Patients who went to an in-network emergency department (ED) were treated by an out-of-network physician 22 percent of the time, resulting in hundreds of thousands of dollars in unexpected medical bills.

The study, published by the New England Journal of Medicine, examined 2.2 million ED visits across the U.S. for patients under the age of 65. While nearly all—99.35 percent—of the visits were to in-network EDs, 22 percent of the visits involved an out-of-network physician.

Study authors Zack Cooper, PhD, and Fiona Scott Morton, PhD, both Yale University economists, said the use of “emergency packages” within insurance plans allows for these surprise charges and “prevents health care markets from functioning as they should.”

“Because patients don’t have a choice of emergency physicians and cannot avoid out-of-network doctors at in-network facilities, emergency physicians will get the same amount of business regardless of their prices or their participation in insurance networks,” they wrote. “As a result, absent intervention, emergency physicians can sidestep the price competition that other physicians face when treating privately insured patients.”

Cooper and Morton noted there was significant geographic variation in out-of-network billing rates. In McAllen, Texas, for example, the rate was 89 percent, which isn’t surprising considering an earlier study said among the hospitals included in the networks of the three largest payers in Texas, 21 to 56 percent had no in-network emergency physicians.

Other areas, including Boulder, Colorado, and South Bend, Indiana, had surprise billing rates close to zero. To Cooper and Morton, those differences mean this is an avoidable problem.

“Ultimately, surprise out-of-network billing is the result of a market failure: the lack of a competitively set price for physician services. There are various ways such a price could be established,” they wrote. We believe the best solution would be for states to require hospitals to sell a bundled ED care package that includes both facility and professional fees.”

Such a system would mean a hospital would negotiate prices for physician services with insurers, applying those rates for designated specialties. The hospital would then act as the buyer of physician services and seller of the combined physician and facility services. If the hospital’s negotiated rates were considered too low by a physicians, their only option would be choosing to work at another hospital.