EDs may charge 12.6 times Medicare prices—with higher markups than other departments

Emergency department services like suturing a wound or interpreting a CT scan may result in patients being charged up to 12.6 times more than what Medicare would pay, with minorities and uninsured patients the most likely to be hit by the markups.

The study from John Hopkins University School of Medicine researchers was published May 30 in JAMA Internal Medicine. Examining Medicare Part B claims from 2013 for more than 12,000 emergency physicians, the study sought to find out how much emergency departments (EDs) billed for services compared to the Medicare allowable amount. It also included hospital characteristics from the 2013 American Hospital Association database and U.S. Census Bureau data for determining poverty rates, uninsured status and racial demographics of the patient population.

Researchers found that for every $100 in Medicare-allowable amounts, EDs charged patients between $100 (a markup ratio of 1.0) and $12,600 (markup ratio of 12.6), with emergency physicians having a median markup ratio of 4.4, or 340 percent in excess changes.

The study found wide variation in ED charges for similar conditions and level of visits. For example, for a physician interpretation of an electrocardiogram, different EDs charged between $18 and $317, while the Medicare allowable amount is $16.

Greater ED markup ratios by hospital were associated with for-profit hospitals, being located in the southeastern United States, and with hospitals serving a greater number of uninsured, African-American or Hispanic patients.

“There are massive disparities in service costs across emergency rooms and that price gouging is the worst for the most vulnerable populations,” said Martin Makary, MD, MPH, John Hopkins professor and the study’s senior investigator. “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.”

The study also compared emergency physician billing to what general internal medicine doctors practicing at hospitals charged. Those physicians also marked up prices, by an average ratio of 2.1 compared to the Medicare allowable amount. For the same services, however, the internal medicine department would charge less than the ED—the median hospital charged an additional $34 when an emergency physician interpreted an electrocardiogram.

Additionally, the associations with greater ED markup ratios by hospital, like being a for-profit hospital or serving more uninsured patients, weren’t present in the markups by general internal medicine physicians.

The study concluded by suggesting their findings be used to inform policies on balance billing and chargemaster rates, arguing the markups are “problematic” for emergency services where comparison shopping is often not an option.

“The ongoing trends of uninsurance, hospital consolidation and narrowing insurance networks since implementation of the Affordable Care Act are poised to increase the potential for patient financial harm in the years to come,” the study said. “Now, more than ever, protecting uninsured and out-of-network patients from highly variable hospital pricing should be a policy priority.”