Main Points
- Emergency care represents less than 3 percent of the nation’s $2.1 trillion in health care expenditures while covering 120 million people a year.
- Emergency departments are open 24 hours a day and can tap multiple resources within a hospital such as diagnostic testing and consultation by other medical specialists, making them highly efficient, effective and timely.
- The real economic issue in emergency medicine is uncompensated care (care provided to the uninsured and poor reimbursement by insurance plans, both private and public).
- Everyone is only one step away from a medical emergency.
What are the costs of emergency care?
The economic costs of providing care are related to the severity of a patient’s illness or injury. The bill can escalate when extensive diagnostic testing is necessary. Unlike a physician’s office, emergency departments have all appropriate diagnostic resources available 24/7/365, and use of this equipment to make a diagnosis contributes to the cost of care.
The major categories on emergency department bills include professional services (physician and radiologist, consultants), pharmacy, supply, ancillary (laboratory, radiology), and miscellaneous. The fee for an emergency physician’s services on a medical bill typically is about 20-25 percent of the total charges for a visit. The hospital fees make up the difference.
Is emergency care cost effective?
Yes. Given the standby costs of staffing and equipping emergency departments to treat patients, the extra cost (or marginal cost) of seeing an additional patient for an urgent or nonurgent medical problem is much less than what it would cost to open a private physician’s office after hours or on the weekend or to build an urgent care center, according to a 1996 New England Journal of Medicine study. The fixed costs of operating an emergency department do not change significantly when urgent care patients are treated.
Emergency departments are more efficient, effective and timely in diagnosing and treating many acute medical conditions than physicians’ offices, because they have immediate access to all the hospital’s equipment and services, including diagnostic imaging, laboratory testing, pharmaceuticals, and access to other medical specialists. Many conditions such as heart attacks, strokes and major trauma are critically dependent on timely diagnosis and treatment to ensure good outcomes.
Health plans often look only at the frequency and cost of isolated patient visits and not the value of the emergency medical system as a whole. Emergency physicians continue to be concerned that payer policy jeopardizes the health of their patients.
Do emergency departments provide a lot of uncompensated care?
About half of all emergency services go uncompensated, according to Centers for Medicare & Medicaid Services (CMS). A May 2003 study of the American Medical Association found that physicians lost $4.2 billion in revenue in 2001 providing care mandated by the Emergency Medical Treatment and Labor Act (EMTALA).
Emergency physicians provide the most unreimbursed care of all physicians, incurring an annual average about $138,300 in EMTALA related bad debt according to 2003 data. Physicians in other specialties who provided emergency care the same year incurred an average of $25,000 in bad debt. In addition, the ability to make up the difference through hospital cost shifting is not a viable option any more, because both private payers negotiate discounted rates for services. (Public payers don’t negotiate- they set prices.)
A study published in the Annals of Emergency Medicine in 2007 reported that overall reimbursement for emergency department charges decreased from 57 percent in 1996 to 42 percent in 2004. In 2004, private insurance paid 56 percent of charges, Medicare paid 38 percent of charges, uninsured patients paid 35 percent of charges, and Medicaid paid 33 percent of charges.
While funding is down, demand for emergency care is up. According to the Centers for Disease Control, emergency department visits in 2006 rose to nearly 120 million. The CDC report said in one decade — from 1996 to 2006 — the number of emergency patient visits rose from 90.3 million to 119.2 million — an increase of 32 percent or an average annual increase of nearly 3 million visits (2.9 million) per year. The number of hospital emergency departments decreased from 4,019 to 3,833.
How have government reimbursement cuts affected emergency care?
According to the CDC Report on emergency department visits for 2006, more than 60 percent of emergency patients have some kind of government health insurance, either SCHIP, Medicaid or Medicare. As government reimbursement rates for emergency department visits generally don’t cover costs, hospitals are forced to seek revenue elsewhere. This often means that hospitals restrict the number of inpatient beds available to emergency patients in order to hold them open for high-revenue elective procedure patients. Then when a patient is admitted to the hospital from the emergency department, he or she may be “boarded,” or held in the ER for hours or even days, preventing emergency physicians from treating new patients coming in for treatment.
Emergency physicians in 2002 experienced an 8-percent cut in reimbursement for Medicare services. This cut was greater than those received by other physicians (5.4 percent). Over the past seven years, annual payment increases have been between 0 and 1.5%, significantly less than inflation. Much larger cuts in payments are projected over the next few years.
Medicaid patients often cannot obtain medical care from physicians in their community because doctors won’t accept Medicaid insurance due to very low reimbursement rates. This is increasingly true for patients with Medicare patients as well. When people cannot obtain timely care from physicians, they may have no choice but to seek care in the emergency department.
Why do people use emergency departments for urgent and nonurgent conditions instead of obtaining primary care?
People who cannot afford to pay for medical care and who have no health insurance often turn to emergency departments for treatment of conditions that have become acute because they lack access to regular medical care. Emergency physicians see first-hand the consequences of a health care system in which over 45 million people are uninsured and millions more are under-insured. The nation’s nearly 4,000 hospital emergency departments are a portal for as many as three out of four uninsured patients admitted to U.S. hospitals.
The scarcity of primary care practitioners in inner cities and rural areas contributes to an increasing reliance on emergency departments. In addition, some workers are unable to take time off to see their physicians within 1 or 2 days for unanticipated illnesses or injuries. Emergency departments are often the only source of medical care available at night, on weekends, and on holidays.
Are patients with nonurgent medical problems causing emergency department overcrowding?
No. Nonurgent patients may wait longer for treatment, but overcrowding is caused when acutely ill patients are “boarded” in emergency department hallways, because no inpatient beds are available in the hospital, and ambulances have to be diverted to other hospitals.
The CDC classified only 12.5 percent of emergency department visits as nonurgent in 2006. A nonurgent visit is classified as a patient who needs treatment between 2 and 24 hours, semiurgent (between 1 and 2 hours), urgent (15-60 minutes) and emergent (less than 15 minutes).
Strategies to restrict emergency department use disproportionately burden the poor and minorities, who often are sicker and more reliant on emergency departments for care. Physicians have a moral and ethical obligation to provide care, and although individual insurers may save money by keeping their members out of emergency departments, the system as a whole will not save money.
Restricting patients from emergency care will have little effect on society's health costs, and treating patients for nonurgent conditions, which can include fractures, wounds, and bronchitis, can prevent development of more serious and costly health problems, such as pneumonia.
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