Emergency Medicine’s Ongoing Battle for Equitable Reimbursement

Emergency medicine is vastly different from most other healthcare specialties, especially when you consider the payer mix and reimbursement process that has helped shape the business model. As America’s safety net, emergency departments (EDs) have a moral and legal obligation to care for any person in need of immediate medical care – regardless of their ability to pay.

In 2017, the National Hospital Ambulatory Medical Care Survey reported 138.9 million ED visits, the payer mix for these visits included:

• 40.3% Medicaid/CHIP/Other state programs
• 31.2% Private insurance
• 18.5% Medicare
• 7.8% Self-pay
• 3.6% Medicare + Medicaid
• 0.9% Worker’s Comp
• 0.5% No charge or charity
• 4.4% Other
• 9.8% Unknown

For most EDs, the only visits with reimbursement rates that average above the cost of care are those covered by private insurance. Most other ED visits will result in negative profit margins, including Medicare (–15.6%), Medicaid (–35.9%), and the uninsured (–54.4%).

“We have a shared social responsibility to ensure that emergency departments remain open to everyone, and that all payers contribute their fair share for this federally mandated care. Our healthcare safety net depends on it,” explains Dr. Andrea Brault, President and CEO of Brault Practice Solutions. “But, it’s not the low government rates or the uninsured care that are most threatening to the business model of emergency medicine. These low payment rates have been a part of the business model since the beginning, and EDs have historically relied on higher rates from commercial payers to offset this loss.”

Aggressive payer trends and poorly written legislation threaten access to emergency care

State legislators began taking an interest in emergency medicine reimbursement with efforts to ban balance billing. A very simplified example of this is when a provider believes their service is worth $350, but the commercial payer “allows” a payment of $200 – the gap, or disputed amount, of $150 is the “balance bill.”

“At face value, making sure that patients don’t have to cover the disputed amount makes sense,” explains Dr. Brault. “But, what we started to see was payers taking advantage of poorly written legislation. In some states, where legislation failed to provide a level playing field, payers were free to lower reimbursement rates with little fear of repercussion. If a provider disagreed with the lower payment, then it was up to the provider group to take action and sue the payer for higher reimbursement. But, most ED groups aren't able to fight these expensive legal battles. And many of them are forced to simply accept the lower rate and write it off as a loss.”

The state bans on balance billing were then followed by the Affordable Care Act (ACA), which includes language to protect patients when they visit an in-network hospital but are cared for by an out-of-network (OON) provider. The law specifies that even if an emergency care provider has an OON status, the patient's co-pay and co-insurance would still be the same as if an in-network provider had seen them.

“But what the ACA specifically left out was the word ‘deductible,’” says Dr. Brault. “This gave payers another loophole, which would ultimately allow them to pass a larger portion of the cost of care onto the patient. After the ACA was passed, high-deductible health plans became much more commonplace.”

From 2006 to 2016, average patient deductibles and co-insurance increased, and patient out-of-pocket spending rose by 54%.

Narrow networks have also added downward pressure on ED reimbursement

Despite the patient protections that were intended with the bans on balance billing and the ACA, commercial insurers have continued to game the system.

“Payers have also been able to shift much of the cost of this supposedly ‘covered’ emergency care on patients by narrowing their networks,” explains Dr. Brault. “This has contributed to the added pressure on emergency departments.”

According to a study by the Leonard Davis Institute of Health Economics, 72% of insurance plans have either small or extra small networks for hospital-based providers. And, in recent years, these plans have become increasingly popular.

“Narrow networks have forced many emergency providers into OON status,” says Dr. Brault. “And, in some markets, there's nothing the provider group can do about it. Some payers just aren’t interested in contracting.”

A survey by the Texas Medical Association found that one-quarter of physicians have approached a health plan in an attempt to join their network – and 29% received no response at all. The survey also reported that “when it comes to negotiating contracts, a number of health plans barely cover the rent,” with some offers said to be “as low as two-thirds of Medicare rates.”

Surprise Billing legislation is now the latest threat to the business model of emergency medicine

Surprise billing is much like balance billing except that the cost of care gets shifted onto the patient in the form of a high deductible, which makes this practice legal despite protections against balance billing. The resulting bill then comes as a surprise to patients who are often unaware of this financial responsibility, hence the name surprise billing.

Many states have now enacted (or are in the process of enacting) consumer protections against surprise silling, which has resulted in a patchwork of state laws, each with different rules and priorities.

Dr. Brault explains, “Some states, like New York in particular, have implemented legislation that successfully protects patients, includes a payment standard for high frequency/low dollar claims, and establishes a mechanism for billing disputes. But other states have unfortunately passed legislation without any dispute resolution process and no minimum benefit standard.”

States can help solve part of the issue, but a Federal solution is also needed

State legislation is a big step in the right direction, but it also has limited authority because it only applies to insurance products regulated by that individual state. Other insurance products fall under federal regulation, including employer-sponsored health plans (ERISA plans) – one of the more common forms of commercial coverage in the US.

“Many thought Congress would pass some form of federal legislation on surprise billing in 2019,” explains Dr. Brault. “We now believe there’s a new deadline of May 2020, which is when several healthcare programs are set to expire.”

Two competing proposals are currently under debate

There are currently two competing bills under debate in the U.S. House of Representatives, which would have to be reconciled before being brought to a vote. All sides agree that patients shouldn’t be involved in what is essentially a billing dispute. But, they are also deeply divided on the reimbursement model that should prevail.

The House Education and Labor Committee introduced a bill, which is also backed by the House Energy and Commerce Committee. Under this model, the providers and payers would still have access to a mediation process, but only if the disputed payment is above $750. If the disputed amount doesn’t reach that threshold, then the payment would default to a market-based benchmark of the median in-network rate.

“But, less than 2% of emergency department payments would meet this threshold,” explains Dr. Brault. “So, in reality, this bill from the House Education and Labor Committee provides no protection for our emergency departments.”

The House Ways and Means Committee approved a competing bill that’s favored by some hospitals and physician groups. This model would allow providers to access a baseball-style arbitration, where the provider and payer both make their best offer, and the mediator chooses one of the two options. There would also be no minimum threshold to access this dispute resolution process, and the model would allow for batching of claims when efficient.

“Neither proposal is perfect,” explains Dr. Brault. “But, the bill set forth by the House Ways and Means Committee is a significant improvement over other proposals that have been considered. Unfortunately, there is still some language in the arbitration process that is highly biased toward insurance companies – the requirement for arbiters to consider the plan’s median contracted rate.”

Dr. Brault also explains that payers can easily manipulate the median contracted rate. “EDs have a legal obligation to provide care, and this gives leverage to the insurance companies. Some payers are known to offer 'take it or leave it' in-network rates because they realize that the provider doesn't really have a choice – they can decide to take the low-ball in-network rate, or they can accept the OON rate which is potentially even lower. Then, you have the payers that will opt to cut the top 50% of contracts – causing even current contracted rates to drop.” 

Advocacy is now more important than ever

Dr. Brault advises emergency medicine providers to stay politically active and engage their representatives in Congress in order to educate them about the unintended consensuses of proposed legislation.

“The business model of emergency medicine is both complicated and unique,” explains Dr. Brault. “And it’s up to us – the providers and partner stakeholders – to educate our lawmakers in Congress. The future of access to emergency care will depend on our continued advocacy and collective voice.”

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About Brault

Brault applies decades of acute care experience to give our clients a distinct clinical edge. Our executive team includes subject matter experts in the areas of: coding and auditing, compliance and risk management, documentation traning, group formation and governance, health information management, hospital contract retention, litigation support, physician reimbursement, practice improvement, and provider enrollment. Visit us at https://www.brault.us/