How the Affordable Care Act will affect emergency department payments

A recent article in the Annals of Emergency Medicine analyzed the revenue increases due to emergency physicians for services delivered to currently uninsured individuals when they begin to receive coverage (via either Medicaid or private plans) under the Affordable Care Act.

The authors analyzed payments for outpatient emergency department (ED) visits using the Medical Expenditure Panel Survey from 2005-2010. They looked into characteristics of charges and payments for the following groups: current Medicaid recipients, patients currently with private insurance, and uninsured patients either eligible for the Affordable Care Act’s Medicaid expansion (up to 138% FPL) or not Medicaid expansion eligible (>138% FPL). Payments reported reflected both the physician and facility payments. The reimbursement ratio, i.e. the ratio of provider charges to actual payments received, was also calculated. The sample included over 18,000 observations.

Patients currently with Medicaid provided an additional $34 payment per ED visit compared to low-income uninsured patients that were Medicaid eligible ($562 vs. $528). In terms of the reimbursement ratio, current Medicaid reimbursed 40% of ED charges compared with 34% of the Medicaid-eligible uninsured.

The findings were more dramatic for privately insured patients compared to the moderate-income uninsured. Patients with private coverage paid $212 more for ED services than uninsured patients with incomes greater than 138% FPL ($956 vs. $744). These Medicaid expansion ineligible  patients would be able to obtain coverage in the insurance exchanges and/or marketplaces provided affordable coverage will not be offered to them via their respective employers. The reimbursement ratio for private patients was 54% while for the Medicaid expansion ineligible population the ratio was 39%.

The authors noted that a large number of uninsured patients potentially affected by the ACA’s coverage provisions reside in Southern states presently opposed to expansion.

Many physicians are unsure about how the Affordable Care Act will affect their bottom line. This study attempts to provide an objective analysis of that important information for providers of emergency services. Based on these data, emergency physicians and hospitals serving large numbers of uninsured patients can expect to be paid more after implementation of the ACA.

As emergency physicians (EPs) are required to evaluate all patients under the federal EMTALA mandate, the changes in payment brought about by the ACA could improve balance sheets among EPs serving high proportions of uninsured patients.

On the other hand, the impact on hospitals is less well understood. Other changes in the ACA — most importantly the decreases to Disproportionate Share Hospital (DSH) funding — could negatively impact safety net facilities. Whether or not the increased revenue from patients gaining coverage will offset DSH decreases is unknown. Of great concern is that many states with the greatest uninsured populations have been reluctant to expand Medicaid or even operate their own health insurance exchanges. These choices would blunt to potential benefit to emergency care providers.

Nevertheless, incentives are aligned for both EPs and hospitals to advocate for the ACA’s attempts at expanding coverage.

Cedric Dark is founder and executive editor, Policy Prescriptions.

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