Cost-Sharing Payments for Out-of-Network Care in Commercially Insured Adults

Providers who do not contract with insurance plans are considered out-of-network (OON) providers. There were 2 objectives in this study: (1) to examine the variations of OON cost sharing, both at the state level and by care settings, and (2) to investigate the pattern of OON care use and cost sharing associated with OON care over time.

Study Design: Secondary data analysis using claims data of employer-sponsored insurance enrollees.

Methods: The study sample included adults aged 18 to 64 years who were continuously enrolled for at least a full calendar year with medical and prescription drug coverage and for whom OON care payment data were available. We examined levels and distributions of cost sharing for OON care from 2012 to 2017, in both emergency department (ED) and non-ED care settings. Outcome measures included annual use of health plan–covered OON care and total out-of-pocket (OOP) cost sharing for OON care. We also measured the use of and cost-sharing spending for OON care based on urgency and site of service. Logistic regression models were constructed to estimate the probability of OON care. Among those with each type of OON care, a generalized linear regression model was used to estimate the OOP spending on OON care.

Results: Slowly decreasing rates of OON care over time occurred in different care settings and at different urgency levels. The cost-sharing amounts for OON care rose rapidly from 2012 through 2016, before slowing slightly in 2017. The growth of cost sharing for OON care during nonemergent hospitalizations especially increased from $671 to $1286 during the study period. The amount enrollees spent on OON care grew in most states, but there were substantial variations.

Conclusions: Cost-sharing payments for OON care represent a growing financial burden for some enrollees. Consumers should be held harmless from higher cost sharing for OON care when it occurs without their knowledge or consent. Further, health plan network adequacy may also merit closer scrutiny. Leveraging provider participation in narrow networks must be balanced with broader consumer protections.

Am J Manag Care. 2019;25(12):598-604

Takeaway Points

Cost-sharing payments for out-of-network (OON) care represent a substantial and growing financial burden to private plan enrollees.

• Policy attention is needed on enrollees’ burdens from cost sharing for OON care, especially during nonemergent hospitalizations.
• Patients should receive up-to-date disclosures of network status and be held harmless from higher cost sharing when OON care occurs without their consent or knowledge.
• Several policy changes, such as regulating cost-sharing amounts for OON care and scrutinizing network adequacy for commercial plans, could alleviate the burden.
• Health plans that leverage networks to lower costs must be balanced with the potential need for broader consumer protections.

Most privately insured Americans contribute toward insurance premiums and share in healthcare costs through substantial out-of-pocket (OOP) payments for deductibles, co-payments, and coinsurance. In recent years, growth in cost sharing for commercially insured individuals has outpaced wage growth.^1,2 Network strategies employed by health plans have further expanded the landscape of cost-sharing tools. Health plans establish contracts with selected healthcare providers and pharmacies, which offer price discounts and other features in exchange for participation as in-network providers. Care that enrollees receive from noncontracting providers or pharmacies is considered out-of-network (OON) care.

OON care may be covered or completely uncovered by health plans, resulting in various forms of OOP payments (see eAppendix A [eAppendices available at ajmc.com] for definitions). Insurance plans may impose ceiling reimbursements to providers for OON care covered as a plan benefit (ie, “covered OON care”). Enrollees are liable for differences in allowed reimbursements and charges from providers—a practice called “balance billing.” In other cases, enrollees pay the entire bill OOP when care from noncontracting providers is not covered by plans (ie, “uncovered OON care”). Although balance billing has received attention from policy makers lately, there has been less attention to cost sharing for covered OON care and the differences between in-network and OON care. Typically, enrollees seeking covered OON care face steeper cost-sharing provisions. For example, in 2016, the average deductible for in-network medical care was $1800 for an individual plan and $3900 for family coverage, whereas the average deductibles for OON care were $3000 and $6000, respectively. Similarly, the OOP annual maximum and coinsurance payments for OON care were nearly 2-fold those for in-network care.^3,4

Many factors influence an enrollee’s OOP costs for OON care, including coverage rules for OON care, condition-specific demand, availability of in-network providers,^5-7 consumer preferences,⁸ and regulations on OON care. Some enrollees accept higher OOP costs when seeking care for complex conditions from OON centers of excellence; however, other encounters with OON providers are unavoidable. Recent evidence suggests that a large proportion of care involves covered care from OON providers, particularly in emergency departments (EDs).^9-12 Even when a hospital is in network, OON encounters with nonparticipating providers are prevalent.^8,11,12 Patients may be unaware of a provider’s network status, or a network may have scarce availability of specific specialties.^8-12

Lately, problematic “surprise bills” from OON providers have led some states to restrict balance billing practices and/or regulate reimbursements for OON care in EDs and in-network hospitals.^7,13 Rates of ED-related OON care decreased in New York following legislation enacted in 2014.¹² However, fewer legislative activities at state or federal levels have specifically targeted enrollees’ cost-sharing burdens. Although the Affordable Care Act (ACA) limited the maximum cost-sharing amounts that private policyholders pay OOP annually, these spending caps do not include OOP payments required for OON care.¹⁴ Moreover, although the ACA matched patient coinsurance rates to in-network rates for OON ED services,^14,15 it did not offer protections for patients in nonemergent settings.

As of 2018, 18% of large employers have used narrow networks of medical providers in their plans¹⁶ and almost 50% of employers have reported using narrow pharmacy networks.¹⁷ Understanding the level and distribution of cost-sharing payments associated with OON care is important to consumers and policy makers. Therefore, we sought to accomplish 2 objectives in this study: (1) to examine the variations of OON cost sharing, both at the state level and by care settings, and (2) to investigate the pattern of OON care use and cost sharing associated with OON care over time. We first focused on the trend of OON care use and cost sharing during a 6-year study interval, both nationwide and in specific states. Next, we examined patterns in use and cost sharing for OON care based on ED and facility settings.

METHODS

Data and Study Sample

Using data from the IBM MarketScan Commercial Claims and Encounter Database from 2012 to 2017, we studied patterns of cost sharing for OON care among those enrolled in employer-sponsored insurance (ESI) plans as policyholders or dependents. The data were comprised of fully paid and adjudicated claims for inpatient and outpatient services and prescription drugs. The enrollment information included each enrollee’s demographic and plan design type. This study was exempted from review by The Ohio State University Institutional Review Board.

The study sample included adults aged 18 to 64 years who were continuously enrolled for at least a full calendar year with medical and prescription drug coverage and for whom OON care payment data were available. Approximately 23% of individuals were excluded due to missing OON payment information. Eighty-four percent of the sample used healthcare covered by insurance during the study time interval. Among them, 93% made OOP payments for cost-sharing requirements, and the remaining ones without cost-sharing payments were excluded. The final sample included 22,054,244 enrollees with 58,577,383 person-year observations, of whom 4,267,444 enrollees were continuously enrolled during the 6-year study period.