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January 20, 2017

Providers' markup over Medicare rates varies by specialty, region, study finds

Daily Briefing

Providers typically charge more than their Medicare reimbursement for services, but the excess charge varies by specialty and location, according to a research letter published Tuesday in JAMA.

Research letter details

Researchers reviewed CMS data submitted in 2014 by 429,273 providers across 54 medical specialties. The researchers sought to determine variation between Medicare reimbursement and provider charges for uninsured patients and insured patients using out-of-network providers.  To do so, the researchers calculated an "excess charges ratio."


The researchers found that the median excess charge was 2.5 times the Medicare amount and that the excess charges ranged from 1.0 to 101.1 among the providers examined. In total, the researchers identified 10,730 providers as having high excess charges—meaning those in the top 2.5 percent of all physicians.

According to the researchers, anesthesiologists had the highest excess charge, charging 5.8 times the amount Medicare pays. Other specialists with high excess charges included:

  • Diagnostic radiologists, who charge 3.8 times the Medicare amount;
  • Emergency physicians, neurosurgeons, and pathologists, who each charge four times the Medicare amount; and
  • Interventional radiologists, who charge 4.5 times the Medicare amount.

In comparison, specialists with the lowest excess charges included:

  • Allergy and immunology specialists and psychiatrists, who each charge 1.7 times the Medicare amount; and
  • Family practice doctors and dermatologists, who each charge 1.8 times the Medicare amount.

Among the 10,730 providers whom the researchers identified had high median excess charges, 55 percent were anesthesiologists, while 3 percent were family practice physicians, general practitioners, or internists.

Providers: CMS should do more to protect consumers from surprise medical bills

According to Medscape, excess charges were higher among specialties in which patients have little choice of physician or little opportunity to determine a provider's network status. Ge Bai of Johns Hopkins University, the research letter's lead author, said, "Patients often have the option to choose their primary care doctor, but usually don't have the option to choose their anesthesiologist, pathologist, [emergency department] doctor, or radiologist." He added, "This distinction, whether patients have options or not to choose doctors, can explain why some specialists have much higher charge ratios than others."

In addition, the researchers found that about one-third of the high-billing providers were located in 10 of the country's 306 referral regions:

  • Atlanta;
  • Camden, New Jersey;
  • Newark, New Jersey;
  • Charlotte, North Carolina;
  • Dallas;
  • East Long Island, New York;
  • Houston;
  • Los Angeles;
  • Manhattan; and
  • Milwaukee.

According to the researchers, those 10 regions include 16 percent of all physicians in the United States.

Bai said regional variation in excess charges "might be due to regional differences in practice norms and consolidation." He added that further study is needed to prove that hypothesis.


The researchers said the median excess charges represent the upper limit of a provider's excess charges and might not truly show what a patient ends up paying. However, they said their findings still highlight a need for measures to protect patients against excess charges. "As the health insurance market shifts toward more restrictive physician networks and high-deductible plans, protecting uninsured and out-of-network patients from high medical bills should be a policy priority," they wrote.

Patients are angry about 'surprise' bills. Here's how some hospitals are responding.

Separately, the American College of Emergency Physicians (ACEP) said policymakers should focus on insurance companies' role in surprise medical bills that can occur when patients are treated by physicians not included in their health plans' provider networks.

ACEP President Rebecca Parker in a statement said the research letter "focused on all physicians, but insurance companies need to shoulder the blame for the out-of-network situation in emergency medicine, because they are narrowing their networks of medical providers, making it more likely that patients will be in out-of-network situations, and they continue to pay less" (Swift, Medscape, 1/18; Bai/Anderson, JAMA, 1/17; Gooch, Becker's Hospital CFO, 1/18; Lapook, CBS News, 1/17).

How to talk to patients about price

As the number of patients on high-deductible health plans rises, medical groups face increasing pressure to provide out of pocket prices to patients. However, providing accurate estimates is challenging.

Join us to hear key imperatives for competing on price, including how to find out if your market is highly price-sensitive, how service trumps accuracy when it comes to price, and how to attract patients on price without alienating hospital partners.


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