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How to Protect Vulnerable Patients from ED Overcharges

Some emergency departments overcharge vulnerable patients an average of 340 percent of the Medicare procedure cost, research shows.

Emergency departments overcharge vulnerable patients and uninsured patients.

Source: Thinkstock

By Sara Heath

- Minority patients and those who do not have health insurance often face higher emergency department costs compared to other patients, opening the door for policy measures to protect vulnerable patients, according to researchers from Johns Hopkins Medicine.

In a study published in JAMA Internal Medicine, Johns Hopkins surgery professor and senior investigator Martin A. Makary, MD, MPH, found that healthcare costs vary at different EDs. However, through an analysis of billing records for nearly 12,000 emergency physicians across the country, Makary and his colleagues noted that price gouging was most prevalent amongst vulnerable patient populations.

Makary and his research team assessed billing records in each state, comparing ED bills to the Medicare allowable amount. The Medicare allowable amount is the sum of what Medicare will pay, the deductible the patient will pay, and the left over amount any third party (such as the patient) will pay.

The team defined the markup ratio as the ED charge divided by the Medicare allowable amount.

EDs marked up prices anywhere from 1.0 to 12.6 times the Medicare allowable amount, meaning that a $100 service could be marked up to $12,600. On average, EDs marked up costs by 340 percent, or $4 billion in overcharged prices versus $898 million in Medicare allowable amounts.

“There are massive disparities in service costs across emergency rooms and that price gouging is the worst for the most vulnerable populations,” Makary said in a statement. “This study adds to the growing pile of evidence that to address the huge disparities in health care, health care pricing needs to be fairer and more transparent.”

Different procedures yielded different markups, the researchers found. Wound closure had the highest mark-up ratio, averaging out at seven times the Medicare allowable amount. CT scan analysis had the greatest variation across different EDs, ranging from a 1.6- to a 27-point markup ratio.

For-profit hospitals were more likely to markup costs than non-profit hospitals. Southeastern and Mid-Western hospitals were also more likely to markup costs than hospitals in other parts of the country.

Patients who did not have health insurance and African American or Hispanic patients were also more likely to see ED price markups than other patients, Makary and colleagues explained.

“Our study found that inequality is then further compounded on poor, minority groups, who are more likely to receive services from hospitals that charge the most,” Makary stated.

While the research team did not have access to the amount patients actually ended up paying, fourth year Johns Hopkins medical student Tim Xu maintained that the study’s results demand better legislative protections of vulnerable patients.

“This is a health care systems problem that requires state and federal legislation to protect patients,” said Xu, who is also the paper’s first author. “New York has passed a law that requires hospital and insurance companies to agree on a cost for the care so patients are not billed egregious amounts. Patients really have no way of protecting themselves from these pricing practices.”

Makary also suggested policies modeled after the Maryland Waiver, which requires a set price for procedures in all EDs across the state, regardless of health system.

At least seven other states also have regulations in place to protect patients from chargemaster pricing, which is the practice of price gouging for uninsured or otherwise “self-pay” patients.

However, Makary said there must be a national policy in place.

Out-of-pocket patient costs have been a pressing problem across the healthcare system. Healthcare professionals widely accept that high costs keep patients from accessing the treatments they need.

A 2016 survey from Oliver Wyman and Altera Institute shows that low-income and minority patients need better price transparency to help manage their medical bills.

Going forward, healthcare experts must advocate for and protect vulnerable patients from unnecessary price increases and also offer better cost transparency to make unavoidably high medical bills more palatable.