Growing Use of Freestanding EDs Raises Costs for Patients, Insurers

April 6th, 2017

In states such as Texas, patients seeking immediate care still primarily use urgent care centers and hospital-based emergency departments, but they also are increasingly presenting at freestanding EDs.

A study published recently in Annals of Emergency Medicine looked at how that affected costs, including how much patients ended up paying out-of-pocket.

Researchers from Rice University, Baylor College of Medicine, the University of Texas Health Science Center at Houston (UTHealth), the Michael E. DeBakey VA Medical Center, and Blue Cross and Blue Shield of Texas (BCBSTX) analyzed more than 16 million insurance claims processed by BCBSTX from 2012 to 2015 to quantify use and costs for freestanding EDs compared with other alternatives.

Patients who need immediate care sometimes think the freestanding EDs have fees similar to those at urgent care clinics because they both tend to be located in convenient neighborhood shopping centers, noted study co-author Vivian Ho, chair of health economics at Rice’s Baker Institute for Public Policy and director of the institute’s Center for Health and Biosciences.

Yet results indicate that the total price of a freestanding emergency room visit averaged $2,199 in 2015 vs. $168 for an urgent care clinic visit usually requiring a one-third out-of-pocket copay in both cases. Costs for hospital-based emergency care were similar to those at the freestanding facility, at an average of $2,259, and also usually required patient payments for one-third of the cost.

The potential for confusion about the facilities and fees is a concern, notes Jack Towsley, divisional senior vice president of health care delivery at BCBSTX. Fees at freestanding EDs can be 10 times higher than urgent care centers. When these facilities do not contract with insurers and are out-of-network for patients, the patients are responsible for more of the cost. Reserving the use of these freestanding EDs for true emergencies and instead visiting a local urgent care facility or doctor’s office for other conditions can save patients time and money and reduce overall health care costs, he says.

The report notes that freestanding ED use jumped up 236% between 2012 and 2015 vs. just 10% for hospital-based EDs and 24% for urgent care clinics.

The shock of the high bills can alarm patients, Ho cautioned. Insurers and patients then pay higher prices for many health care services at freestanding EDs when they could have paid much less at an urgent care clinic. These unnecessary costs can translate to higher premiums for all insurance consumers.

Results found that 15 of the 20 most common diagnoses treated at freestanding EDs coincided with urgent care clinics but treatment for them cost nearly 10 times more at the freestanding EDs. One example offered was “other upper-respiratory infections,” which was the most common diagnosis at the freestanding EDs. The average price tag at freestanding EDs was $1,351, which is dramatically higher than the $165 charged by urgent care clinics.

The increased use of freestanding EDs in Texas, accompanied by the higher prices at EDs relative to urgent care centers, raises the potential for inefficient use of EDs, concluded the researchers. They urged consideration of regulatory limits on balance billing for out-of-network care at freestanding EDs.