There was wide variation in the facility fees Colorado hospitals and freestanding emergency rooms tacked onto emergency visit bills in 2018, new data from the state's All Payer Claims Database show.
In addition to charges for things like lab tests, imaging and surgical procedures, emergency visit bills almost always include an evaluation and management fee, also known as the facility fee, that corresponds to the patient's severity level. But a new report from Colorado's Center for Improving Value in Health Care, the not-for-profit organization that analyzes all payer data, shows huge variation in those facility fees.
For the highest severity level, for example, the facility fees commonly ranged from $1,990 to $4,700 last year—that's the 25th to 75th percentile. But the highest payment for the same severity level was nearly $48,000, CIVHC found.
"There's no rhyme or reason, unfortunately, to it," said CIVHC spokeswoman Cari Frank. "That's the point of us putting it out there, is because it doesn't make a lot of sense."
Frank added such data points, which CIVHC releases periodically on a variety of healthcare services, are designed to start conversations between insurers, providers and employers about reducing variation and, in turn, cutting costs.
The consumer advocacy group Colorado Consumer Health Initiative often uses CIVHC reports like this one as it helps patients resolve expensive hospital bills. Adam Fox, the Consumer Health Initiative's director of strategic engagement, said he sees lots of ER bills where facility fees are upcoded to higher severity levels when it may not have been appropriate.
"Having more of this data available is really helpful because that's an area of emergency and hospital visits that is sort of a black box," he said. "There's not really a clear rationale for facility fees all the time."
Freestanding emergency rooms, which are common in Colorado, sometimes charge particularly "astounding" facility fees for minor issues, Fox said. One patient, for example, recently visited a freestanding ER for a nosebleed, and the facility fee was about $4,000 for a bill that totaled just over $5,000.
Insurers most commonly paid $190 to $500 facility fees for the lowest severity level in 2018, yet the highest amount paid for that category was just shy of $5,000. The average facility fee for that category was $346.
For the middle severity level, the common range was about $700 to $1,500, yet the highest amount paid was $22,400. The average was $1,072.
Frank said she often hears the argument that rural providers have to charge more because they don't have economies of scale. But CIVHC's data show some rural providers actually get paid less than their urban counterparts.
"It really comes down to just the rates they are able to negotiate with the payers and how that all works out," she said.
Colorado's All Payer Claims Database includes data from about 40 commercial health insurance carriers covering about 75% of the state's commercially insured population. It does not include people covered by some larger self-insured employers
Emergency departments require robust training, staffing and technology, and because of that, they're often the most expensive place to get care, Steven Summer, CEO of the Colorado Hospital Association, said in a statement in response to CIVHC's report. Hospitals are trying to educate people about lower-cost options.
"As noted in the 2017 CIVHC Data Byte, we should start to see more ED visits coded at the highest level if the system is working correctly, because only the sickest patients are seeking care in the ED," he said.
All hospitals became required to post their facility fees as part of the federal regulation that took effect Jan. 1, but Summer also said most Colorado hospitals voluntarily began doing so two years ago.
Many stakeholders, including HHS Secretary Alex Azar, have argued that hospitals must do more to make those chargemaster list prices easier to for patients to use.
"We appreciate this analysis by CIVHC, as it provides a comprehensive statewide view of information that was previously just available at the individual hospital-level," Summer said.