Nursing

Emergency physician

Negotiation

Actuarial science

Social psychology

Computer security

Computer science

Arbitration

Medical emergency

Surprise

Payment

Business

Emergency department

Psychology

Political science

Intervention (counseling)

Medicine

Finance

Journal of Political Economy

In the United States, hospitals and physicians independently negotiate contracts with insurers. Therefore, a privately insured individual can be treated at an in-network hospital’s emergency department but receive a large unexpected bill from an out-of-network emergency physician working at that facility. Because patients do not choose their emergency physician, emergency physicians can remain out of network and charge high prices without losing patient volume. We illustrate that this strong outside option improves physicians’ bargaining power with insurers. We conclude by analyzing New York’s efforts to address out-of-network billing through binding arbitration between physicians and insurers over out-of-network payments. This intervention reduced out-of-network billing by 12.8 percentage points (88%).

Surprise! Out-of-Network Billing for Emergency Care in the United States