ER spending rises with increasing prices, severity of visits

Even though emergency department use has stayed the same, ED spending per member nearly doubled from 2009 to 2016 as the severity of ED visits and the prices associated with those visits increased, new data from the Health Care Cost Institute shows.

The not-for-profit HCCI analyzed employer-sponsored insurance claims for the five procedure codes used to bill for ED visit facility fees over the seven-year period. Emergency department facility fees are coded on a scale of 1 to 5, with Level 1 codes reflecting low-acuity conditions, and Level 4 and 5 codes representing the most serious conditions, such as blunt trauma or severe infections.

Over the study period, the HCCI said average prices for each of the five codes increased, with the prices for codes used to designate the highest-severity visits rising faster than the lowest-severity codes. At the same time, the use of the two highest-severity codes increased.

Those two trends helped drive ED visit spending per person to an average $247 in 2016, up 98% over $125 in 2009, while overall ED use stayed the same. The average price of the facility fee claim was $894 in 2016, an increase of 98% over $452 in 2009. HCCI defines spending per person as total expenditures divided by the employer-sponsored insurance population studied. Spending is determined by prices and utilization.

Per-person spending associated with the highest-severity ED code rose even faster, more than doubling to $77 from $31 in 2009. Spending rose faster because the price and use of the code grew quickly over the study period. The price of that code jumped to $1,108, a 77% increase over $627 in 2009. The use of the code grew 38% during the period.

On the opposite end of the spectrum, the frequency of the lowest-acuity ED visits plummeted, keeping spending on those types of visits to a minimum. The use of the lowest-acuity procedure code fell 41% between 2009 and 2016, while the price of that code grew 47% to $215 per claim. Overall spending on the lowest-acuity visits fell 5% over the seven-year period.

The HCCI also noted that ED spending increased in every state, even though ED use grew in only 11 states over the period. Spending in Mississippi grew the fastest, rising 153% to $300 per claim in 2016 over 2009.

Some health insurers have been cracking down on rising ED spending as well as the more frequent use of the highest-severity procedure codes. For example, UnitedHealth Group in March rolled out a new nationwide payment policy under which it is reviewing and adjusting facility claims for the most severe and costly ED visits for patients enrolled in the company's commercial and Medicare Advantage plans.

"The goal of this revised policy is to ensure accurate coding by hospitals, and ultimately promoting accurate coding of healthcare services is an important step in achieving the triple aim of better care, better health and lower overall cost," a UnitedHealth spokesman told Modern Healthcare in March.

National insurer Anthem has taken a different route to reduce ED spending by denying coverage for visits to the ED that it determines were not for true emergencies. Hospitals have decried the policy and some have sued the insurer, claiming the policy will harm providers and patients.

For its analysis, HCCI looked at 11.8 million ER procedure code claim lines per year of the study period. The claims accounted for 4.7 million patients enrolled in employer-sponsored insurance plans.