8 Variation in Emergency Department Pricing in the United States

Abstract

The price of emergency department (ED) care depends on the patient’s insurance type and network status. In-network patients and their insurers usually pay negotiated rates that are a proportion of the full charges, whereas uninsured and out-of-network patients are often liable for the full charges unless they are offered a discount. In this study, we examined the variation in the prices of common ED services across the United States. We performed a retrospective analysis of payments made to emergency physicians by the Centers for Medicare and Medicaid Services (CMS), representing 100% of services provided to Medicare Part B fee-for-service beneficiaries in 2013. We analyzed the variation in charge-to-Medicare-payment (“markup”) ratios, or the billed charges divided by Medicare-allowable rates (what CMS has determined to be the cost of providing the service) for all charges by hospital and individual CPT codes. We performed multivariable linear regression to study the association between hospital-level ED markup ratios and the characteristics of the hospitals and their patient populations using 2013 data from the American Hospital Association and the US Census Bureau. Our analysis included 2,870 EDs, of which 49% were urban, 33% were academic, 18% were for-profit, and 22% served zip codes with over a 20% uninsured population. Services provided by emergency medicine physicians had an average markup ratio of 5.4 (440% markup), which was greater than the overall markup ratio of 3.5 (240% markup) for all services provided under Medicare Part B. Markup ratios varied widely by procedure and hospital, with IV administration of medications having the highest median markup ratios (eg, 43.5 for dexamethasone 1 mg) and greatest variation among hospitals (Table). For these common services, charges billed by the emergency physician were often 30% to 100% higher than charges billed by an internal medicine physician in the same hospital. Hospital-level ED markup ratios ranged from 1.0 to 15.7 (median 3.7, interquartile range 2.8 to 4.9). Greater hospital-level ED markup ratios were associated with for-profit status (vs non-profit: coefficient 0.53 (0.35-0.70)), greater uninsured patient population (vs less than 10%, 20% or more: coeff 0.32 (0.07-0.57), greater Hispanic patient population (vs less than 20% Hispanic, 20% or more: coeff 0.24 (0.04-0.43)). Relative to the Northeast, EDs in the Southeast had higher markup ratios (coeff 0.51 (0.29-0.74)). Charges for ED services vary widely across hospitals, with commonly performed procedures and IV administration of medications being marked up the most. For-profit hospitals and those serving large uninsured populations had higher markups on ED services, suggesting a profit-seeking and/or cost-shifting motive. Greater discussion is warranted to develop measures to protect patients from financial harm.Tabled 1Markup variation by hospital for common procedure codes billed by emergency physiciansServiceMinimum25th percentileMedian75th percentileMaximumEvaluation and management (level 5 visit)1.13.44.45.910.3Chest X-ray1.02.43.24.434.1Complete blood count1.02.12.73.712.012-lead EKG1.04.56.07.530.6Venopuncture1.03.35.06.631.9IV dexamethasone, 1 mg1.018.243.591.6934.0IV iodine contrast, 1 mL2.46.09.316.9972.0IV ceftriaxone, 250 mg1.311.022.731.3127.0IV ketorolac, 15 mg1.013.032.745.3453.0Shown are charge to cost (“markup”) ratios, or the billed charges divided by Medicare-allowable rate Open table in a new tab