• Barak D Richman, Nick Kitzman, Arnold Milstein, and Kevin A Schulman.
• Duke University School of Law, PO Box 90360, Durham, NC 27708. E-mail: richman@law.duke.edu.
• Am J Manag Care. 2017 Apr 1; 23 (4): e100-e105.

ObjectivesTo develop an effective legal mechanism to combat chargemaster abuses and to facilitate price transparency.Study DesignApplying legal doctrines to out-of-network (OON) billing disputes.MethodsWe 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.ResultsOur 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.ConclusionsChargemaster 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.

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