Law Commons^™

Limiting Overall Hospital Costs By Capping Out-Of-Network Rates, David Orentlicher, Kyra Morgan, Barak Richman

Scholarly Works

Contract theory offers a simple and wildly effective solution to surprise bills: Hospital admissions contracts are contracts with open price terms, which contract law imputes with market rates. This solution not only obviated the costly, time-consuming, and complicated (and still unimplemented) legislative fix in the No Surprises Act, but it also is a superior solution since it introduces superior incentives to disclose, compete, and economize.

Using data from the Nevada Department of Health and Turquoise Health, this paper explores the theory and empirics of employing contract law's solution to hospital surprise bills and its superiority over other legislative interventions.