The Growth Channel

Freestanding ED 101: What you need to know

by Caitlin Gillooley

We’ve been getting a lot of questions from our members about freestanding emergency departments (FSEDs) lately, and with good reason: spending for ED visits grew nearly 40% between 2008 and 2013, and a Rice University health economist noted that FSEDs are “sprouting up like Texas wildflowers.” To help you get up to speed, we’ve put together the basics.

1. The two types of FSEDs

Hospital-Based Off-Campus Emergency Departments (OCED): Currently the more common type of FSED, these are run by hospitals and are considered similar to hospital outpatient departments. These facilities must be:

  • Licensed by the state and adherent to Medicare Conditions of Participation
  • Financially and clinically integrated with the affiliated hospital
  • Located within a 35-mile radius of the affiliated hospital
  • Compliant with all of the requirements of their parent hospital’s ED, including 24-hour per day operations and EMTALA obligations

Independent Freestanding Emergency Centers/Departments (IFEC or IFSED): These facilities are owned and operated by non-hospital for-profit entities. IFECs are similar to OCEDs in terms of the services they offer. They are not considered provider-based EDs and are not recognized by the Center for Medicare and Medicaid Services (CMS) as emergency departments; because of this, these facilities are not bound by federal emergency department regulations and do not have to comply with EMTALA.

2. Services provided

FSEDs offer a limited set of services in addition to emergency care. These usually include:

  • Imaging (x-ray, CT, ultrasound)
  • Lab
  • Physician visits

These facilities do not offer trauma or cardiac services requiring catheterization. Walk-ins make up most of the patient volume.

3. Growth in FSEDs

OCEDs: In 2015, there were 387 OCEDs operated by 323 different hospitals. The number of these hospital-affiliated facilities increased 76% between 2008 and 2013. Thirty hospitals have more than one OCED. Industry representatives and media reports suggest that there is interest in developing more of these facilities in the next few years.

IFECs: In 2015, there were 172 IFECs owned by 17 different for-profit entities. 90% of these facilities are located in Texas, where IFECs grew from zero in 2010 to 156 in 2015. The other 10% are mainly located in Colorado and Arizona. These three states do not require a certificate of need (CON) to build an IFEC, so it’s easier to develop these facilities in these states than in others with stricter regulations.

4. Billing details

OCEDs: These hospital-run facilities bill for services under the Outpatient Prospective Payment System (OPPS) and Medicare Part B Fee Schedule for emergency department services. Private insurers usually pay OCEDs as in-network providers under the affiliated hospital’s contract. In other words, OCEDs bill like traditional emergency departments and until January 1 of this year were not separately identifiable in claims data—the new CMS place of service code for Off Campus-Outpatient Hospital will apply to OCEDs.

IFECs: Because these independent facilities are generally not affiliated with hospitals, they are not considered provider-based and are thus not recognized by CMS. That means that IFECs cannot bill Medicare or Medicaid. Private insurers often consider these facilities to be out-of-network.

It is important to note that individual state and municipal laws differ in the requirements for development of these facilities. Some IFECs are partnering or affiliating with hospitals or local providers in order to be considered provider-based EDs for billing purposes; others are attempting to be recognized as “hospitals that specialize in emergency care” to comply with (or circumnavigate) local regulations.

FSEDs have pros and cons. For more information on whether an FSED is the right investment for you, check out our resources on ambulatory care support networks.

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