Hospitals increasingly outsource their emergency departments to emergency medicine staffing agencies. However, emergency staffing is different than temp agencies supplying nurses, physical therapists or radiology techs to meet staffing needs that vary one day to the next. Emergency Room (ER) physicians generate revenue for the hospital and also bill for their own services provided to patients in the ER. A National Bureau of Economic Research study explains why this is sometimes controversial. Using data from a large national insurer, the study finds the average charges billed to patients often  rises after an outside agency takes over staffing for the ER. In many cases, hospital admissions rise, as does up-coding charges to higher-paying codes.

After an emergency medicine agency takes over hospitals often enjoy higher fees and less hassle over staffing. However, patients complain outrageous fees, inflated bills and out-of-network balance billing that catches them by surprise. Complaints are streaming in across the country about high balances owed to out-of-network emergency physician even though patients made sure the hospital was in their network.

There is no easy way to ensure physicians who provide services at the hospital are in-network. Why would hospitals not require physicians staffing their ERs to affiliate with area insurers? Perhaps there’s an unstated agreement; the staffing firm games the system and refuses to join networks and the hospital allows the game to go on since it’s benefiting from increased revenue.

There are two opposing views on why physicians staffing hospital emergency rooms sometime refuse to affiliation with area insurers. Doctors complain insurers low-ball them with paltry reimbursement offers that are below market. Insurers argue emergency room staffing agencies take advantage of patients who are in no position to go elsewhere even though the prices are high. (In reality, the prices are unknown)

For some emergency room physicians joining a network would likely yield lower fees, since their patients cannot easily go elsewhere. Physicians who have not contracted with patients’ health plans are free to charge whatever they want. If the insurer doesn’t pay, the physician can often bill the patient for the inflated balance. One researcher compared this to kind of ambushing patients. It is no coincidence that out-of-network balance billing is more common among physician specialties whose members rarely meet with patients prior to providing care. These include radiology, pathology and anesthesiologists – and of course emergency physicians. Sometimes assistant surgeons are placed in this category.

Across the country more states are taking steps to limit patients’ exposure to surprise out-of-network bills. One solution is to require a “meeting of the minds” between doctor(s) and patients or hospitals and patients before a debt is collectable. A meeting of the minds is already the standard under contract law.

Devon Herrick, PhD, is a health economist and former hospital accountant.

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