Variation in Emergency Department vs Internal Medicine Excess Charges in the United States

Abstract

and insured but out-of-network emergency department (ED) patients are often billed hospital chargemaster prices, which exceed amounts typically paid by insurers.OBJECTIVE To examine the variation in excess charges for services provided by emergency medicine and internal medicine physicians.DESIGN, SETTING, AND PARTICIPANTS Retrospective analysis was conducted of professional fee payment claims made by the Centers for Medicare & Medicaid Services for all services provided to Medicare Part B fee-for-service beneficiaries in calendar year 2013. Data analysis was conducted from January 1 to July 31, 2016. MAIN OUTCOMES AND MEASURESMarkup ratios for ED and internal medicine professional services, defined as the charges submitted by the hospital divided by the Medicare allowable amount.RESULTS Our analysis included 12 337 emergency medicine physicians from 2707 hospitals and 57 607 internal medicine physicians from 3669 hospitals in all 50 states. Services provided by emergency medicine physicians had an overall markup ratio of 4.4 (340% excess charges), which was greater than the markup ratio of 2.1 (110% excess charges) for all services performed by internal medicine physicians. Markup ratios for all ED services ranged by hospital from 1.0 to 12.6 (median, 4.2; interquartile range [IQR], 3.3-5.8); markup ratios for all internal medicine services ranged by hospital from 1.0 to 14.1 (median, 2.0; IQR, 1.7-2.5). The median markup ratio by hospital for ED evaluation and management procedure codes varied between 4.0 and 5.0. Among the most common ED services, laceration repair had the highest median markup ratio (7.0); emergency medicine physician review of a head computed tomographic scan had the greatest interhospital variation (range, 1.6-27.7). Across hospitals, markups in the ED were often substantially higher than those in the internal medicine department for the same services. Higher ED markup ratios were associated with hospital for-profit ownership (median, 5.7; IQR, 4.0-7.1), a greater percentage of uninsured patients seen (median, 5.0; IQR, 3.5-6.7 for Ն20% uninsured), and location (median, 5.3; IQR, 3.8-6.8 for the southeastern United States).CONCLUSIONS AND RELEVANCE Across hospitals, there is wide variation in excess charges on ED services, which are often priced higher than internal medicine services. Our results inform policy efforts to protect uninsured and out-of-network patients from highly variable pricing.

Discovering healthcare provider behavior patterns through the lens of Medicare excess charge

“…This is the ratio of charges that the provider bills for a particular medical procedure to the Medicare allowable amount. This ratio has also been referred to as excess charge [ 1 ] or the markup ratio [ 2 ]. An excess charge ratio of 3 would mean that for a $100 Medicare allowable amount, the provider billed $300 on average.…”

“…Excess charge, also referred to as markup ratio, has been explored in the literature from the perspective of physician specialty and region [ 1 ], hospital characteristics (e.g., for-profit vs. nonprofit) [ 15 ], emergency department and internal medicine [ 2 ], and critical care [ 3 ]. While these works have made significant contributions toward revealing patterns of excess charge behavior, more research is called for to include patient characteristics and practice patterns that may also affect physician charges [ 3 ].…”

“…Cluster analysis is a novel approach used to investigate healthcare price variation. Prior research in this stream has mostly pre-categorized providers into high-vs-low price groups [ 2 , 15 , 22 ]. A segmentation strategy allows pricing behavior to be explored in conjunction with other relevant factors.…”

“…In search of the drivers of variation, studies have focused on excess charge [ 2 ] or markup [ 15 ], the ratio of submitted charges to the total allowable limit for a service. As with payments, wide variation in the markup ratio is observed nationwide.…”

“…For hospitals in the US, excess charge is shown to be a function of state-level price-setting policies, as well as the for/not-for profit status of hospitals [ 15 ]. It is also shown that hospital excess charges for the emergency department (ED) may vary substantially, and hospitals charge more when patients are seen by an ED physician compared to an internal medicine physician [ 2 ]. Our work adds to this literature by focusing on provider behavior with respect to specific procedures and by linking Medicare payment with excess charge.…”