This helps explain common anecdotes of insured patients being charged many times more than the retail price for simple slings and braces.⁴

Intraoperative neuromonitoring, used by some surgeons to enhance the safety of spine surgery, is also often provided by third-party contractors. We find that these services are the single most common source of potential surprise bills in lumbar discectomy (28% of cases with a potential surprise bill), associated with charges $18,638 in excess of what an insurance plan would typically pay. Some neuromonitoring providers, in addition to issuing inflated charges, are known to provide kickbacks to surgeons choosing their services–even though the American Society of Neurophysiological Monitoring has denounced this practice.³ Surgeons seeking to protect their patients should choose third-party providers who are not systematically billing out-of-network.

In an era in which 1 in 3 insured Americans could not afford an unexpected $1,000 medical bill, our findings support the need for a comprehensive solution to surprise billing.⁵ Broadly speaking, two broad policy approaches have been described. The first relies on holding patients “harmless” for out-of-network charges and determining insurance plan payment via a single benchmark or an arbitration process—as a growing number of states have done.⁶ The second relies on bringing all facility-based providers into the same health plans as the facilities they practice in. This has not been attempted on a large scale. Regardless, the impact of state-level surprise billing policies is inherently limited because most commercially insured Americans are covered by self-insured plans which can only be regulated at the federal level, according to the Employee Retirement Income Security Act (ERISA).⁶ Alternative payment models, such as bundled payments, could also eliminate the piecemeal approach to procedural reimbursement that has allowed surprise billing to persist. However, the impact of these approaches is limited by the small share of commercial plans adopting these payment models.⁷

Our study has several limitations. First, our estimates are derived from claims for a single insurer. However, past research on out-of-network billing using single-payer claims has mirrored multi-payer studies.^2,8 Furthermore, the geographic and plan design diversity within this dataset suggests it may be generalizable. Second, like prior work on surprise billing, we are unable to determine the precise magnitude of a potential balance bill since our data did not indicate whether patients’ insurance plans had out-of-network benefits.^2,8 As such, we used methods previously published to estimate potential financial liability.⁹ This remains a conservative estimate because it excludes expected sources of cost-sharing such as deductibles, coinsurance, and copays.

Ultimately, our data demonstrate the complexity of out-of-network billing in surgical procedures. Though policy discussions often blame physician staffing companies for the bulk of surprise billing, our findings reveal a highly varied and pervasive pattern.¹⁰ This work corroborates media reports of third parties, such as DME and neuromonitoring providers, that may be exploiting patients without their knowledge. Current Congressional proposals to end surprise billing should curb most of these practices, though aggressive industry lobbying may have stalled policy momentum.