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Future of out-of-network care in orthopedics is uncertain
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Despite having the highest health care costs in the world, there is constant concern in the United States about the challenges of maintaining health care’s financial stability. The ability to receive appropriate compensation for patient care is threatened by declining reimbursements.
Negotiating with private insurers to provide fee schedules reflective of fair market value and reimbursement rates that allow for sustainability of a practice can be challenging and disheartening. Large health care systems have leverage to affect insurers’ enrollment, which is a primary source of revenue. However, small groups of providers may not have much impact due to their presence or absence in an in-network plan that has no financial consequence to the insurer. In some parts of the United States, rates at Medicare levels, which are often perceived as the lowest possible, are accepted as providers have no ability to impact the insurance rate market. This can lead to an unsustainable practice, possibly leading to decisions to become part of a larger system that has negotiation power or go out of network and not accept the fee schedule offered by insurers. The common theme from the providers’ perspective is there is an ever-increasing burden to provide high-quality care with declining reimbursements, thus threatening the sustainability of the practice.
The issue is just as challenging for patients. The cost for private health insurance is increasing faster than wages and profits. Businesses and employees struggle to maintain quality health care insurance. Medicare beneficiaries also pay fees that frequently strain their finances.
Out-of-network option
One way to counter this burden is out-of-network care. Insurance companies may provide out-of-network benefits for enrollees to maintain their attractiveness to the marketplace; however, they would prefer enrollees stay with in-network providers. The insurance coverage of out-of-network costs is typically below that of in-network providers, thus passing added costs to the enrollee. However, this is sometimes not the case, such as emergency care. Providers, especially specialists, will remain out-of-network, even for Medicare, so they can charge a fee they believe best represents their market value. While the altruistic view is this fee is necessary to cover the cost of providing quality care, the reality is that in many markets, the fees are extraordinary and cannot be justified by the costs. When the fees reach values as high at 1,000% of Medicare rates, some may feel this is unethical or immoral; however, it is not illegal.
The potential of out-of-network reimbursement is profitable and raises provider income, however, many market forces are slowly eliminating this option. Out-of-network providers create a direct-to-consumer strategy to drive volume, which is frequently done by developing a reputation as a “best-in-class” provider. This model is typically based on subjective criteria and can be negatively affected by factors such as competitive marketing, health care system realignment and other “best-in-class” providers negotiating to be in-network with influential payers. In-network providers who have a healthy balance sheet and sustainable operations can work with the insurers and the other in-network providers to drive volume and achieve predictability of pricing and reimbursement. In regions where out-of-network care is more common, in-network providers benefit from this market force by offering a slightly lower fee schedule to payers, thus saving revenue, but not at a discount seen in other markets where fees are smaller percentages above Medicare rates.
Uncertain future
The future of out-of-network care in orthopedics is uncertain, but unlikely to be sustained for individual physicians. A few surgeons and facilities will be able to continue to be effective in attracting patients who can afford additional fees. At the very least, these surgeons must offer the perception that the patient receives some value of care that is better than what is received by in-network providers.
As the transparency of charges from physicians and facilities increases, out-of-network providers will be forced to truly justify how their care is more valuable than that of in-network providers, which is often at a fraction of the cost, who have similar qualifications and accomplishments. Based on today’s health care landscape, in-network solutions to reimbursement and care are likely to eliminate out-of-network care with few exceptions.
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- Anthony A. Romeo, MD, is the Chief Medical Editor of Orthopedics Today. He can be reached at Orthopedics Today, 6900 Grove Rd., Thorofare, NJ 08086; email: orthopedics@healio.com.
Disclosure: Romeo reports he receives royalties, is on the speakers bureau, is a consultant and does contracted research for Arthrex; receives institutional grants from MLB; and receives institutional research support from Arthrex, Ossur, Smith & Nephew, ConMed Linvatec, Athletico and Wright Medical.