Upcoding, surprise billing driving long-term ER spending spike
Emergency department (ED) spending has increased substantially over the past decade despite the number of visits per capita remaining relatively stable.
The percentage of U.S. health spending attributable to the ED rose from 3.9% in 2006 to 5% in 2016, according to a study published in Health Affairs. Although this may be a small piece of total spending, policymakers have been particularly interested in this trend because of an increase in surprise billing in EDs.
Researchers analyzed data from five states between 2012 and 2019 to determine the impact of price increases and upcoding on spending. Upcoding occurs when a provider submits codes for more severe and expensive diagnoses or procedures than those actually observed in or provided to the patient.
When Medicare updated its diagnosis-related group payments in 1988 and 2007 to provide additional compensation for more severely ill patients, hospitals systematically assigned greater proportions of patients to higher-paying groups, suggesting upcoding. Researchers also identified more aggressive coding of diagnoses in geographic regions that experience higher enrollment in Medicare Advantage, which explicitly compensates insurers for enrolling sicker patients.
In an analysis of more than 3 million ED visits, price increases were the largest source of overall per-visit spending increases in Colorado, North Carolina, Ohio and Texas.
“The fact that price increases were the largest reason for rising ED spending in four of the five states we examined supports concerns that hospitals have gained significant pricing power in emergency care and other hospital services, particularly in concentrated provider markets,” the report said.
In Massachusetts, upcoding was the largest source of spending increases per patient.
“Regardless of which state we examined, upcoding was still an important contributor to higher ED spending, accounting for $47 of increased per-visit spending between 2012 and 2019 in Ohio and up to as much as $254 in Colorado,” the report said. “Our results analyzing commercial claims are consistent with those of previous studies that have found that upcoding has been a significant source of spending increases in the Medicare population.”
Researchers called for a broader study on the correlation among price, upcoding and other factors. “Future research should explore the associations between local market conditions, such as consolidation and ownership type, and both price increases and upcoding,” the report concluded.