Battling the chargemaster: A simple remedy to balance billing for unavoidable out-of-network care

Journal Article

Objectives: To develop an effective legal mechanism to combat chargemaster abuses and to facilitate price transparency. Study Design: Applying legal doctrines to out-of-network (OON) billing disputes. Methods: We reviewed rudimentary contract law and examined the law's handling of contracts where prices have not been specified in advance. These cases are the controlling authority to guide courts, handling of surprise and OON billing problems. We then compared legal remedies that correct OON billing abuses to prevailing legislative and regulatory approaches. Results: Our analysis suggests that providers have no legal authority to collect chargemaster rates from surprise and OON billing abuses. A proper application of contract law can end such abuses and would facilitate superior pricing incentives to other strategies designed to end balance billing disputes. Conclusions: Chargemaster rates on uninsured and OON patients impose significant financial burdens on the vulnerable, distort medical prices, and inflate healthcare costs. Applying rudimentary contract law to these practices offers a solution that is simpler and more effective than other administrative and legislative schemes recently adopted in several states. It will prevent providers from hiding behind a convoluted hospital pricing system, encourage the development of attractive narrow-network insurance products, and shield urgently sick individuals from the dread of medical predation. Patients and payers should know that they are under no obligation to pay surprise bills containing chargemaster rates, and state attorneys general can use the law to prevent providers from pursuing chargemaster-related collection efforts against patients.

Cited Authors

  • Richman, BD; Kitzman, N; Milstein, A; Schulman, KA

Published Date

  • April 1, 2017

Published In

Volume / Issue

  • 23 / 4

International Standard Serial Number (ISSN)

  • 1088-0224

Citation Source

  • Scopus