Dive Brief:
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A group of investors filed a lawsuit against Envision Healthcare in U.S. District Court this month that claims the company did not tell them its subsidiary EmCare overcharges patients and conducts surprise billing.
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A New York Times article in July reported hospitals that hired EmCare, which is an outsourcing business for emergency rooms, saw more out-of-network emergency room bills and high-paying medical codes. The lawsuit alleges Envision’s share price fell $2.33 on July 24 after The New York Times article.
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The investors said company “revenues were likely to be unsustainable" because of the negative publicity.
Dive Insight:
The New York Times article used EmCare as an example of an outsourcing ER company that hospitals use to find doctors, and how those services have caused more expensive hospital bills because the ER doctors are considered out-of-network.
This is not an uncommon practice in healthcare. A National Bureau of Economic Research (NBER) study found that patients who visited in-network hospitals for emergency care received out-of-network physician care 22% of the time — and there's no way they can avoid it.
“Because patients cannot avoid out-of-network physicians during an emergency, physicians have an incentive to remain out-of-network and receive higher payment rates,” according to the report.
Also, The Commonwealth Fund released a report on surprise billing, also called balance billing, in June. Only six states have comprehensive laws that protect against surprise billing. There are no federal protections against the practice, according to the report.
The NBER study said 14% of ER visits and 9% of hospitals stays were likely to produce a surprise bill. This is especially a problem for people admitted via the ER. The Commonwealth Fund said 20% of those admitted via the ER were more likely to receive a surprise bill.
The Commonwealth Fund suggested states need to tackle the issue of surprise billing in the coming years. For now, patients in most states are visiting in-network hospitals only to find out later they were cared for by a doctor the insurance company considers out-of-network.
The practice clearly doesn't sit well with the group of Envision investors who are now speaking out. Time will tell whether the negative publicity and lawsuit will play a part in sparking changes to protect against surprise billing.