Some Physicians Charge Up to 6 Times What Medicare Pays

Physicians, on average, charge roughly 2.5 times the amount Medicare actually pays, with some specialists—anesthesiologists, emergency physicians, and radiologists among them—charging up to 6 times what Medicare pays for the same service. Researchers reported their findings in a research letter in JAMA.

Such markups, which researchers termed “excess charges,” hit certain payers particularly hard: casualty and worker’s compensation insurers as well as patients who are uninsured or receiving services from out-of-network physicians.

“The doctors with the highest markups are often the ones that patients don’t actually choose,” said study senior author Gerard F Anderson, PhD, a professor at the Johns Hopkins Bloomberg School of Public Health. “Many people are shocked 2 weeks or 2 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.”

Dr Anderson and Ge Bai, PhD, CPA, assistant professor of accounting at the Johns Hopkins Carey Business School, examined Medicare physician utilization and payment data for 2014, comparing physician charges with Medicare rates. More than 400,000 physicians were included in the data set.

The analysis showed that the average anesthesiologist charges 6 times what Medicare pays; interventional radiologist, 4.5 times; emergency physician, 4 times; neurosurgeon, 4 times; and diagnostic radiologist, 3.8 times. Internists, psychiatrists, and family physicians were among the specialties with the lowest average markups, at 2 times, 1.7 times, and 1.8 times, respectively.

The study also identified regional differences in excess charges. Average markups in Wisconsin (3.8 times what Medicare pays) are nearly double those in Michigan (2 times). 

“As the health insurance market shifts toward more restrictive physician networks and high-deductible plans, protecting uninsured and out-of-network patients from high medical bills should be a policy priority,” researchers wrote. “For example, a recent law in New York restricts out-of-network physicians from charging patients excessive unexpected amounts.”—Jolynn Tumolo