Most physicians charge patients more than Medicare rates

Doctors have complete discretion to determine the amount they charge.

Most physicians charge more than the Medicare program pays for their services, but there’s a wide variation among specialties and regions, a new study has found.

The study, published in JAMA, found that nearly all doctors bill patients far more than what the Medicare program pays. Overall, physicians in 54 specialties charged a median of 2.5 times what Medicare charges, according to researchers from the Johns Hopkins Bloomberg School of Public Health and the Carey Business School.

But the so-called “excess charges” vary greatly by specialty and region. Anesthesiologists had the highest median charge-to-Medicare payment ratio at 5.8, where general practice had the lowest markup at 1.6.

Doctors have complete discretion to determine the amount they charge, but high rates can impose financial burdens on uninsured patients and privately insured patients using out-of-network physicians, the study authors said. While some out-of-network physicians may offer patients discounts from their full charges, many patients wind up with unexpected medical bills, the study said. For instance, a 2016 study found nearly a quarter of patients who received emergency care at an in-network hospital were surprised to learn that they were treated by an out-of-network physician when they got unexpected bills.

The medical specialties that had the greatest charges above the Medicare rates are those where patients do not choose their physicians, such as anesthesiology, radiology, pathology and emergency medicine. But also high on the list are neurosurgeons.

“The doctors with the highest markups are often the ones that patients don’t actually choose,” the study’s senior author Gerard F. Anderson said in a study announcement. “Many people are shocked two weeks or two months later when they get a bill from a doctor they didn’t really meet and no one told them what the exam would cost and later they discover the price is outrageous. But this is happening all the time.”

Charges above Medicare rates also varied by state, ranging from a low in Hawaii and Michigan to a high in Wisconsin.

The changing environment in which hospitals need to compete for patients by offering easy-to-compare bundled pricing may have an impact on those physician rates. As hospitals compete for patients by offering bundled pricing, doctors with high fees may be surprised to find themselves excluded from contracts, resulting in less patient volume and less revenue, as FiercePracticeManagement reported.