New Study: Emergency Rooms Overcharging Minorities

340% markup by ER physicians vs. 110% markup by non-ER internists

emergency room
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A May 2017 study published in JAMA Internal Medicine demonstrates that higher prices are common in American emergency departments—most adversely affecting poor, minority patients. 

Overall, services provided by emergency medicine physicians were marked up by 340 percent compared with a 110 percent markup for services provided by internists outside of the emergency room.

Overview

Prices charged for the same services vary widely from emergency department to emergency department.

Furthermore, it’s always more expensive to get treatment for a condition in the emergency department than it is to receive treatment in a physician’s office or urgent care center.

Many people who receive very high bills from hospitals are those who can least afford them: minorities who lack insurance. High medical bills can lead to a downward spiral and are the leading reason why people declare bankruptcy.

Fears about how much hospitals charge also discourage people from seeking necessary care. These people end up eventually presenting to the emergency department with graver conditions that not only take a large toll on quality of life but also end up costing more.

How Pricing Works

Hospitals use chargemasters, which are lists of services and their costs, to collate a patient’s bill. However, the true price of services varies depending on the type of insurance that a patient has and network status.

Patients who are in-network and their insurers typically pay less; whereas, patients who are out-of-network and don’t have insurance pay full hospital charges, which can be several multiples of what Medicare pays. The most expensive hospitals can charge in excess of 900 percent more than what Medicare pays.

Investigating ER Pricing

In this price-analysis study, researchers analyzed billing records from 12,337 emergency medicine physicians practicing in nearly 2,707 hospitals throughout the United States. Similarly, they examined the records of 57,607 internal medicine physicians practicing in 3,669 hospitals.

Using these records, the researchers calculated the “level of excess charges using markup ratios, which is the ratio of the billed charges to the Medicare allowable amount.” With the Medicare allowable amount being “the sum of what Medicare pays, the deductible and coinsurance amount that the beneficiary is responsible for paying, and any amount that a third party is responsible for paying.”

Additionally, the researchers determined the following characteristics for each emergency department:

  • Size
  • Location
  • For-profit status
  • Teaching status
  • Urban or rural status
  • Safety-net hospital status

Based on information provided by the United States Census the researchers also estimated the following:

  • Poverty rates
  • Uninsured status
  • Minority populations  

Uncovering Price Discrepancies

When the same services were performed by either an emergency medicine physician or an internist, the markup was significantly higher for the services rendered by the emergency medicine physician.

For instance, the median charge for an electrocardiogram was $95 when interpreted by an emergency room physician; whereas, the reading by an internist cost $62. 

According to the researchers:

In considering all ED services, for every $100 in Medicare allowable amounts, different hospitals charged patients between $100 (markup ratio, 1.0) and $12,600 (markup ratio, 12.6), with a median of $420 (markup ratio, 4.2); in contrast, the median hospital’s internal medicine charge would have been $200 (markup ratio, 2.0).

Here are some more specific findings from the study:

  • Emergency physicians ended up charging $4 billion, almost $3.1 billion more than Medicare allowable amounts.
  • Markup was greatest for suturing of lacerations (i.e., wound closure).
  • CT scans of the head had the largest variation in price among hospitals surveyed. In other words, CT scans of the head ranged most in price.
  • Emergency departments that charged the most were a part of for-profit hospitals and located in the Midwest and the southeastern United States. These emergency departments served larger numbers of uninsured Hispanic and African American people.

A Word From Verywell

When a person is treated in the emergency department, often with little choice, they are subjected to the vagaries of price. According to the authors, "Now, more than ever, protecting uninsured and out-of-network patients from highly variable hospital pricing should be a policy priority."

The results of this study underscore the need for more transparency in hospital billing. They also support the need for state and federal legislators to protect patients against raised prices.

Sources:

Medline. Electrocardiogram.

Medline. When to use the emergency room.

Xu, T, et al. Variation in Emergency Department vs Internal Medicine Excess Charges in the United States. JAMA Internal Medicine. 2017.

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