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Editor’s note: Comments from the American Medical Association were added to the original article.

The patients underwent elective surgery with primary surgeons and in facilities that were in their private insurer’s network. Yet, one in five got a surprise bill after their procedure for out-of-network services, according to a new study.

The patients were left with an average potential balance of $2,011, according to the JAMA study released today.

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Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

As politicians in Washington look at how to address the problem of surprise bills, researchers examined claims data from a large health insurer to examine how often patients unexpectedly received out-of-network bills after having in-network elective surgery. In 20% of the surgeries, patients received out-of-network charges, the study found.

Members of Congress have been grappling with ways to end surprise medical bills. The House Ways & Means Committee on Friday released largely provider-friendly legislation as a bid to end an impasse over how to handle surprise billing with a proposal to use a “mediation” process to handle disputes.

In the study, most commonly, the out-of-network bills occurred when patients received care from anesthesiologists and surgical assistants who were not part of their insurance network, which happened in 37% of the cases where patients received a surprise bill, the study found.

In cases where a surgical assistant was not in the insurance network, patients faced an average potential bill of $3,633. With out-of-network bills that resulted from the anesthesiologist being out of the patient’s network, the average potential bill was $1,219, the study found.

The analysis included almost 350,000 commercially insured patients who underwent one of seven common elective surgeries at in-network facilities with in-network primary surgeons between 2012 and 2017. Researchers said one limitation of their study was that the claims data came from only on insurer.

Patients had a greater risk of receiving an out-of-network bill when they were members of a health insurance exchange plan. Risks were also significantly higher when there were surgical complications, the study found.

In an accompanying editorial, JAMA editors said it’s time to stop surprise medical bills, which they described as “both common and potentially financially devastating.”

“Such billing practices are particularly pernicious because patients usually have no knowledge that they will occur, and no way to avoid them,” wrote Karen E. Joynt Maddox, M.D., of the Washington University School of Medicine and associate editor of JAMA, and Edward Livingston, M.D., deputy editor at JAMA.

It’s up to both clinicians and policymakers to act to end surprise billing, they said, arguing that surgeons have an ethical responsibility to speak out.

“When feasible, surgeons should ensure that all the personnel involved in the care team that they are leading accept the same insurance plans and should consider refusing to work in facilities that allow surprise billing,” they wrote.

The American Medical Association, the country’s largest physician organization, Tuesday came out in support of the bipartisan efforts of the House Ways and Means Committee to craft legislation to protect patients from surprise medical bills.

The legislation creates a two-step process for resolving disputes over reimbursement, first through a 30-day negotiation process that encourages parties to resolve their differences before using a mediation process administered by a third party.

“We support the underlying mechanism for resolving these disputes, including the eligibility of all disputed claims for negotiation and mediation. We also appreciate that the mediator must consider a wide range of supporting information submitted by physicians in rendering a final determination,” said Patrice A. Harris, M.D., AMA president, in a statement.

Harris said the AMA plans to work with the committee and others to refine the legislation so it is fair to everyone involved.

While hospitals and physicians support the legislation, payers have pushed to link out-of-network payments to a benchmark rate, rather than the arbitration process favored by providers.

As Congress considers efforts to rein them in, private equity firms are buying up more physician practices, according to a new study.

Private equity firms acquired 355 physician practices from 2013 to 2016, a number that jumped each year of the study, according to a research letter published today in JAMA. The number increased from 59 practices in 2013 to 136 practices in 2016.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

With approximately 18,000 group medical practices in the U.S., researchers said while private equity acquisitions increased across specialties during the study period, they still constituted a small proportion of practices. Those acquisitions continued in the years beyond those in the study period.

The 355 practices bought up included 1,426 sites and 5,714 physicians.

The majority of acquired practices (43.9%) were in the southern U.S., the study found. Practices acquired by private equity firms had several sites (a mean of four) and many physicians (a mean of 16.3 in each practice) with a mean of 6.2 physicians affiliated with each site.

The study, which identified group practice acquisitions using the Irving Levin Associates Health Care M&A data set that includes information on healthcare mergers and acquisitions, also looked at which specialties private equity firms were most interested in.

The most commonly acquired medical groups from 2013 to 2016:

  • Anesthesiology practices (19.4%)
     
  • Multispecialty practices (19.4%)
     
  • Emergency medicine (12.1%)
     
  • Family practice (11.0%)
     
  • Dermatology (9.9%)

From 2015 to 2016 there was an increase in the number of acquired cardiology, ophthalmology, radiology, and obstetrics/gynecology practices, according to the research letter.

Industry reports suggest further growth in acquisitions in 2017 and 2018, particularly in ophthalmology, dermatology, urology, orthopedics, and gastroenterology.

Within the acquired practices, anesthesiologists represented 33.1% of all physicians; emergency medicine specialists, 15.8%; family practitioners, 9%; and dermatologists, 5.8%.

That profile of practices with several sites and many doctors matches “private equity firms’ typical investment strategy of acquiring ‘platform’ practices with large community footprints and then growing value by recruiting additional physicians, acquiring smaller groups and expanding market reach,” said the study authors Jane M. Zhu, M.D., of the division of general internal medicine and geriatrics at the Oregon Health & Science University in Portland; Lynn M. Hua, of the department of health care management at the Wharton School of the University of Pennsylvania, in Philadelphia; and Daniel Polsky, Ph.D., of the Carey Business School at Johns Hopkins University in Baltimore.

They noted that more research is needed to understand the effect of the acquisitions to mitigate unintended consequences.

“Private equity firms expect greater than 20% annual returns and these financial incentives may conflict with the need for longer-term investments in practice stability, physician recruitment, quality, and safety,” wrote the researchers.

Ownership by private equity firms may create additional pressures to increase revenue streams (such as elective procedures and ancillary services), direct more referrals internally, and rely on lower-cost clinicians, the authors said.

A limitation of the study is that its data is based on publicly announced transitions and therefore may underestimate the total number of acquisitions, particularly of smaller practices, they said.