Lagging reimbursement rates threaten U.S. emergency care

Falling reimbursement rates, increases in uncompensated care and claim denials are putting the "viability of hospital-based emergency care in the United States is at risk," according to a new RAND report. 

The report supported by the Emergency Medicine Policy Institute found that Medicare and Medicaid reimbursements to physicians practicing in the emergency department (ED) both fell by 3.8% in real payment per visit from 2018 to 2022, meaning the payments were adjusted for inflation. 

ED physicians experienced even steeper reimbursement declines from private payers, with a 10.9% decrease for commercial in-network visits and a 47.7% decrease for commercial out-of-network visits during the same period. 

Researchers said the declining reimbursement rates stemmed from an overall decrease in commercial prices, inflation and low payment rates from non-payment or claim denials.  

In particular, ED physicians faced frequent underpayment or claim denials from payers for "significant portions of the allowed amounts" payers were obligated to pay, the report said. This especially threatened the viability of independent ED physicians, who cannot bridge reimbursement gaps with facility fees.  

The report found that commercial allowed amounts for ED professional allowed amounts fell by 7.42% in real terms. However, allowed amounts for ED facility care actually increased by 18.65% in real terms. 

Emergency care also faced higher uncompensated and undercompensated care in addition to reimbursement challenges, further straining financial and operational health of EDs. Researchers attributed the increase to more ED visits for Medicaid patients, the drop in Medicare and commercial reimbursement rates, Medicare anti-inflationary policies, payer downcoding, the rate of claim denials and the negative financial impacts of the No Surprises Act. 

Additionally, EDs recently managed more patients with complex medical and social needs, such as older adults, patients with mental illness, survivors of violence, veterans, unhoused individuals and undocumented immigrants. ED patient acuity also increased over the past dozen years, resulting in greater demand for critical care services in the ED. 

Together, the financial challenges of EDs could result in less access to care and even facility closures. But a new payment system could better support EDs, RAND researchers said.  

They recommended a tiered system that builds on the traditional fee-for-service model. However, the system would layer in new funding sources for unfunded or partially funded safety-net emergency care as a result of visits by uninsured and underinsured patients, as well as care related to public health, mass casualty incidents, disasters and public health preparedness. 

"Urgent action is needed to sustain hospital emergency departments, which act as a safeguard for patients who use the services and communities that rely on them during a crisis," Mahshid Abir, the report's lead author and a senior physician policy researcher at RAND, said in a statement.  

"Unless these challenges are addressed, there is an increasing risk that emergency departments will close, more doctors and nurses will leave emergency medicine, and patients will face even longer waits for care," Abir explained. 

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.