Emergency Departments: Costs and Codes in the News

UnitedHealth Group and MEDPAC both reported on the state of emergency departments last week.

Last week, emergency departments (EDs) got some serious national attention.

First, UnitedHealth Group released a study examining costs associated with freestanding emergency departments (FSEDs), and second, there was a call for the Centers for Medicare & Medicaid Services (CMS) to develop formal code selection guidelines for emergency services.

Both news items were reported by Ronald Hirsch, MD during his segment on Monitor Mondays this past Monday.

Emergency departments – both freestanding and hospital-based – treat non-emergent conditions for millions of patients each year at substantially higher prices than physician offices or urgent care centers, according to the report released last week by UnitedHealth Group, “Freestanding Emergency Departments: Treating Common Conditions at Emergency Prices.”

Hirsch, quoting from the report, told audience members that less than 25 percent of such facilities accept incoming ambulances, and they often do not accept Medicare or Medicaid, at least in Texas, where there is a large number of FSEDs. Hirsch said such facilities also tend to be located in metropolitan areas with higher median incomes that are already well-served by hospitals, urgent care centers, and physician offices. 

“Their data also indicated that while 8 percent of visits to hospital-based EDs are classified as true emergencies, requiring the care only available in an ED, only 2.3 percent of visits to FSEDs were true emergencies,” Hirsch said. “They (UnitedHealth Group) also report that the costs of these EDs is significantly higher than even hospital-based EDs, with the average cost for a patient with strep throat to be over $2,700, compared with $1,800 in a hospital-based ED and $130 in a doctor’s office.”

In Texas, the average cost of treating common conditions at an FSED ($3,217) is 22 times than that of a physician office ($146) and 19 times more than that of an urgent care center ($167).

As reported here on RACmonitor, major health plans, including UnitedHealth Group and others, have a vested interest in reducing utilization of these FSEDs because of their cost. While the underlying motivation for this study is unknown, it certainly is interesting.

The other ED issue that came up last week has been a topic covered on prior Monitor Mondays broadcasts: the coding and payment of the emergency department facility fee.

“You may recall that the coding for these visits has no official guidelines from Medicare, so it is left to hospitals to develop their own,” Hirsch said. “And apparently, there has been an increase in the number of visits that are coded with higher-level codes, which led the Medicare Payment Advisory Commission (MEDPAC) to discuss this trend at their meeting last week and to recommend that CMS finally develop formal code selection guidelines.”

“Now, of course, nothing happens quickly, but by 2022, we may actually have a formal guideline,” Hirsch added. “But until then, it remains confusing and subject to interpretation.”