June 7, 2017

Study finds huge ED markups for uninsured patients—but ED docs say, not so fast

Daily Briefing

    The amount U.S. hospitals charge patients for care varies widely based on a patient's insurance status and the type of hospital at which they seek care, according to a study in JAMA Internal Medicine.

    4 tools to better serve price-sensitive patients

    According to Reuters, hospitals often charge uninsured patients more than Medicare beneficiaries for providing the same care. Hospitals also partake in a practice known as "balance" or "surprise" billing. Under the practice, hospitals will charge patients enrolled in private health plans more for care than Medicare beneficiaries if the privately insured patients are treated by physicians who are not within their plans' provider networks, even if the ED where the patients received care were included in that network.

    Study details

    For the study, researchers examined 2013 Medicare billing data from 12,337 ED physicians based in 2,707 U.S. hospitals, as well as 57,607 internal medicine physicians based in 3,669 hospitals throughout all 50 states. The researchers compared medical charges that occurred within the same hospitals, as well as medical charges for patients with different types of insurance. In addition, the researchers reviewed 2013 data from the American Hospital Association to determine hospitals':

    • Profit status;
    • Regional locations;
    • Sizes; and
    • Urban/rural statuses.

    The researchers also used hospitals' Zip codes and reviewed 2013 U.S. Census Bureau data to determine the approximate poverty rates, uninsured status, and minority populations in the areas the hospitals served.

    Findings

    The researchers found that internal medicine services typically were billed to uninsured patients and those treated by physicians not within their private health plans' networks at twice the rate allowable under Medicare, ranging from one to 14.1 times the Medicare allowable rate. Markups for ED services were even higher while ED services typically were billed to such patients at 4.2 times the rate allowable under Medicare. Those markups ranged from one to 12.6 times the Medicare allowable rate.

    The researchers also found that the extra charges could vary for the same service. For instance, an uninsured or privately insured patient could be charged anywhere from 1.6 times to 27.7 times more than a Medicare beneficiary to have an ED physician read a CT scan of the head, according to the study.

    Patients are angry about 'surprise' bills. Here's how some hospitals are responding.

    The charges also varied by the type of hospital at which patients sought care and the hospital's location, the researchers found. According to the study, uninsured and privately insured patients faced the highest ED service markups at for-profit hospitals, at an average of 5.7 times Medicare's allowable rates. Hospitals in the southeastern part of the United States had the highest markups at 5.3 times the rates charged by hospitals in other regions, according to the study.

    Comments

    Study lead author Tim Xu of Johns Hopkins University School of Medicine said the findings "poin[t] to the practice of price gouging by hospitals because patients often can't pick their doctors in the [ED]." He said because patients typically do not plan to visit an ED, "hospitals take advantage of that" and are "more likely to set their prices higher." Xu added, "It's a system that needs help."

    Similarly, Martin Makary, a professor of surgery at Johns Hoskins University School of Medicine and a senior researcher on the study, in a release said, "There are massive disparities in service costs across [EDs] and that price gouging is the worst for the most vulnerable populations."

    Xu said more states should pass laws to prohibit surprise billing. "Unfortunately, only a handful of states have that kind of law. So patients really get struck in the crossfire and get these enormous bills that they really don't expect," he said.

    In addition, Xu said patients who receive higher charges should contest their bills. "Patients need to know they do have rights in this case," he said, adding, "Often if they negotiate with the hospital they can get a discount."

    ACEP pushes back

    The American College of Emergency Physicians (ACEP) critiqued the study findings, with ACEP President Rebecca Parker saying Medicare is not an accurate benchmark for establishing fair market value.

    "By defining charges greater than Medicare as 'excessive' and a 'markup,' the authors reveal an inherent bias," Parker said. According to Parker, "Medicare does not reflect actual costs and has not kept pace with inflation. Medicare physician payments decreased by nearly 8 percent in the past 11 years, and Congress further reduced payments to fund other legislation ... as well as continued a 2 percent reduction under the sequester."

    In addition, ACEP contended that the study failed to account for "the reality of uncompensated care and undercompensated care provided by [EDs], mandated by [the Emergency Medical Treatment and Labor Act (EMTALA)]. ... Emergency physicians have the highest rates of non-payment than all other physicians."

    How to thrive in a price-sensitive market

    ACEP added, "For the past 30 years, the Federal EMTALA law has required emergency physicians and hospitals to provide a medical screening to everyone, regardless of ability to pay. No other specialty has this duty." And because of that mandate, Parker said, the study's comparison of emergency care and internal medicine "is basically a meaningless comparison." She said, "It would have been better to compare internal medicine with the internal medicine sub-specialties and other subspecialists who can pick and choose who they see."

    Further, Parker said ED physicians charge all patients identically, based on the services provided—and they usually do not know the insurance status of their patients. "Most emergency physicians have no idea what insurance coverage a patient has," she said. "They uniformly submit identical charges, per CPT code, to all payers, some internists alter their fee schedule to correspond with the expected payment from the involved payers."

    According to Parker, a bigger issue than the study's focus was the refusal of some insurers to cover certain care provided by EDs. "These kinds of policies mean that patients experiencing emergencies may not go to the ED because of fear of a bill, and could die as a result," she contended. "People should never delay seeking emergency care out of fear of the costs, and insurance coverage should be based on a patient's symptoms, not final diagnosis" (Commins, Health Leaders Media, 6/2; Emery, Reuters, 5/30; Xu et al., JAMA Internal Medicine, 5/30; Johns Hopkins Medicine release, 5/30; Rapaport, Reuters, 5/30; Rosin, Becker's Hospital Review, 5/30).

    4 tools to better serve price-sensitive patients

    As more and more patients face the prospect of high out-of-pocket care costs, they've become increasingly price-sensitive and willing to shop for services.

    That means that for your organization to thrive in the market, you'll need a strong price sensitivity strategy. Check out our infographic to learn the four tools you need to fix your strategy—and examples of how your peers have fixed theirs.

    Download the Infographic

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