Emergency department visit cash fees exploited by large health systems

The hospital price transparency requirements that went into effect in 2021 are beginning to get results as more researchers analyze the data for specific information. A recent study from the University of Maryland illustrates how the law affords insight into how hospitals set fees for various services.

The study, “Hospital and Regional Characteristics Associated with Emergency Department Facility Fee Cash Pricing,” by Morgan A. Henderson and Morgane C. Mouslim, examines the emergency department fees set by 1,600 hospitals reported in 2021. The goal is to see how hospitals set Emergency Department (ED) fees for patients paying in cash. The authors note that, due to the millions of Americans who are underinsured or not insured at all, this group represents a not inconsequential number of ED users.

The study produces a range of results–including the finding that the larger health systems were more likely to comply with price transparency regulations than smaller providers. These same major players appeared to view cash payments in the ED as a fine way to boost their profits. Even though they claim to offer discounts for cash payments, their pricing policies appear to reveal a motive in opposition to giving the cash payer a break.

Among the stat-driven findings:

• The median cash price for ED facility fees ranges from $160.78 for a level 1 visit to $1,097.43 for a level 5 visit. However, cash prices range widely; many hospitals also charge a higher fee for night ED visits.
• Hospital for-profit status and a bed count of 251 or more beds are associated with higher cash prices for ED facility fees across all visit levels.
• Location in a county with a poverty rate of 16 percent or more was correlated with lower facility fee cash prices for ED visit levels 2 and up.

To give perspective to the findings, it is important to understand that all hospitals subjectively set cash prices for ED. While often loosely based upon a universally accepted standard, ED cash fees do not necessarily reflect actual provider costs. Thus these fees, while “discounted” for cash payment, can be manipulated to enhance a system’s bottom line. ED prices and facility use have been rising steadily: fees increased 120% between 2009 and 2016, and in 2018 there were approximately 130 million ED visits in the U.S.

The authors’ main fiscal finding was straightforward: “We found that for-profit status, higher bed count, affiliation with a health system, and lower local area poverty rate each correlate with higher ED facility fee(s).” In addition, “Across all five levels of ED visits, for-profit hospitals posted significantly higher cash prices for facility fees than nonprofit hospitals,” the study finds.

Related: Hospital price transparency is necessary, but is it enough?

Why? Because these providers use cash pricing to boost profits.

The authors concede that this profiteering was to be expected of the large for-profit health systems. But they aren’t okay with it.

“Although we did not attempt to estimate the causal impact of for-profit status on hospitals’ ED cash pricing policy, these results may be consistent with profit-maximizing behavior,” they say. “People seeking emergency care might not be able to seek lower-cost sites of care and thus are likely to be relatively insensitive to (high) prices. It is important to note that although it may be economically rational for profit-seeking hospitals to charge relatively high ED cash prices, this does not imply that the practice is socially optimal. Charging high prices to self-pay patients may lead to emergency care avoidance, which could, in turn, lead to worse patient health and even greater downstream health care costs.”