On the front lines, America’s emergency departments (ED) are currently in at the center of a crisis treating patients with COVID-19. Emergency physicians and other clinicians are placing themselves and their families at risk. Yet, there is also another important crisis facing hospital-based EDs: surprise billing legislation. Certain forms of surprise billing legislation have the potential have a substantial and negative impact on how America’s EDs are supported, and our ability to adequately respond to disasters such as COVID-19.
ED surprise billing is where patients with private insurance get an unexpected bill from an emergency physician because they were out-of-network.
There are two reasons why surprise bills or, put another way — surprise coverage gaps — occur.
Surprises happen when the emergency physician group and private insurer cannot agree on fair rates, or patients receive care physically outside their insurance coverage. In “out-of-network” bills, insurers pay a unilaterally determined “allowable amount” in the absence of a contract with a physician practice. This is commonly lower than the in-network rate and subject to higher out-of-network deductibles. Patients are billed the difference between the plan payment and physician charges.
Of nearly 139 million yearly U.S. ED visits in 2017, about 8 million involve out-of-network bills. This is lower than the 11 million visits by the uninsured patients who receive care delivered by federal mandate but are unfunded and largely ignored by policymakers.
Protecting patients from out-of-network bills is everyone’s goal. Yet, media discussions have demonized doctors as opportunists using out-of-network bills to greedily generate excessive profits. The problem: this narrative fails to capture the financial realities of EDs, nor does it discuss the efforts by emergency physicians to protect patients.
We, emergency physicians, need to set the record straight. We are the caregivers who are risking our lives in the COVID-19 crisis. We are there at the bedside for the ill and injured 24/7/365: weekends, nights, holidays, and as first responders during disasters. When other physicians enjoy Thanksgiving and Christmas with their families, emergency physicians work. We care for everyone; COVID-19 patients, but also the uninsured, homeless, mentally ill, and physically violent — regardless of whether they can pay. This is required by federal law. No other doctors do this.
Becoming an emergency physician involves 7-8 years of post-college training. Like other doctors, emergency physicians have substantial loans: $200,000 of average debt. It takes years to earn the privilege to care for patients at their most vulnerable moments, and even longer to financially recover from medical school debt. Emergency physicians are paid appropriately but work hard: 48% are burnt out from constant stress, the chaos of our nation’s EDs and working nights and weekends, and during public health crises like the one we face today.
In society, EDs serve valuable functions treating the critically ill (e.g., heart attacks and strokes), as 24/7 diagnostic & treatment centers for potentially serious illnesses, as the safety net for the uninsured, and for disaster response such as our current crisis. EDs deliver the best of American medical care and backstop health care’s many failures. Many other nations model their emergency care systems to resemble ours. ED critics decry the costs of such a system, at least until they or their family need one.
Out-of-network billing discussions do not account for the economics that support today’s system. Academic papers focus exclusively on what people see as outsized payments from private insurance — often relying on data from a single, unnamed health plan — and report irrelevant data on “gross charges.” No papers have adequately described a comprehensive picture of the unit economics of EDs.
Let us explain how it actually works. EDs require highly trained staff 24/7/365: 168 hours per week, ready for whatever walks through the door. Compare that to 40-60 hours in clinics that are not open on holidays and weekends.
ED financing is derived from Medicare and Medicaid insurance, private insurer payments, and to a lesser extent, patients. But not every patient pays the same. Running an ED is mostly fixed costs, and all payments need to cover those costs to make it work. Public programs pay less and do not adequately cover costs requiring payments from private insurance to make up the difference.
In our 139 million visits, 32% have Medicaid, which pays $105 per visit and is the largest growing population. For the 14% uninsured, payments are minimal (~$20). ED economics are “fragile” compared to other physicians not required to care for everyone. The average orthopedic practice has only 6% of uninsured plus Medicaid while we have 46%.
For our 23% of visits covered by Medicare, we get $145 on average. The trouble with Medicare: Payments haven’t kept up with inflation. A MedPAC study found that the 2017 profit-margin on Medicare patients was -9.9% and declined to -11% in 2019.
Finally, there’s the 31% with private insurance left to help support a system expected to deliver care to everyone. For private insurance, the average ED payment is $275. All told, emergency physician bills represent only 1% of a private insurance plan’s annual cost. That’s for around-the-clock access for everything from heart attacks and strokes to broken ankles.
Major efforts are underway to lower private insurance payments and address out-of-network bills. Starting April 1, United Healthcare will be systematically downing-coding ED visits billed using the complex 99285 code. As a direct result, emergency staffing groups have announced physician pay cuts. Notably, these cuts are occurring when insurer gross margins per member per month spiked to $146 in Q3 2018, compared to $36 in Q3 2011.
Congress has been actively discussing out-of-network billing. One solution allows insurers to pay median in-network rates for out-of-network care. The trouble: there is no objective standard for an in-network rate. This proposal dramatically benefits insurers at the expense of physicians, hospitals, and patients. It will cause a slippery slope of lower payments that will bleed America’s EDs of highly-trained physicians, and drain America’s capacity to respond to disasters like COVID-19.
Also missing from media reports: emergency physicians have worked to implement real state-level solutions to fix out-of-network billing. A great example of sensible legislation is Texas, which protects patients and ensures insurers pay fair prices through an arbitration process between insurers and providers.
Ultimately, emergency physicians want to serve everyone, but our ability to complete this mission is under fire. No ED patient should face financial hardship, but America needs to answer a larger question: do we want 24/7/365 highly-trained emergency physicians available to all Americans, including the poor and uninsured, and to respond to public health crises? If yes, we need to carefully consider the effects of disrupting the fragile economics of EDs.
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