Why did my anesthesiologist get paid in full for their bill while my doctor has to give a 50% discount?

I will start off with a statement that I am not picking on anesthesiologists because the same question could be asked about radiologists, pathologists, emergency medicine doctors, and other specialists who work only within the hospital setting.  There are reasons that doctors are paid differently even for the same services.  The hospital based physicians in particular though do sometimes get paid more on a percentage of charges than do other providers and several factors weigh into that as well.

I will preface the rest of the blog post by sharing that I am writing based on how it works in many states, there are exceptions around the USA where hospital based physicians work directly for the hospital and the compensation structure paid by the insurance companies is different as well. In Texas all physicians providing clinical services are in their own practices which are separate from the hospital. Thus they or their practice bills and collects revenue for the services provided separately from the hospital’s charges and collections.

Generally we seek to get care at the lowest cost, so we typically all seek “in-network” care. This means we go to providers who are contracted with the insurance company. In exchange for the provider being in the network for any given insurance carrier, they give a discount off their charges. From a practical standpoint they really agree to the fee schedule offered by the carrier or negotiate rates they will accept. Generally most providers must accept the rates offered by the carrier.

Some providers do get exceptions to the carrier’s standard fee schedule. One set of providers who may get an exception is those who have a proven track record of providing cost effective care with good outcomes. Large groups who are critical to the carrier’s networks may get negotiated rates. Hospital based physicians, such as the anesthesiologists and radiologists, often because they have exclusive arrangements at specific hospitals are also able to negotiate rates.  Of course not all physicians agree to contract with the insurance carriers and this leads to out of network care issues.

Often, but not always, in a hospital based setting, physicians who only work in the hospital will be paid at the “in-network” rate even when they are not contracted. Again, I stress this is definitely not a guaranteed situation, but it does happen.   This is exactly the situation where you will sometimes see payments to anesthesiologists, radiologists, pathologists, and emergency medicine physicians getting paid more than you would expect for a contracted provider.  It is because they in fact are not contracted but are being paid at the in-network level.  In some cases, primarily emergency care, the provider may in fact get their full charges paid.

The hospital based physician charges and out of network issue is one that many of the carriers fight on a regular basis because some of these hospital-based physicians to charge rates well above what other providers are paid for similar services. This issue is something that is a big deal to the carriers because paying 2-3-4 times what others are paid for the same services does end up costing everyone more in terms of higher premiums.  One technique used by carriers now, where permissible is to limit payment to the same amount paid by Medicare for non-network providers.  (Those providers who refuse to accept Medicare Assignment.)

These limits on payment may result in the patient being balance billed, however the insurance company may make whole patients/members who had no choice but to use the out-of-network physician.  These are the cases where you can expect to see the higher level compensation paid to physicians.  So collectively higher negotiated rates with the carrier and payments to non-network-providers in order to hold the member harmless make up most of the higher payments to hospital based physicians.  The other reason you may see full charges paid is that the provider adjusts their charges based on contracts with carriers and only charges what is due by the carrier, automatically writing the difference off as a contractual allowance.

Generally it is a rare circumstance where you will see a provider paid their full charges by an insurance company, but it does happen. The above information should have shined some light on why that happens with hospital based physicians.  If you need help with Health Insurance In Texas so you can get hold of network discounts contact us.