Emergency physicians charge uninsured or out of network patients as much as four times more than what they are willing to accept in payment from Medicare, according to a recent study from Johns Hopkins School of Medicine recently published in JAMA Internal Medicine. The researchers say that amount is more than double what the same hospitals charge for the same services in other parts of the hospital.
Their conclusion? “It’s a system that needs help,” says Dr. Tim Xu, the study’s lead researcher.
But the American College of Emergency Physicians (ACEP) says the study relies on flawed methodology and incorrect assumptions about the cost of emergency care. For one, the study compares emergency charges with those of internists only in the hospital setting. Dr. Rebecca Parker, president of ACEP, says that a better comparison would include charges for internists in any setting.
“The authors stated that they analyzed services solely performed in hospital settings, thus excluding the largest source of internist charges—those billed for office visits,” Dr. Parker said in a prepared statement. “Internists can set their office visit charges at any level, and this would not be captured. The data should be rerun to include all office visit claims for the affected internists.”
Apples to Oranges
Additionally, ACEP claims that comparing internal medicine to emergency medicine sets up an apples to oranges comparison, resulting in inaccurate and meaningless information.
“Emergency physicians provide more medical care for the poor and uninsured than any other physician,” said Dr. Parker. “Comparing internal medicine with emergency care is basically a meaningless comparison. 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.”
Far from Fair Market Standard
The primary comparison from the study, however, was the difference between what physicians charge and what Medicare pays. The study concluded that uninsured or out-of-network patients were charged seven times the Medicare allowed amount to repair a cut, six times the rate for interpreting an EKG, and anywhere from 1.6 times more to as much as 27.7 times more to have a CT scan of the head interpreted in the ER.
While many commercial and government payers reimburse physicians below the amount charged, this comparison is significant because it highlights the amount patients without insurance and patients who visit an out-of-network ER would have to pay. When a patient’s out-of-network plan covers a portion of the cost, in most states patients are responsible for the balance in what is known as balance billing, or more recently “surprise billing.”
But according to ACEP, comparing the full charge amount to what Medicare pays offers little insight into the real cost of ER services. For one thing, Medicare allowed amounts are far from a fair market standard.
“By defining charges greater than Medicare as ‘excessive’ and a ‘markup,’ the authors reveal an inherent bias. Medicare does not reflect actual costs and has not kept pace with inflation,” Dr. Parker said. “Medicare physician payments decreased by nearly 8 percent in the past 11 years, and Congress further reduced payments to fund other legislation (PAMA and ABLE), as well as continued a 2-percent reduction under the sequester.”
Prudent Layperson Violations
Also, a recent payer trend, even for in-network providers, is to refuse coverage for emergency services, particularly for “non emergency” diagnoses. Indianapolis-based Anthem Blue Cross Blue Shield has begun implementing such policies in Missouri, Virginia, Kentucky, and most recently Georgia, in what ACEP calls a violation of the prudent layperson standard.
“These kinds of policies mean that patients experiencing emergencies may not go to the ER because of fear of a bill, and could die as a result,” Dr. Parker said. “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.”
Finally, at least part of the amount emergency physicians charge for services reflects the reality that ERs must treat all patients, regardless of their ability to pay. As a result, collection rates for emergency medicine are lower than any other specialty. According to ACEP, many emergency physicians collect less than 20 percent of what they bill.
“Most emergency physicians have no idea what insurance coverage a patient has,” Dr. Parker said. “They uniformly submit identical charges, per CPT code, to all payers. [On the other hand,] some internists alter their fee schedule to correspond with the expected payment from the involved payers.”
But What’s the Cost?
While one author of the Johns Hopkins study says their results indicate “price gouging by hospitals because patients often can’t pick their doctors in the emergency department,” the reality may be more related to the results of another study published in The Journal of the American Osteopathic Association.
According to researcher Kevin Hoffman, DO, an emergency medicine resident at Saint Joseph, Mich.-based Lakeland Health, only 38 percent of emergency physicians, physician assistants, and nurse practitioners can accurately estimate the costs for three common conditions seen in the emergency department.
Dr. Hoffman said that even if physicians know the cost of their own professional services, “we suspect that other fees, not in the control of these [health care professionals] HCPs, such as room fees, nursing fees, and radiologist fees, can make up a large percentage of a patient’s bill for an encounter.”
Together, these two studies (both the one from Johns Hopkins and the one from Lakeland Health) reveal how little is known—by Medicare, commercial payers, patients, and even physicians themselves—about the true cost of emergency care. Unfortunately, better understanding continues to be hindered by the list of ongoing healthcare reform issues like a lack of transparency, too many uninsured and underinsured patients, too few after hours treatment options other than the ER, poor or lack of payer coverage for ER services, and below-market reimbursement by Medicare and other government payers.
Ultimately, even if the methods and results of the Johns Hopkins study were flawed, I think we’d all agree with lead researcher Dr. Xu: our healthcare system does need help.
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