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

108 Pages Posted: 25 Jul 2017 Last revised: 20 Jul 2023

See all articles by Zack Cooper

Zack Cooper

Princeton University

Fiona M. Scott Morton

Yale School of Management; National Bureau of Economic Research (NBER)

Nathan Shekita

Yale School of Management

Date Written: July 2017

Abstract

Hospitals and physicians independently negotiate contracts with insurers. As a result, a privately insured individual can attend an in-network hospital emergency department, but receive care and potentially a large, unexpected bill from an out-of-network emergency physician working at that hospital. Because patients do not choose their emergency physician, emergency physicians can remain out-of-network and charge high prices without losing patient volume. As we illustrate, this strong outside option improves emergency physicians’ bargaining power with insurers. We then analyze a New York State law that introduced binding arbitration between emergency physicians and insurers and therefore weakened physicians’ outside option in negotiations. We observe that the New York law reduced out-of-network billing by 34 percent and lowered in-network emergency physician payments by 9 percent.

Suggested Citation

Cooper, Zack and Scott Morton, Fiona M. and Shekita, Nathan, Surprise! Out-of-Network Billing for Emergency Care in the United States (July 2017). NBER Working Paper No. w23623, Available at SSRN: https://ssrn.com/abstract=3007504

Zack Cooper (Contact Author)

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Fiona M. Scott Morton

Yale School of Management ( email )

493 College St
New Haven, CT CT 06520
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nathan Shekita

Yale School of Management

165 Whitney Avenue
New Haven, CT 06511
United States

HOME PAGE: http://https://nathanshekita.github.io/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
218
Abstract Views
593
Rank
253,806
PlumX Metrics