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Study examines extent, variation of physician excess charges

January 17, 2017

Nearly all physicians charge more than the Medicare program actually pays ("excess charges"), with complete discretion to determine the amount charged. Ge Bai, Ph.D., C.P.A., and Gerard F. Anderson, Ph.D., of Johns Hopkins University, Baltimore, conducted a study to understand the extent and variation of physician excess charges. The study appears in the January 17 issue of JAMA.

High excess charges can impose financial burdens on uninsured patients and privately insured patients using out-of-network physicians. Although some out-of-network physicians may offer discounts from their full charges, many patients receive unexpected medical bills. For this study, the researchers examined Medicare physician use and payment data, including payment and submitted charges for U.S. physicians who provided services to Medicare beneficiaries and submitted Medicare Part B claims in 2014. Physician excess charges were defined as total charges divided by total Medicare allowable amount for medical services (i.e., the charge-to-Medicare payment ratio) for each physician. Specialty and geographic distribution of physicians with high excess charges were defined as physicians with median charge-to-Medicare payment ratios in the top 2.5 percent.

Data from 429,273 individual physicians across 54 medical specialties were included in the study. The researchers found that the median physician charges were 2.5 times higher than what Medicare pays. The authors note that the charge-to-Medicare payment ratio represents the upper limit of each physician's actual excess charge, and may not be what a patient actually pays. The ratio varied across specialties, with anesthesiology having the highest median and general practice having the lowest. Of the 10,730 physicians with high excess charges, 55 percent were anesthesiologists and 3 percent were in general practice, internal medicine, or family practice.

There were also regional differences in excess charges. Two neighboring states (Wisconsin and Michigan) had different median excess charges (3.8 vs 2.0, respectively). About one-third of physicians with high excess charges practiced in only 10 hospital referral regions.

"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. For example, a recent law in New York restricts out-of-network physicians from charging patients excessive unexpected amounts," the authors write.
(doi:10.1001/jama.2016.16230; the study is available pre-embargo at the For the Media website)

Editor's Note: All authors have completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and none were reported.

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The JAMA Network Journals

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