Jose Lissade, a 43-year-old handyman who lives in Queens, New York, made two trips to the hospital in 2018 for a gastrointestinal infection. During those two stays, he had some routine heart tests that typically would cost a total of about $340. The tab for Lissade’s tests: $4,800.

Lissade personally shelled out only a $100 co-pay for each stay. But his insurance provider, a union health plan called the 32BJ Health Fund, paid much more to some doctors at the hospital, a Northwell Health facility in Queens. The plan settled claims for the tests for a total of $2,320, almost seven times what the plan normally pays. All that because Lissade was seen by out-of-network doctors.

“When we have a cardiologist who wants $5,000 for something that other people are willing to accept $80 to $120 for, that starts to raise concerns for us,” said Sara Rothstein, director of the 32BJ Health Fund.

32BJ says markups by outside physicians inflate costs by millions of dollars each year. Thousands of times a year, the health plan pays a higher price because some doctors don’t take the same insurance as the hospitals where they practice. Over three years, 32BJ has paid more than $10 million to out-of-network doctors at New York hospitals in its network, according to data shared with Bloomberg News. Employers fund the plan, which is jointly governed by representatives of labor and management.

The situation isn’t unique to Northwell. Physicians can set their sticker prices as high as they like. If they don’t contract with health plans, they can often negotiate higher payments for the same services. For that reason, health plans try to steer patients toward contracted doctors in their networks. But sometimes patients can’t avoid seeing out-of-network doctors, particularly if they’re working at hospitals that are in patients’ insurance networks.

Nationwide, about 16% of inpatient hospital visits trigger bills from out-of-network providers, according to an analysis by the Kaiser Family Foundation. The rate is twice as high in New York state.

Surprise Bills
Congress is considering legislation to insulate patients from so-called surprise medical bills – out-of-network charges in situations where patients can’t avoid the provider, such as emergencies. Committee leaders in the House and Senate this week promoted a proposal that would limit patients’ exposure to surprise bills and set up rules for insurers and providers to settle payment disagreements. President Trump has also called for a fix.

But even when patients don’t get charged directly, plans get the bill. 32BJ blames hospital systems for allowing out-of-network physicians to charge many multiples of contracted rates. The plan says it pays more for such claims to doctors at Northwell, one of the region’s biggest hospital systems, than at competing New York systems.

Northwell calls the analysis misleading. The health system says the out-of-network charges come from independent physicians who practice at its facilities but aren’t its employees, and that the hospital has no control over their billing.

“Those aren’t our physicians. Those are private practice, independent entrepreneurs,” said Felix Aviles, vice president of practice management at Northwell. Aviles said 99% of the health system’s employed doctors are in-network with 32BJ’s plan. The hospital found only $250,000 in out-of-network claims billed by Northwell’s employed physicians in the same period, he said.

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