An analysis of billing records for more than 12,000 emergency medicine (EM) physicians across the United States has found that charges varied widely, but that on average, adult patients were charged 340% more than what Medicare pays for services ranging from suturing a wound to interpreting a computed tomography scan of the head.
A report of the study’s findings, published in JAMA Internal Medicine, also notes that the largest hospital markups were more likely made to minorities and uninsured patients.
“There are massive disparities in service costs across emergency rooms, and that price gouging is the worst for the most-vulnerable populations,” said senior investigator Martin Makary, MD, MPH, a professor of surgery at the Johns Hopkins University School of Medicine. “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.”
For the study, Makary and his team obtained Medicare billing records for 12,337 EM physicians practicing at nearly 300 hospitals in all 50 states in 2013 to determine how much emergency departments billed for services compared with the Medicare allowable amount. This amount is the sum of what Medicare pays, the deductible and coinsurance that patients pay, and the amount any third party, such as the patient, pays.
In addition, using the 2013 American Hospital Association database, the researchers identified size, urban/rural status, teaching status, for-profit status, regional location, and safety-net hospital status for each emergency department whose billing data were part of the analysis. Using the zip code for each emergency department, the researchers also estimated poverty rates, uninsured status, and minority populations for those using each emergency room, based on data from the 2013 U.S. Census Bureau.
The researchers then calculated each service bill’s markup ratio, defined as the relationship between the billed charges and the Medicare allowable amount. For example, a markup ratio of 4.0 means that for a service with a Medicare allowable amount of $100, the hospital charged $400––or 300% over the Medicare allowable amount.
Makary and his team found that emergency departments charged anywhere from 1.0 to 12.6 times ($100 to $12,600) more than what Medicare paid for services. On average, EM physicians had a markup ratio of 4.4 (340% in excess charges) or EM physician charges of $4 billion versus $898 million in Medicare allowable amounts.
The researchers also analyzed billing information for 57,607 general internal medicine (IM) physicians at 3,669 hospitals in all 50 states to determine whether any markup differences, and how much, existed between EM physicians practicing in a hospital’s emergency room, and general IM physicians who see patients at hospitals.
On average, charges were greater when a service was performed by an EM physician rather than by a general IM physician. Overall, general IM physicians had an average markup ratio of 2.1 compared with the Medicare allowable amount.
Makary found that wound closure had the highest median markup ratio at 7.0, and interpreting head CT scans had the greatest within-hospital variation, with markup ratios ranging between 1.6 and 27.0.
For a physician’s interpretation of an electrocardiogram, the median Medicare allowable rate is $16, but different emergency departments charged anywhere from $18 to $317, with a median charge of $95 (or a markup ratio of 6.0). General IM doctors in hospitals charged an average of $62 for the same service.
Overall, emergency departments that charged patients the most were more likely to be located in for-profit hospitals in the southeastern and midwestern U.S., and served higher populations of uninsured, African-American, and Hispanic patients.
While the study was limited by the lack of data on facility and technical fees charged by hospitals, as well as by the lack of patients’ insurance type and the actual amount patients ultimately paid, Makary said the study highlights the urgent need for legislation that will protect uninsured patients.
Models such as the Maryland Waiver, Makary added, where prices are set at the same rate no matter what hospital a patient goes to, can increase price transparency and protect patients. Currently, at least seven states have passed legislation to protect uninsured patients from paying so-called charge master prices, a list of billable services developed and closely guarded by each hospital, noting prices that are usually highly inflated and charged mainly to uninsured and other “self pay” patients.
Makary said a national model is necessary to unravel what is currently an inexplicably chaotic and opaque pricing system.
Source: Johns Hopkins Medicine; May 30, 2017.