Health Policy Journal Club, Health Policy

Health Policy Journal Club: Reimbursement Rises Slower than Charges

Over the past 20 years, public payers have not kept pace with providers' expectations.

It is no secret that relatively stagnant reimbursements for emergency department (ED) visits present stiff financial challenges to the practice of emergency medicine. In the face of increasing costs of care, EDs depend on adequate reimbursement in order to remain financially viable.

This study examined the differences in reimbursement between private and public (ie, Medicare, Medicaid) insurance for ED visits between 1996-2015. To do this, the researchers looked at the Agency for Healthcare Research and Quality's Medical Expenditure Panel Survey for more than 114,000 ED visits that did not result in hospitalization. They then tabulated expenditures per year by insurance type.

Their results revealed several findings. The average expenditure by a private insurer for an ED visit in 2015 was $1,676 vs. $892 for Medicare and $504 for Medicaid. Charges for ED visits rose substantially over the same time period and in 2015 were higher for patients covered by Medicare (approximately $5,000/visit) and lowest for Medicaid (approximately $3,000/visit).

What is also striking about the data is the declining reimbursement-to-charge ratio, meaning a shrinking reimbursement from all insurers as a proportion of charges. Reimbursement to EDs has risen slowly; however, charges have increased at a far faster rate. In 1996, private insurance covered 75% of charges for an ED visit. By 2015 that number shrunk to 47%. At the lowest end, Medicare reimbursed just 24% of the amount charged.

The numbers illustrate that private insurance reimburses at nearly double the rate of Medicare and more than triple the rate of Medicaid. The authors point to decreased regulatory authority and bargaining power for private insurers compared to public insurers as one cause for the difference. There was no substantial difference in the intensity of services between groups. Hospitals also do not appear to be charging private insurance more than public insurance for the same service.

These data show that increases in charges for ED visits have far outpaced the rise in reimbursement and that public insurance reimbursed at a far lower rate than private insurance. To ensure that EDs can remain financially viable, it will be important to understand and try to mitigate increases in hospital charges while also advocating for fair reimbursement for the extremely valuable services that EDs provide.

Abstract: Yun J, Oehlman K, Johansen M. Per Visit Emergency Department Expenditures By Insurance Type, 1996-2015. Health Aff (Millwood). 2018;37(7):1109-1114.

Between 1996 and 2015, mean annual increase in per visit emergency department expenditures were significantly lower for private insurance than Medicare, Medicaid, and no insurance, with no corresponding difference in ED charges. Expenditures as a proportion of charges decreased for all insurers over time. Private insurance had the highest expenditure-to-charge ratio in each year.

PMID: 29985689

EMRA + PolicyRx Health Policy Journal Club: A collaboration between Policy Prescriptions and EMRA

As emergency physicians, we care for all members of society, and as such have a unique vantage point on the state of health care. What we find frustrating in our EDs - such as inadequate social services, the dearth of primary care providers, and the lack of mental health services - are universal problems. As EM residents and fellows,  we learn the management of myocardial infarctions and traumas, and how to intubate, but we are not taught how health policy affects all aspects of our experience in the ED. Furthermore, given our unique position in the health care system, we have an incredible opportunity to advocate for our patients, for society, and for physicians. Yet, with so many competing interests vying for our conference education time, advocacy is often not included in the curricula. This is the gap this initiative aims to fill.  Each month, you will see a review of a new health policy article and how it is applicable to emergency physicians.