Emergency rooms are monopolies. Patients pay the price.
By Sarah Kliff
Dec 4, 2017, 8:00am EST
Around 1 am on August 20, Ismael Saifan woke up with a terrible pain in his lower back, likely the result of moving furniture earlier that day.
“It was a very sharp muscle pain,” Saifan, a 39-year-old engineer, remembers. “I couldn’t move or sleep in any position. I was trying laying down, sitting down, nothing worked.”
Saifan went online to figure out where he could see a doctor. The only place open at that hour was Overland Park Regional Medical Center in his hometown of Overland Park, Kansas.
The doctor checked his blood pressure, asked about the pain, and gave him a muscle relaxant. The visit was quick and easy, lasting about 20 minutes.
But Saifan was shocked when he received bills totaling $2,429.84.
The bill included a $3.50 charge for the muscle relaxant. The rest — $2,426.34 — was from “facility fees” charged by the hospital and doctor for walking into the emergency room and seeking care.
Because Saifan’s health spending is still within his plan’s deductible, he is responsible for the entire amount.
“I called the insurance company to make sure the bill was real,” he says. “They said it was a reasonable price, and gave me a breakdown.”
Spending on emergency room fees has increased by $3 billion — even though the number of fees is declining slightly
There are 141 million visits to the emergency room each year, and nearly all of them (including Saifan’s) have a charge for something called a facility fee. This is the price of walking through the door and seeking service. It does not include any care provided.
Emergency rooms argue that these fees are necessary to keep their doors open, so they can be ready 24/7 to treat anything from a sore back to a gunshot wound. But there is also wide variation in how much hospitals charge for these fees, raising questions about how they are set and how closely they are tethered to overhead costs.
Most hospitals do not make these fees public. Patients typically learn what their emergency room facility fee is when they receive a bill weeks later. The fees can be hundreds or thousands of dollars. That’s why Vox has launched a year-long investigation into emergency room facility fees, to better understand how much they cost and how they affect patients.
Saifan’s bill was so expensive, it turns out, because the hospital used the facility fee typically reserved for complex, intensive emergency room visits.
Emergency room facility fees are usually coded on a 1 to 5 scale, to reflect the complexity of care delivered to the patient. Saifan’s visit where he received a muscle relaxant was coded by the doctor as a level 4 visit — the second highest — and came with hefty fees as a result.
The hospital billed a separate facility fee and chose level 3, typically reserved for moderately complex visits.
Saifan’s experience isn’t an anomaly: A new Vox analysis reveals that emergency rooms all across the country are increasingly using these higher-intensity codes, and that the price of these codes has increased sharply since 2009.
Vox worked with the nonprofit Health Care Cost Institute (HCCI) to analyze 70 million insurance bills for emergency room visits from between 2009 and 2015. We focused on the prices that health plans paid hospitals for facility fees, not the hospital charges (which can often be inflated well above what patients actually pay).
We found that the price of these fees rose 89 percent between 2009 and 2015 — rising twice as fast as the price of outpatient health care, and four times as fast as overall health care spending.
Overall spending on emergency room fees rose by more than $3 billion between 2009 and 2015, despite the fact the HCCI database shows a slight (2 percent) decline in the number of emergency room fees billed in the same time period.
“It is having a dramatic effect on what people spend in a hospital setting,” says Niall Brennan, executive director of the Health Care Cost Institute. “And as we know, that has a trickle-down effect on premiums and benefits.”
The HCCI data shows that prices are rising dramatically and that, increasingly, hospitals have gravitated to using the most expensive billing codes — the level 4 and 5 charges, typically reserved for the most complex visits.
The rising price of emergency room facility fees coupled with growing usage of the most expensive codes mean it’s significantly more expensive to go to an emergency room now than it was six years ago.
Hospitals argues that these increases are due to an aging, sicker population.
“The number and complexity of ED visits continues to increase — this trend is not surprising given current population and health care-related trends,” Ashley Thompson, senior vice president for public policy at the American Hospital Association, said in a statement.
But experts on emergency billing argue that this is evidence of hospitals taking advantage of their market power — charging high fees because they are often the only place, late at night or on the weekend, where Americans can seek health care.
“If you have a monopoly — and when it comes to the ER, it’s a monopoly — you can set any price you want,” says Robert Derlet, a professor emeritus in emergency medicine at the University of California Davis, who has been critical of ER billing in the past.
“What is going to deter me from increasing my price? Who can stop me? If I’m the financial officer for the hospital, I might even get a bonus for doing this.”
Hospitals increasingly code emergency room visits as complex
David Overton knows what strep throat feels like. He comes down with it once or twice every year. He typically goes to urgent care or a drug store clinic when his achy throat and fever symptoms start.
But his most recent strep throat infection flared up on Memorial Day, and those clinics were closed. So he went to Legacy Emergency Room & Urgent Care outside of Dallas.
Overton walked in the door for urgent care, but staff there said his case was severe enough to move him to the emergency room side of the clinic.
“I felt terrible, and I wasn’t up for debating it,” he says. “So I was like okay, I guess we’ll do this.”
The emergency room performed a CT scan and used IV medications to treat Overton. He immediately felt better, and left with a prescription for antibiotics. Three days, later he saw another doctor who confirmed it was a simple case of strep throat.
But because of the complex intervention — the CT scan, the IV drugs, the long visit — the hospital coded Overton has having the most complex visit possible, a level 5. They billed him a $1,900 facility fee. Because he has a high-deductible plan, he’s responsible for all of it.
“Did I need the CT scan? No. Did I need the IV antibiotics? No,” he says. “I could have been treated with oral antibiotics.”
He’s currently paying off the bill by $50 each month. So far, he’s paid $300.